[FEEDBACK REQUSTED] Gigamining -> Teramining Upgrade Paths

[jamesg]

To all interested parties:

I would like to request gigaminers and other interested parties feedback on the upgrade paths from Gigamining to Teramining. I have outlined my initial thoughts below but this is not final and could be changed based on community feedback.

I will offer a trade-up program from Gigamining to Teramining. Below is what each bond looks like from a numbers perspective:

Code:

                 GIGAMINING   TERAMINING
Total Gh/s      200Gh        4,000Gh
Mh/s per bond   5Mh/s        25Mh/s
Total bonds     40,000       160,000

You will notice that Teramining has 4 times the number of shares as Gigamining. This is to allow for both a free and paid upgrade path.

Free Upgrade Path
I will offer a 1:1 exchange of Gigamining bonds for Teramining bonds that costs nothing to upgrade. An example would be if you have 400 Gigamining bonds and don’t want to pay to upgrade, you can swap them 1:1 for Teramining bonds. This would represent a 5x increase in the bonds hashing power at no additional cost. So in this case, the 400 Gigamining bonds (2Gh) would be upgraded to 400 Teramining bonds (10Gh).

Paid Upgrade Path
I will also offer a 1:4 exchange of Gigamining bonds for Teramining bonds. So, if you have 400 Gigamining bonds (2Gh) and pay the upgrade fee, you will receive 1,600 Teramining bonds (40Gh) in return. The fee to upgrade will be .25 BTC per Gigamining bond. So, the upgrade fee on 400 Gigamining bonds would be 100 BTC.

Initial Sales of Teramining
There will be no public or private offering of Teramining to the larger community. The only way to receive Teramining bonds will be to trade-in your Gigamining bonds either through the free or paid upgrade paths. Any bonds not sold will remain in the gigamining sub-account and will not have coupon payments paid out on them.

Contract Changes
The only contract change between Gigamining and Teramining is the amount of Mh/s per bond.

Please leave your comments and questions below and I will answer them to the best of my ability. My hope is to solidify this in a timely manner so there is less uncertainty around the future of Gigamining.

Best regards,
gigavps

[jamesg]

Q&A

Q: Will Gigamining exist after Teramining is released?
A: If everyone does not upgrade, gigamining will still exist. Only once all bonds are recalled will Gigamining cease to pay out coupon payments.

Q: Will you send a notice out to Gigaminers as we get closer to ASIC arriving?
A: Yes. I will make EVERY ATTEMPT to make sure all Gigaminers upgrade. This includes more forum notifications and through GLBSE.

Q: How will you upgrade bond holders?
A: This will be a manual process using a spreadsheet and the transfer function of GLBSE. I will work with nefario to make sure they are compensated appropriately.

Q: When can I let you know my intentions of upgrading?
A: If you feel your holdings will be stable over the next couple of months, you may fill out this form.

Q: When will the upgrade process start?
A: This will probably start once I receive the equipment. That being said, I also need to make sure things are stable before releasing the new bond.

Q: Will you ever sell more Teramining bonds?
A: This is very real possibility, but for the initial release of Teramining, I want only current Gigamining bond holders to have this opportunity.

Q: Will the .25 BTC upgrade price be effected by a big swing in exchange rates?
A: Yes. If the price of Bitcoins goes to $12 in October, we'll set a new BTC price for the upgrade.

Q: Will you change your forum handle to teravps?
A: No. My wife likes the word "giga".  

[P4man]

Interesting. I think its rather nice of you to offer a free upgrade path.  It will probably still be a patch on a wooden leg for bond holders, but its better than no patch at all, and you didnt have to do this.

However, I dont think the paid upgrade path makes a lot of sense. IMO hashrate is going to increase by much more than 4x, so the upgrade will still end up being a downgrade from a coupon payment POV. At least in the longer run. If you get your machines early there might be some good months that could make it worth while I guess, havent done the math on that yet.

[pieppiep]

I will upgrade all my bonds with the 1:4 path for 0.25 BTC each.

[Daily Anarchist]

What if in the future you want to raise more money for Teramining? Won't you sell bonds then?

The whole bonds as a hashrate/second seems to have sort of been blown to pieces lately. It really doesn't allow for people to invest in individual companies, only hashrates. I would rather invest in Teramining, the company. Yes, I know that we are investing in the solvency of the companies, but it's not enough.

I would rather own a share of Teramining and earn dividends that are directly proportional to how well Teramining as a company is doing. This means other things come into play, like electric bills, efficiency, taxes, etc. Right now all I'm gambling on is future difficulty of mining. That's kind of lame.

My advice is to work on an upgrade path that allows us to invest in Teramining the company.

[sadpandatech]

Do you have an idea on when you will start the upgrade? Will it be when you get shipping confirmation or after you've had time to get the new units setup and running?




I'm fairly confident at this point that for the first run of asics everyone receiving them will be highly profitable at current BTC prices. Even considering the diff increas from the first run.

[sadpandatech]

My advice is to work on an upgrade path that allows us to invest in Teramining the company.

I too would like more opportunity to invest in the actuall company. This does not work well in mining companies though. namely because they would have to restructure the entire payout scheme to allocate earnings towards growth. Then the idea is you would profit more in the long run from taking smaller dividends. If it were companies that were doing more than mining or were building hardware and mining then I could see it. Otherwise the only other option is for the company owner to use their personal earnings for growth and payout higher dividends not only to their own shares but to everyone elses as well who did not pay for the growth.

[jamesg]

What if in the future you want to raise more money for Teramining? Won't you sell bonds then?

I have answered this in the Q&A post.

My advice is to work on an upgrade path that allows us to invest in Teramining the company.

Thank you for your feedback. I will take this into consideration.

[sunnankar]

IMO hashrate is going to increase by much more than 4x, so the upgrade will still end up being a downgrade from a coupon payment POV.

It is useful to view mining bonds are depleting assets, like oil or gas wells. You can always reinvest a portion of dividends into additional bonds to maintain the nominal coupon amount.

My advice is to work on an upgrade path that allows us to invest in Teramining the company.

There are other instruments out there to do this. I don't think Gigavps wants to sell equity as it appears he has a lower WACC with debt issuance. So it might just be a matter of price; I suppose you could grossly overpay for an equity stake and Gigavps would likely take it.

[jamesg]

Do you have an idea on when you will start the upgrade? Will it be when you get shipping confirmation or after you've had time to get the new units setup and running?

I have answered this question in the Q&A.

I'm fairly confident at this point that for the first run of asics everyone receiving them will be highly profitable at current BTC prices. Even considering the diff increas from the first run.

I have done some initial calculations and I would agree with this assessment.

[occulta]

This was by no means a must by gigavps, but keeping people happy will probably benefit the bonds as a whole, and i am happy

[Otoh]

I think that the free upgrade is both generous & far sighted, I shall take the paid 4:1 option most probably depending on the consensus nearer the time, many thanks giga.

[cytokine]

I'm very interested in this. I have 247 shares of GIGAMINING and I would definitely trade these in for TERAMINING shares ASAP. I would take the paid upgrade path.

[Sukrim]

Q: Will you change your forum handle to teravps?
A: No. My wife likes the word "giga".  

How about the lady in the picture then?

I would be interested about how you came to the valuation of 0.25 BTC for the "upgrade" price. After all, it means 1 Gigamining share is worth 25/3 = 8.33... Bitcents if 3 additional shares are worth 25 Bitcents initially... is it just a token amount to make sure people actually pay _something_, even if it's cheap or what else were your considerations/calculations regarding this price?

[cytokine]

I would also like to say that, by providing this upgrade option, you have earned a HUGE amount of trust far above and beyond that of other similar bonds issuers, and therefore I will seriously take this into consideration when deciding where to invest in the future.

[dishwara]

I bought some Gigamining bonds at the rate of 1.5 BTC. Now it seems i have to pay another 0.25 BTC/per bond to get Teramining bonds.........

Someone knows something which I don't.

[bitcoiners]

I have to say I was skeptical about the upgrade process but I like what I've read so far.

Cheers.

I bought some Gigamining bonds at the rate of 1.5 BTC. Now it seems i have to pay another 0.25 BTC/per bond to get Teramining bonds.........

Someone knows something which I don't.

You obviously didn't read the whole first post.  Or didn't understand it.

[silverfuture]

Paid upgrade path here as well please!

[PinkBatman]

Very excited about this!

[sunnankar]

GigaVPS is the only miner with whom I am familiar (hur hur) who is making a significant capital and operational investment in commercial-grade infrastructure.

BITBOND is another quality mining infrastructure and a larger scale than Gigavps's. If I recall Gigavps even has some equipment in one of BITBOND's facilities.