Disclaimer: If you’ve ignore all my disclaimers before, read this one. Really. This article contains information about a mining asset that I have a strong interest in seeing people buy. In fact, it is my own asset and I have a direct benefit from you wanting this asset like it’s free sex and beer. DO NOT simply assume that everything in this article is written for your benefit. ASSUME that I want to influence your buying decision. RESEARCH on your own to find out whether what you read here is true or false.
I’ve been fascinated by the perpetual mining bonds (PMB) for quite some time and have written two previous articles about this phenomena, which is somewhat unique to Bitcoin mining. If you haven’t read those articles before, I strongly encourage you to do so.
After seeing the first results of Bitfury’s chip tests, however, I’m happy to announce that I’ve decided to offer my own ASIC mining hardware up as backing for a new PMB called BFMines.
What Is It?
BFMines is a simple way for investors to get a piece of the Bitcoin mining pie without having to buy and operate dedicated hardware. In short, you buy a share of my mining operation and receives in return the output of 1 mh/s of Bitcoin mining per share.
This type of contract is sometimes called a perpetual mining bond, although the term ‘bond’ is somewhat misleading. What you need to know, however, is that you buy a share and I’ll mine for you. You get a return or dividend based on the hash rate. What that output is in terms of Bitcoins depends on the mining difficulty and it’s a fixed formula which means that as long as you have the current mining difficulty, you know exactly how much dividends you’ll get.
You also get these dividend payments every day, and you get them ‘perpetually’ which is another one of those somewhat misleading terms. The term ‘perpetual’ in this sense means that the mine will continue to give you daily dividends until the operation closes down, but you will not get your original investment paid back once the operation closes.
Instead, upon closure, you get 110% of the price for which the shares have been traded over the previous 7 days. If difficulty rises, this will likely be less than what you paid, so keep that in mind as you are considering this investment.
Note: You really should read the articles listed earlier to understand the full picture.
In short and simple terms, however, think of this more as a payment for me mining on your behalf and taking away all the hassle and risk of running your own mining operation.
Why Another PMB?
It is no secret that there are many competing mining bonds on the market. In fact, just a few weeks ago, ThickAsThieves released his TAT.VirtualMine asset, which is a perpetual mining bond priced at 0.007 per mh/s, a very competitive price from a reputable operator.
So why would we need another one? Well, I believe there are several reasons.
For PMBs, price is really the most important factor. Lack of competition means that prices can be kept artificially high by lack of options for those that wish to take part in mining without having to manage, host, and bear the risk of physical mining hardware. Simply having more options will ensure that prices stay competitive.
PMBs also need to be a real alternative to owning mining hardware. They don’t need to be cheaper (and cannot, due to the operator still needing to buy the hardware to mine) but they do need to be reasonably competitive. BFMines is priced just below ASICMiner’s Blade Erupter ASIC blades which are the only currently available ASIC miners widely available (priced at 0.005BTC per mh/s), but not lower than the cheapest alternatives out there.
Further, I intend to run this asset as I would like to see other cryptostocks run, with proper information management and investor relations. Even the big dog in the pen, ASICMiner, doesn’t have a web page and other assets lack in their information management by quite a lot, to put it mildly.
The first step in this is the new web pages at http://bfmines.com/ where I’ll be posting updates on status, contracts, descriptions, and so on so that new or potential investors can learn about their investments.
I hope this operation can serve as an inspiration for other asset operators to take their investors more seriously. To me, it’s a matter of pride and a sign of appreciation for those investors that choose to trust me with their money.
What Are the Catches?
There are a few things of which you should be aware, though.
BFMines is not scheduled to start operating immediately. In fact, the mining operation is backed by hardware that doesn’t exist yet!
Does that scare you away? Don’t worry, I’ve put failsafes in place to protect your investment and compensate you for the delay.
First, any funds received during the IPO phase will go into an escrow account held by the exchange operator of BTCT (where the asset is listed). This means that the funds are locked until the time when the mining hardware arrives and has been proven to operate as expected.
If that does not happen, you get all your funds back.
Second, the mining hardware runs well above the amount of hashing power that the asset consumes. The assets sold are limited to 100GH/s but the miner is rated for 120GH/s. The surplus capacity will be used to cover operational expenses but anything abode that will be paid out as a bonus dividend for the first six months of the operation.
Note: The exact amount depends on the final operational parameters of the equipment, which hasn’t been set in stone yet.
Finally, and this doesn’t apply specifically to my asset but to all PMBs and mining hardware, difficulty may rise quickly rendering the investment less profitable than it appears initially. There’s nothing I or any individual can do to affect this, so you should make absolute sure you make the best estimated you can about future difficulty before you invest in this asset, other PMBs, or buy hardware.
Where Can I Buy BFMines?
Right now, BFMines is still awaiting peer review before it is approved at BTCT. Until then, there really isn’t much you can do to buy shares.
However, once the asset is approved, I’ll announce it here on my blog and also on the official pages and in the Bitcointalk thread for BFMines. I’ll leave a few days for investors to place initial bids (listing will be at 0.004 BTC per share) and then I’ll release the shares for trade.
When that happens, you can buy shares on the official BTCT BFMines asset page.
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