Since October of 2014, the Bit from the Block Project has been operating as a unique, diversified and member driven mining project. The whole purpose behind the concept of the BFTB project was to provide an avenue for people who wanted to be part of the Bitcoin mining race but for several reasons were not currently involved. Whether they could not afford to purchase and maintain the hardware themselves or if they just did not know which “cloud mining” sites to trust after several industry fly-by-night “mining” companies disappeared with members’ funds. BFTB became a unique entity and a stand-out option within the industry.
As with all start-ups (especially in the Bitcoin mining industry) BFTB was met with waves of skepticism, questions and doubt. At the start, I could not provide a ton of answers but I was confident in the business model so I just asked people to wait and see before joining the project if they had doubts in me or the project model. Actions speak much louder than words. Well… here we are, 14+ months later. BFTB escaped the collapse of Coinsortium.co with good strategic planning and foresight, BFTB established itself on the NXT Asset Exchange, BFTB has close to 100 individual members, BFTB has deployed over 20,000 gh/s of Bitcoin mining power, and BFTB was able to maintain operations when BTC hit lows of under $200 per coin while many other much larger mining providers ceased operations.
With the Bitcoin industry starting to go mainstream, financial laws and regulations are bound to follow swiftly. To this point, I have not pushed the growth of the BFTB project too hard because there is no formal legal structure or reporting guidelines currently in place. Again, the purpose of the BFTB project was to help you, the miners, not for me to make profit. Over the last year or so, I have not taken any profit from running this project. 90% of generated revenue has gone back to project members with the remaining 10% being reinvested into mining operations. This type of approach has allowed for slow organic growth and creation of a fundamental and loyal member base but it has its limitations in terms of true long term growth.
So… what is the point of this email?
The BFTB project has been approached by an outside investor who is interested in helping bring this project to a legal standard in which it could truly thrive and provide a benefit to those involved over the long term. This investor has offered to cover any and all legal fees required to properly launch the business. Over the coming weeks, I will be in discussions with a team of lawyers as well as accountants in order to figure out the best way to legally structure this “project” to formally turn it into a business. By incorporating into a legal entity, it will provide a level of transparency as well as accountability for the operations and earnings that we as a member base generate. I do not think this process will be a fast one because I would like to make sure that the BFTB is structured in a way that we are covered and operating 100% legally under the few current laws, which would make it easy to adapt to any new laws that may come out in the future as Bitcoin and the Blockchain technology grow in acceptance.
What does this mean for current BFTB members?
Over the coming weeks while discussions of a proper legal and tax structure for the BFTB project are being held, a couple things will be going on for current members.
1) Dividend payment structure will change slightly. Dividend payment rate will drop to 80% of total revenue generated. 10% of total revenue generated will still be re-invested in mining power. The final 10% of revenue generated will be used for an “expense fund” for upcoming and unforeseen expenses that may arise during this legal re-structuring and that may not be included in the scope of our outside investor. Any additional BTC left over from the “expense fund” at the end of the re-structuring will be reinvested into mining power to increase revenue generation.
2) BFTB will start to re-purchase shares at fair market value on the asset exchange. If you are not interested in waiting to see how this project turns into a legitimate business, an easy out will be provided for you. Simply post your GH for sale on the NXT Asset Exchange through your local wallet and BFTB will begin purchasing GHs back at its discretion. Alternatively, send an email to [email protected]
with your current amount of shares as well as asking price per share. BFTB has the right to deny or accept any rate deemed fit for repurchasing the shares.
3) For those who are interested in remaining a part of BFTB and are willing to wait for the re-structuring, a coupon type program will be developed where you can trade in your current BFTB mining power for a voucher to obtain a new mining contract with the formal organization. The details of this program have not been worked out yet but will be part of the discussions with the legal and tax teams.
I will in no way be leaving BFTB nor will I allow it to be turned into something it is not. This legal restructuring is contingent upon me remaining as the director of operations/CEO of the new company. Although this may not be what some members want to hear, I truly believe it is the best course of action for the BFTB project in the long run as well as for myself to be shielded from any legal or tax ramifications down the road since we are currently operating in a legal “gray zone”.
What are the next steps after the restructuring?
After BFTB has been restructured into a legitimate organization, the next step will be to launch a real website, not what we currently have had to make do with. The goal will be to have everything we have been talking about over the last year… Built in message board, built in ROI tracker, built in buy/sell marketplace, and more. Longer term goal will be to move into a much larger mining facility as well. While we have almost 20 Kw worth of electrical capacity at the currently facility, the goal will be to get closer to a 100kwh capacity facility to implement more hardware and rely less on outside cloud mining providers so we can get more aggressive on per GH pricing as well as per GH maintenance costs.
I am sure over the coming weeks there will be numerous questions, suggestions, comments and concerns about how the BFTB will be moving forward. I will address and answer as many as I can and I will attempt to get a FAQ page posted to our current message boards with some answers to the most common questions. As always, please feel free to contact me directly at [email protected]
or pm me on Bitcointalk @ “Dr Charles”, Litecointalk @ “DrCharles”, Nxtforum @ “DrCharles”, or HashClub @ “DrCharles”
I am extremely excited to take this next step with you guys and I greatly appreciate the support and good feedback I have received thus far for running this service.