Author Topic: [LTC-GLOBAL] BUY-A-HASH  (Read 277192 times)

Offline Deprived

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #30 on: May 11, 2013, 12:19:12 PM »
A few questions:

1.  You've set the initial price at 0.3 LTC per bond.  Is that price remaining fixed during initial sales or will it adjust if the exchange-rate moves significantly?  At present the contract doesn't specify which - and it should.  If exchange-rate moves a lot then selling at same price (in LTC) has potential issues (e.g. if LTC falls a lot vs USD then you no longer raise enough per bond to deliver the promised hash fater costs).  I'd recommend fixing the price to LTC equivalent of $1.

2.  Can't you just run it with a guaranteed pay-out?  e.g. 0.5 Kh/s per share.  As its stands you'd have to produce a whole ton of accounts for anyone to be able to verify that you were meeting contractual obligations - i.e. that ALL money raised from bond sales was being spent to the benefit of bondholders.  That's not desirable either for you OR for investors.  You have to treat bond-raised funds as segregated from remaining capital and allocate/explain costs such as HVAC across bond-capital and other capital in an equitable manner.  And bond holders can't predict their income - if more shares sell then presumably it falls until hardware purchased with that new capital is deployed.  We've seen one attempt at this hybrid bond/share thing already - Triple B.  And it's a total abortion with zero transparency and no way for investors to figure out what was done with their money.  I'd seriously recommend either issuing a bond (with defined payouts regardless of what the capital is sued for) or a share (not really an option when you're already well underway).

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #31 on: May 11, 2013, 01:23:40 PM »
I'll go ahead and alter the contract to include the adjusted bond price. I had thought of that, but was unsure how to best state that.

The contract now states:

Quote
The goal of the bond offering is to buy, build, and maintain a large amount of computer hardware, primarily focused on Scrypt-based currencies. We plan on mining the most profitable currencies with this bond offering, then converting said coinage to LTC for dividend payments.

We have selected 0.3 LTC per share as an optimal number, which translates to approximately $1.00 USD at this point in time. We estimate that $1.00 USD will produce approximately of 1 KH/s of power, once all other factors are considered (such as ancillary equipment, electricity, HVAC, lease costs, ect). Should the price of Litecoins vary significantly, we will adjust the sell price of the bond to equate to $1.00 USD.

As for the guaranteed payouts, I have no qualms with pegging it exactly at 0.5 KHs. My only issue with it was that my goal is to exceed that amount. But if others agree that it should be pegged at 0.5 KHs, then we can easily adjust the contract to state that.

« Last Edit: May 11, 2013, 01:27:54 PM by Benny »

Offline Deprived

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #32 on: May 11, 2013, 10:47:08 PM »
I'll go ahead and alter the contract to include the adjusted bond price. I had thought of that, but was unsure how to best state that.

The contract now states:

Quote
The goal of the bond offering is to buy, build, and maintain a large amount of computer hardware, primarily focused on Scrypt-based currencies. We plan on mining the most profitable currencies with this bond offering, then converting said coinage to LTC for dividend payments.

We have selected 0.3 LTC per share as an optimal number, which translates to approximately $1.00 USD at this point in time. We estimate that $1.00 USD will produce approximately of 1 KH/s of power, once all other factors are considered (such as ancillary equipment, electricity, HVAC, lease costs, ect). Should the price of Litecoins vary significantly, we will adjust the sell price of the bond to equate to $1.00 USD.

As for the guaranteed payouts, I have no qualms with pegging it exactly at 0.5 KHs. My only issue with it was that my goal is to exceed that amount. But if others agree that it should be pegged at 0.5 KHs, then we can easily adjust the contract to state that.

Well there's nothing wrong with guaranteeing 0.5 KHS PPS equivalent minimum - then if you want to pay more do so but you aren't obliged to and don't need to produce detailed accounts justifying payments.

If you think through how you'd allocate EVERY payment partially to the bond you'll see why it's not a good route to go down.  Plus if you try to account for the bond seperately (which you MUST do if payments are calculated for it based on performance) then it gets really m essy if you start doing things like putting a board that wasn't bought for the bond into a machine that otherwise WAS paid for by the bond - e.g. if the PS on that machine then fails is replacing it 100% a cost to the bond or some smaller percent?

Bonds shouldn't require detailed accounts - they should pay out a predetermined amount with no reference to actual performance needed to calculate it.  It's one of the beauties of selling them - that you don't have to account for everything you to do other people.  As it stands you can make decisions yourself - but then have to account for everything in detail to demonstrate that bond-raised capital was used only for the benefit of bondholders.

By making your offering into a more 'pure' bond you remove that need.  I'd suggest starting it at a flat .5 KHS/bond then if things go well you could look at increasing it when you released a new batch - which would allow you to measure performance across your whole installation when working out profitability.  And that gives you more flexibility - as you can move boards around as you see fit without having to remember which 'belong' to the bond.

Only issue then becomes close-down procedure.  In a traditional bond, full face value would be returned (as is the case with my own non-mining LTC-ATF.B1 bond).  To do that you have to price in depreciation when working out the dividend schedule for bonds - which I'm not convinced you've actually done.  i.e. in a few years time when all the boards have failed, where is the hash-power coming from to keep servicing the bonds?

If you think of it as a loan - which eventually has to be repaid - then you're approaching the concept of bonds in the right manner.  Bonds are debt - not equity (as is the case with shares).

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #33 on: May 12, 2013, 12:09:01 AM »

Well there's nothing wrong with guaranteeing 0.5 KHS PPS equivalent minimum - then if you want to pay more do so but you aren't obliged to and don't need to produce detailed accounts justifying payments.

If you think through how you'd allocate EVERY payment partially to the bond you'll see why it's not a good route to go down.  Plus if you try to account for the bond seperately (which you MUST do if payments are calculated for it based on performance) then it gets really m essy if you start doing things like putting a board that wasn't bought for the bond into a machine that otherwise WAS paid for by the bond - e.g. if the PS on that machine then fails is replacing it 100% a cost to the bond or some smaller percent?

Bonds shouldn't require detailed accounts - they should pay out a predetermined amount with no reference to actual performance needed to calculate it.  It's one of the beauties of selling them - that you don't have to account for everything you to do other people.  As it stands you can make decisions yourself - but then have to account for everything in detail to demonstrate that bond-raised capital was used only for the benefit of bondholders.

By making your offering into a more 'pure' bond you remove that need.  I'd suggest starting it at a flat .5 KHS/bond then if things go well you could look at increasing it when you released a new batch - which would allow you to measure performance across your whole installation when working out profitability.  And that gives you more flexibility - as you can move boards around as you see fit without having to remember which 'belong' to the bond.

Only issue then becomes close-down procedure.  In a traditional bond, full face value would be returned (as is the case with my own non-mining LTC-ATF.B1 bond).  To do that you have to price in depreciation when working out the dividend schedule for bonds - which I'm not convinced you've actually done.  i.e. in a few years time when all the boards have failed, where is the hash-power coming from to keep servicing the bonds?

If you think of it as a loan - which eventually has to be repaid - then you're approaching the concept of bonds in the right manner.  Bonds are debt - not equity (as is the case with shares).

If interested parties want a flat, no-question 0.5 KH/s per bond issued, I don't have a problem altering the contract to state specifically that. Given the 0.1 KHs reinvestment clause, there is enough funding there to ensure that any hardware failures are covered by myself/the mining LLC, as that translates to about $780 USD/mo to put in a repair fund.

That should correlate to answer the failure question - with 0.1KHs being constantly reinvested into hardware, we can hedge against depreciation, especially as the most critical hardware has a 2+ year warranty (GPUs and PSUs have 2-7 year manufacturers' warranty, which take up the lion's share of costs). I've certainly thought about that issue, which is why I stated that 50% would go to payment, and set the issuance at 1.0 KHs per USD invested, as I know this is easily attainable.

If there are no qualms with altering the contract to state exactly that the bond is for a simple 0.5 KHs of PPLNS power to be distributed weekly, I will gladly do that. My only issue with it was if investors would believe that to be enough value. But at the same time, given the scams going on, I guess it would be much better than what is currently being offered.

Offline trommie

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #34 on: May 13, 2013, 12:29:57 AM »
Will the bonds retain a face value for buyback?

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #35 on: May 13, 2013, 01:03:25 AM »
Will the bonds retain a face value for buyback?

Absolutely - unless anyone suggests a more beneficial model that could be used.

Offline John Galt

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #36 on: May 13, 2013, 03:23:44 PM »
My main complaint about the registration is the CONTRACT section. The CONTRACT section is supposed to be be CONTRACT. It has a lot of fluff and very few details. It must specify all of the issuer's obligations to the shareholders. A mining bond (which isn't really a bond) is pretty simple:

1. What is the dividend? When and how often is it paid? How is the dividend amount determined?
2. What is the collateral for the bond?
3. What do the bondholders get if the company closes or mining stops?
4. Is the bond callable? If so, what are the details?
4. Any other obligations and promises that you want to make.

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #37 on: May 13, 2013, 03:58:39 PM »
My main complaint about the registration is the CONTRACT section. The CONTRACT section is supposed to be be CONTRACT. It has a lot of fluff and very few details. It must specify all of the issuer's obligations to the shareholders. A mining bond (which isn't really a bond) is pretty simple:

1. What is the dividend? When and how often is it paid? How is the dividend amount determined?
2. What is the collateral for the bond?
3. What do the bondholders get if the company closes or mining stops?
4. Is the bond callable? If so, what are the details?
4. Any other obligations and promises that you want to make.

When signing up for issuing the asset, the section requested the following information:

Quote
Set a reasonable goal for your business!

My goal is:

Have step by step detailed plans for success!

To reach that goal:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until I succeed.

Have a plan for failure!

If I fail:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until everyone has their investment back.

Protect your shareholders!

I will NOT screw you by:
  a) Issuing more shares without passing a vote.
  b) Spending your money on anything other than what I say I will.
  c) Significantly changing the asset without a vote.
  d) Giving up when the going gets tough.
  e) etc...

This is exactly what I filled out in this field. I have no problem offering a formal contract in that field, but as per the statements made inside the asset issuer TOS, I filled out exactly what it wanted.

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #38 on: May 13, 2013, 05:04:30 PM »
FYI, I did add a section at the end which is the actual contract.

Quote
Mining bond between Buy-A-Hash (formally known as Coin Services, LLC) and bondholder

Upon the purchase of the bond, the issuer agrees to use funding to purchase hardware and systems related to the purpose of mining. As per conversion rates, each share is roughly equivalent to $1.00 USD (Initial issuance = 0.3 LTC/Share).

Each share entitles the bondholder to 0.5 KHs of consistent mining power, to be deployed within 3 weeks of the bond issuance. All purchased hardware is pooled together to mine for the bondholder, with excess capacity as profit for the bond issuer, Coin Services LLC / Buy-A-Hash.

The issuer agrees to shoulder the burden of hardware replacement, electricity, and other associated maitenance costs.

The dividend is to be distributed weekly to all bondholders, based on the current amount of hardware deployed for the purpose of mining. Therefore, a new bondholder will recieve dividends upon the first available payout date.

Collateral for the bond is based on assets held by the LLC, which include, but are not limited to:

    Liquid capital
    Currently deployed hardware
    Undeployed, but held hardware

Bond Redemption in Case of Market Collapse, or Dissolution of Mining Program / LLC

In the event of catastrophic collapse of cryptocurrencies, or unforseen circumstance with Coin Services, LLC, we will make any and all attempts to liquidate assets owned by bondholders. Upon liquidation, we will make all attempts to repay bondholders in cryptocurrencies, or fiat, whichever is preferred by the bondholder, up to the full purchase price of the bond ($1.00 USD/bond)

Additionally, we reserve the right for the bond to be callable, at no less than 120% of the purchase price.

Price and Share Issuance

Initially, our goal is to seek up to $50,000 USD in funding. Should the market see growth or decline in regards to USD, we will remove or issue additional shares to ensure that each share is applicable to 1 USD, and 0.5 KHs of hashing power.

Dividend Variance, PPLNS Mining

Mining rigs will be deployed to various pools, based on uptime and lowest fee. We typically will select PPLNS pools. This may cause some slight variance in regards to payouts due to luck. We guarantee that any and all dividends will be within 10% of shares issued multiplied by the hash offering rate (0.5 KHs), and the difficulty. This variance is based on pool luck. Should the pool see a worse variance than 10%, the asset issuer will eat the costs to ensure proper dividend is made. Additionally, should the pool see a more favorable variance than 10%, then issuer will retain that share for when variance harms the dividend.

That should help answer questions and provide further definition. This is what I wanted to put inside that section, but was unsure if it was appropriate - I guess with the questions being asked, it makes sense to add it formally to the details.

Offline burnside

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #39 on: May 13, 2013, 10:56:01 PM »
Quote
Set a reasonable goal for your business!

My goal is:

Have step by step detailed plans for success!

To reach that goal:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until I succeed.

Have a plan for failure!

If I fail:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until everyone has their investment back.

Protect your shareholders!

I will NOT screw you by:
  a) Issuing more shares without passing a vote.
  b) Spending your money on anything other than what I say I will.
  c) Significantly changing the asset without a vote.
  d) Giving up when the going gets tough.
  e) etc...

That definitely could use some refinement.  ;) 

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #40 on: May 13, 2013, 11:50:01 PM »
Quote
Set a reasonable goal for your business!

My goal is:

Have step by step detailed plans for success!

To reach that goal:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until I succeed.

Have a plan for failure!

If I fail:
  a) I'll do this...
  b) Then I'll do this...
  c) Then I'll do that...
  d) Until everyone has their investment back.

Protect your shareholders!

I will NOT screw you by:
  a) Issuing more shares without passing a vote.
  b) Spending your money on anything other than what I say I will.
  c) Significantly changing the asset without a vote.
  d) Giving up when the going gets tough.
  e) etc...

That definitely could use some refinement.  ;)

Yeah, it threw me for a loop, thus why my contract was full of fluff and descriptions of what I planned to do, rather than a contract.

May make sense to revise the "Contract" into two separate components: a business plan, and an actual contract agreement between share/bond holder and the issuer. May help with the confusion (or maybe I am easily confused, ha ha).

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #41 on: May 15, 2013, 05:41:56 PM »
Just a quick note:

We're getting ready to finish paperwork for the commercial building we're planning to deploy the systems to. As per our last discussion, it seems they may be able to move the timetable up for us to move in, even earlier than June the 15th.

Hopefully, this meshes with Litecoin Global voting, and we can sync everything up. We should have enough electric/HVAC capacity to handle a few more units than we currently have deployed. We've already talked to contractors about installing 400 amp service for project expansion. Should that go through, 400a should allow us to add ~200 MH of capacity, if not more (including 25% of electric costs for cooling).

Offline Carnth

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #42 on: May 17, 2013, 08:33:21 PM »
I just want to clarify some things from the contract:

Quote
As per conversion rates, each share is roughly equivalent to $1.00 USD (Initial issuance = 0.3 LTC/Share).

Is it "roughly" or is it always = to $1 USD?
If it's equal to $1 USD, I would remove any estimated costs in LTC in the contract. (The contract portion in the asset details becomes read-only after the first share is sold.)

How often will you adjust prices as the shares are sold to reflect the current LTC/USD value?

On the buy-a-hash website, it states that $1 can get you about 1KH/s, but your bond only guarantees 0.5KH/s can we expect more hashes from this bond?

Offline Benny

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #43 on: May 17, 2013, 09:07:03 PM »
I just want to clarify some things from the contract:

Quote
As per conversion rates, each share is roughly equivalent to $1.00 USD (Initial issuance = 0.3 LTC/Share).

Is it "roughly" or is it always = to $1 USD?
If it's equal to $1 USD, I would remove any estimated costs in LTC in the contract. (The contract portion in the asset details becomes read-only after the first share is sold.)

How often will you adjust prices as the shares are sold to reflect the current LTC/USD value?

On the buy-a-hash website, it states that $1 can get you about 1KH/s, but your bond only guarantees 0.5KH/s can we expect more hashes from this bond?

I will adjust prices if and when they change 10% or more from the base price over a period of 3 days (to prevent variance/pump and dump).

On the website, we state $1 per KH if we're selling the rig to the end user - so we have no maintenance costs or electric wrapped up in that price. 

I updated the contract, and included the price clause based on a 3-day median value of LTC (1 bond = $1 USD).

Offline Carnth

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Re: [LTC-GLOBAL] BUY-A-HASH
« Reply #44 on: May 17, 2013, 09:28:04 PM »
It's live.