Great question. Its possible that the impact of the halving may be offset by higher bitcoin prices as there are less newly issued bitcoin hitting the market from miners. However in the long run its our belief that higher cost miners will likely go offline and only the most efficient will remain. Slide 27 in our presentation illustrates our analysis of what may happen in the short run http://www.btcs.com/deck-new.pdf. The pending merger with Spondoolies brings together leading edge IP, an amazing technical team and the operation expertise on the deployment side. We outline our competitive advantage on slide 22.As a company that is actively mining bitcoin, how will the reward halving in 2016 impact your strategy this year?
The majority of our current revenue is derived from our mining operations and we have seen tremendous growth in this segment. Our facility in NC has 3mw of power available and we are only using about 0.65mw so we have the capacity to scale to 3mw with negligible build-out costs. Moreover using the 3mw currently available would still only occupy about 1/6 of the building so we have ample room to further expand. In terms of the $1.5m convertible note there are three options to full fill our obligations: 1) repaid it with cash flow from operations, 2) convert to common stock, or 3) repay it with proceeds from an offering (the note becomes payable within 3 days of completing a fully underwritten offering). We have been tirelessly working to address SEC questions on our resale S1 which we initially filed in June of 2015. All the shares covered by the resale S1 are freely tradeable pursuant to rule 144 and are already included on the share count so its non-dilutive. The purpose of pushing so hard on the resale S1 is clear any questions the SEC may have such that we may do a primary offering potentially in connection with an up-listing to the NYSE or Nasdaq. If BTCS clears an S1 with the SEC we will be the first company in the industry to do so and likely set a precedence as to certain disclosures.First, thank you for publicly taking questions.
I have a few questions about cash flow: mining generates some cash, but only in the range of hundreds of thousands of dollars. How else does the company generate cash flow? How does it intend to raise the funds necessary to repay the $1.5m recently borrowed?
Also, when do you think the Spondoolies merger will be completed? Selling their products would generate good cash flow.
Also, do you still see the company as a private equity fund? Have any investments been sold?
The main constraint to growth is capital. Bitfury has raised $60m, KNC has raised $30m and BTCS/Spondoolies on a pro-forma combined basis has only raised about $16m. Our business model should work extremely well at scale (if we are cost competitive and depending on the price of bitcoin) however getting to scale requires additional capital. Much of our efforts in 2015 was putting the pieces in place to allow for rapid growth. Ideally we would expand well beyond 3mw.Wow! That is all very informative - thank you.
What stands in the way of ramping up mining to the full 3mw capacity? Is the constraint lack of mining rigs?
I have come to think it's a very relevant question and you can better weight people's opinions having an idea of how many Bitcoins they hold (or do not hold.) So Instead of asking their opinion on bitcoin, I'm now asking every participants the same question:"Never ask anyone for their opinion [...] Just ask them what they have -or don't have- in their portfolio"
Fair question. I currently have limited holdings in bitcoin. The main use case for bitcoin is speculation and the belief it will go up. I'm very optimistic that mass adoption will occur for bitcoin as a currency but it will take time and will likely start in areas with limited banking options and happen when volatility comes out of the market. Additionally, bitcoins value may be driven by the value the blockchain can create in securing distributed applications.Hello Charles, happy new year
my usual question:
I was re-reading Antifragile by iconoclast thinker Nassim Taleb recently. He writes
- Do you mind to tell us which percentage of your personal net worth and/or liquid assets you hold in Bitcoins ?
The delay has been a function of capital. We were seeking $5m in funding per Slide 6 of our October corporate presentation which we filed with the SEC on 10/26/2015. We raised much less ~$1.4m on 12/16/2015. A good comparison to mining are smart phones they have a short product life and innovation is rapid. Apple has been able to do very well with the iphone because they have the right team to design / build and have a great reputation with consumers. In my opinion ASIC servers are similar to smart phones in terms of product life cycle. Most importantly though I believe companies are built by people and between Spondoolies and BTCS we have a truly amazing team which is well positioned to innovate for the long run despite any short term delays.Charles,
It's well know the pace for Bitcoin tech greatly varies depending upon the part of the market being covered. But when it comes to mining it's break neck or you're left behind with many expensive paperweights.
Spondoolies announced their SP50 rig back in September and began taking emails for bulk purchases. The video posted above dated October 7th shows the NC facility preparing for SP50 equipment. With this in mind...
What has held back delivery?
Is everything still on track for the NC facility to have around ten or more SP50's rolled out by the end of January? (Per the additional hash power expected to be added in January. --12/22/15 IR email.)
If so, what is the estimated lead time and schedule for additional mining equipment to be added provided capital increases as needed?
I appreciate the time you've taken to do this AMA and look forward to additional information and videos as they become available.
First off thanks for being a supporter and shareholder of the company. Unfortunately I have to give you a vague answer. Basically it depends and will change especially over the next 1-5 years. Currently there are no hedging mechanism with acceptable counter party risk. We therefor can't go long with downside protection as we need to cover FIAT expenses for ongoing operations. Mining works best at scale and when vertically integrated; both Bitfury and KNC have proved out this model. If we're successfully able to scale our business, and we believe we have built the foundation to do so, we'll have much more freedom to evaluate the appropriate level of bitcoin we want to carry on our balance sheet.Charles,
Thanks for doing this AMA. I am currently a shareholder in your company. I was curious as to what percentage (if any) of the bitcoins you mine are you NOT converting to fiat currency and just keeping on balance sheet as an Asset. I am trying to get a handle on potential market value of company, if bitcoins increase in value over the next 5 years.
Not familiar with the X11 chips so I don't think it's in the cards. As for the GoCoin questions they are better suited for GoCoin. It wouldn't be appropriate for me to discuss their business on a forum.Nice to have you here!
Does spoondlies tech plans on going for other algos ie the infamous X11 chips ?
What are plans for GoCoin to monetize or take the spot Blockchain has?
Can you describe a bit how the referal program fo GoCoi nworks?
It would be great if the US government subsidized mining but I doubt it will happen.@Charles, Thanks for all you are doing in the space!!
I would like to see the US Government heavily subsidize mining here in the USA. I mean HEAVILY!!! Tax exemptions, free land, grants, university funding etc!!! How do you feel about that?
Many things become centralized over time (straight from James D'angelo's mouth (https://youtu.be/_RC8wEL2r9s). Is it possible that with Bitcoin we see never ending swings from decentralization to less decentralization, never developing a status quo?
PM me and I'll get you a ride in the Pilatus PC12. Fun little plane. Also would you like to do a "Hangout" for a few minutes at our February Bitcoin Meetup? We are a small group... usually about 30 to 50 people show up to the meetups but we are growing fast and we are seeing adoption in our area with recent media attention. Let me know.As a side note and in the essence of keeping things informal I'm a pilot as well (single engine land and glider).
Thanks happy to remotely join a meet up. Will PM you.PM me and I'll get you a ride in the Pilatus PC12. Fun little plane. Also would you like to do a "Hangout" for a few minutes at our February Bitcoin Meetup? We are a small group... usually about 30 to 50 people show up to the meetups but we are growing fast and we are seeing adoption in our area with recent media attention. Let me know.As a side note and in the essence of keeping things informal I'm a pilot as well (single engine land and glider).
Thank you for the video!Through our pending merger with Sponoolies we plan to vertically integrated our mining operations. As a combined company we would design, build and deploy mining hardware. As a public company its our responsibility to create value for our shareholders so yes we plan to profit from the mining. We also plan to sell mining equipment to the public to ensure that the blockchain remains decentralized.
More information on our strategy can be found in our corporate presentation here: http://www.btcs.com/deck-new.pdf
You can also see a tour of our mining facility below:
I see you are expanding your mining operations.
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See Interior Build-Out Video 3/16/16 at: https://youtu.be/71lkTegoBgU
David, I noticed you asked this question in a pretty old "Ask Me Anything" so being unsure this is monitored by Charles Allen (BTW if you are reading this Charles Hello, Hope all is doing well... would love to have you back again for a hangouts session... we are doing better now with the live video) I will answer your question best I understand it.Hi, good evening Charles,
when I get onto bitcoin.com, the first step asking is to select a wallet, then select an exchanger. The question is, are there differences between a wallet selected from what is provided on the bitcoin.com and the wallet of a exchanger in which I have a account?
Thank you in advance and have a good weekend!
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