Author Topic: [LTC-GLOBAL] CIPHERMINE Industrial Cryptocoin Mining & High Perf. Computing  (Read 94253 times)

Offline WoodTech

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I'm pleased to announce our new security, CIPHERMINE, listed on Litecoin Global. CipherMine is a joint venture between leading British IT entrepreneur Kate Craig-Wood (aka. woodtech), founder and CEO of Memset, Giles Russel (aka. evilscoop) the man behind EvilMiners, and two systems administrators at Memset.

Please view the security here. We have completed both rounds of our IPO in astonishingly little time; the second at the higher price of 0.9LTC/share sold out even faster than the first found! We have now put all planned reserves (20,000 shares) on the market. Thank you to all our investors!

The latest version of the full business plan can be downloaded from docs.ciphermine.com, an excerpt of which is below. Although we are quoted in LTC our principal operation will be SHA256 mining using ASICs and FPGAs.


Executive summary

CipherMine is a virtual cryptocoin mining business. All shares are listed on on the LTC Global exchange.

1.1 Goals

  • To provide a vehicle through which Litecoin (LTC) can be invested in mining cryptocoins.
  • To give shareholders a high, reliable, long-term return on investment via regular dividends and equity growth.
  • To aggressively invest in ASIC mining hardware to maximise early-mover advantage.
  • To promote LTC and the LTC Global exchange as a good alternate to Bitcoin (BTC) and associated crypto-exchanges by being successful, and in doing so encourage a growth in value of LTC similar to BTC's.
  • To operate in a sustainable and environmentally-friendly manner.

1.2 Strategy summary

CipherMine is already in operation, at present mining LTC with a combination of heavily discounted CPU resources and wholly owned GPU rigs. We wish to diversify into BTC mining and have an aggressive strategy of reinvestment in hardware. Although our models and discussion herein focus on LTC and BTC, we intend to apply our scrypt and SHA256 clusters to whichever coins are most profitable at any given time.

We have chosen LTC-Global since there is currently a dearth of mining companies on that exchange and because we believe that by being successful we can encourage LTC and LTC Global to become a main stream cryptocurrency and exchange with similar value explosions to that witnessed with BTC and shares on the BTC Trading Co exchange.

We shall invest 50% of profits back into hardware, as well as a 3-year straight-line amortisation / depreciation of existing hardware, and pay our 50% of profits as dividends. We have a detailed business model and forecast (available on request), the dividend forecast from which is shown in the figure 1.



The assumptions used (see detail below) are conservative. Most importantly, we assume that BTC mining productivity will decrease significantly due to difficulty increasing, and have based our difficulty forecast on the last two months trend. We also assume a fixed price for both LTC and BTC. Should they appreciate, as we expect, then our profitability will rise significantly. We shall be doing our accounting in Euros, not cryptocoins, though dividends will be in LTC.

1.3 Key strengths / differentiators and assets

  • An outstanding, publicly visible principal with a wealth of technical and business expertise, backed up by a superb team of professionals with demonstrable experience.
  • A carefully considered, detailed and realistic business plan and model showing the growth potential.
  • 750 Avalon SHA256/BTC-mining ASICs on order (~230 GH/sec, delivery lateJuly - early August).
  • 100 SHA256/BTC-mining FPGAs on order (~24GH/sec, delivery late June).
  • We have the following arrangements with Memset Ltd:
    • Use of their ultra-efficient, high-security (to British government standards) data centre for which CipherMine will only be charged power at cost (and there is a lot of spare space).
    • Use of the spare compute in their virtual machine estate with a minimal at-cost charge.
    • The expectation that they will purchase end of life GPU rigs from CipherMine for use in their GPU cloud.
  • Four quad-AMD 7950 GPU LTC mining rigs deployed (one mid-build).
  • Cluster of 40 VMs LTC mining with Memset's spare compute (expandable).
  • A proprietary, scalable software suite for the automation of mining workers as well as auto-selection of best value cryptocoin to mine and automatic conversion of alternate cryptocoins into LTC.



News

No longer being actively updated - please see the security's news page on LTC Global for the latest updates.

24 Jun 2013: First 80 SHA256 FPGAs delivered

We have recieved our first batch of 80 Ztex 1.15x clone SHA256-mining FPGA boards. Some pictures are below, apologies for the shakiness - was a phone camera! We've since packed them up for transport so not had a chance to take better ones, but will post more in a few days.





We are testing them in batches of 10 at present. Unfortunately we only have 10 mini USB cables due to a slow shipment, but according to Amazon they have been dispatched and will arrive in the next few days soon after which we will be able to get all 80 crunching on SHA256. We already have the necessary power cables and just need to rig up some fans (the little ones they came with are inadequate and we are removing them).

Each stack of 10 boards is producing 2.0 - 2.25 GH/s, so 16 - 18 GH/s in total (~0.44 BTC/day, or ~16 LTC/day with current conditions). Giles thinks we can coax a little more out of them with a firmware upgrade, some more overclocking and the aforementioned improved cooling arrangements.

Kate.


26th Jun 2013: Jan, Private pools, Diversification and PR

Dear All,

I have updated the CipherMine business plan to take into account recent developments. Please download version 1.05 from docs.ciphermine.com. The pertinent changelog entry is pasted below. Three items are of particular note:

1) I am delighted to announce the addition of Jan Heinicke-Clemm (aka. JohnDorien on bitcointalk.org) to our team. Jan is a competent, multi-disciplinary IT specialist with skills in programming, systems administration and electronics engineering. In the near-term he will be helping me with software development, in particular putting up private pools (see section 5.1.8 ) for our alt-coin mining. Once this is complete the first tranche 500 shares will be released to him. The second 500 will be release on or before 15th August once we have verified his merit. Those shares are coming from my personal allocation so no-one is being diluted.

2) Today I had a conversation with my PR agent, Katie Olver, about CipherMine. She is extremely excited and thinks that with the interest around bitcoins at the moment she can get us coverage in national British newspapers. This is part of a strategy to raise awareness of the security in hopes of boosting share prices (see section 4.5) and making it easier to raise money in the future should we need to. It will also ultimately help our diversifications (see section 5.2). Katie is calling her journalist contacts tomorrow (PR people are always so impatient! ;) so there is a chance that things could get "interesting" in the next week or so.

If it does look likely that we're going to get some good coverage then I will be "forking" the busines plan to modify a couple of elements and removing previous versions. Please retain a copy of v1.05! It will remain available to shareholders via a mechanism yet to be determined. Further, if you are a shareholder then please keep a close eye out for announcements in the coming week or two - we may need to act quickly and I will want to involve you.

3) We have purchased BTC with the 15,667 LTC raised in the IPO rounds and have placed an order and paid for for an additional 2,500 Avalon ASICs with Steamboat. There will be more hardware purchases in the next few days. This should nor mean that we are ahead of plan (we assumed the IPO would take longer and the ASICs would be delivered later than the mid-August ETA).

Kate.


Changelog for release 1.05:

  • Added Jan (developer and electronics engineer).
  • Added detail to R&D diversificaiton section.
  • Expanded on software and mining pools section, including private pools plan.
  • Updated staff shareholdings.
  • Added preamble note to shareholder contract about successful IPO and how money is being spent.
  • Added section 4.5 (marketing and press relations).
  • NOTE: New hardware orders and timelines not yet put into the model - forecast should improve once done.
« Last Edit: July 17, 2013, 07:10:43 PM by WoodTech »

Offline killerstorm

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #1 on: June 21, 2013, 01:19:16 PM »
Is it profitable to mine Bitcoins on  FPGAs? What are you going to do when it won't be profitable anymore?

Offline killerstorm

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #2 on: June 21, 2013, 01:59:21 PM »
Why don't you let the market to calculate the valuation on its own, by offering shares via an auction?

It is possible to emulate it on a platform like ltc-global by offering shares in small portions with price of each offer being higher than the previous one.

E.g. the way it was done by BitBet.us on MPex: http://mpex.co/?mpsic=S.BBET

You can  see many 10000 share asks, each one having price 3% higher than the previous one..

I understand that you're giving early investors a favor by offering it at fixed price, but...

Offline WoodTech

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #3 on: June 21, 2013, 02:11:40 PM »
Is it profitable to mine Bitcoins on  FPGAs? What are you going to do when it won't be profitable anymore?

It is profitable to mine Bitcoins on GPUs at the moment! FPGAs use vastly less power so yes they are still very profitable. If you're buying at the current going rate, less so, but I'm a good negotiator. ;)

My hope is that we can repurpose the FPGAs for other HPC tasks as part of our diversification plans. Failing that they do have quite a good resale value so we can recoup some of their costs.

The model I have built suggests FPGAs will continue to be profitable for the next year at least.

Kate.

Offline WoodTech

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #4 on: June 21, 2013, 02:13:24 PM »
Why don't you let the market to calculate the valuation on its own, by offering shares via an auction?

In order to effectively model the business plan and provide realistic forecasts I needed to have a reasonable idea of how much we would raise at IPO. An auction would be hard to predict, and a key part of our offering is a robust set of forecasts.

Yes, this should favour early investors, but I see that as reasonable since they are taking the greatest risk.

Kate.

Offline Ethera

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #5 on: June 22, 2013, 08:25:00 AM »
So I understood correctly? you have 22k euros in value, looking to raise 30k more through 10 percent of shares? meaning you have less then you want to get and value it 9:1 what it will be? isnt it a bit of a ripoff on a huge scale? And to add that you will be calculating returns post electricity quote "Dividends shall be calculated as the 50% of the mining revenue after costs (hardware depreciation, power, etc)".. i fail to see how people will get anything back besides those holding the initial 90%.
« Last Edit: June 22, 2013, 08:28:53 AM by Ethera »


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Offline Ethera

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #6 on: June 22, 2013, 08:32:21 AM »
Plus this: A motion shall be considered approved on a majority of more than 50% of the shares (50,000 shares).
Meaning that only your voice (how your 100k shares are distributed, with you getting 65%) counts. Isnt it a bit harsh? meaning that motions in here basicly are a joke and just your public stunt?


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Offline killerstorm

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #7 on: June 22, 2013, 09:12:12 AM »
So I understood correctly? you have 22k euros in value,

22k euro is just the cost of equipment/parts they have ordered. Once they will assemble these parts into mining rigs, value of those mining rigs will be much higher, of course.

Manufacturing and hosting these rigs requires labor and expertise, which are not free, that's why Kate and others get their shares: they are compensation for effort they'll put into it.

Here's an analogy: Suppose there is a person who can make $10 figurines out of pieces of clay worth $1. He currently has $50 worth of clay and wants you to buy $50 worth more, so that he can manufacture and sell figurines with total value of $1000. In return you get 10%, i.e. $100.

This is a good deal because you can double your money. But if you use reasoning you've used above, it is a bad deal because you get only 10% of profit when you cover 50% of raw material costs, an obvious rip-off.

I guess you saw it this way because you think it is similar to Litecoin mining, where one can just buys parts in store and assemble a mining rig in matter of hours.

But it is very different with ASIC miners: ones which are readily available are sold with insane markup, and people were waiting for like an year to get some at reasonable price. So getting ASICs at reasonable price in reasonable time frame is an art of its own.
« Last Edit: June 22, 2013, 09:44:06 AM by killerstorm »

Offline killerstorm

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #8 on: June 22, 2013, 09:20:38 AM »
Thanks for your replies, Kate.

On the auction: perhaps you can do it same way BFMINES is going to do it (check news of https://btct.co/security/BFMINES): they will wait 48 hours after asset is unlocked before they sell bonds.

This will let people to put their bids. If there are bids for more than 10000 shares, investors might start bidding higher to make sure they get shares. (If they think they are more valuable than IPO price.)

Then you can sell shares at fixed price you choose, but you get extra money from higher bids.

If there are no higher bids then you just sell at fixed price.

BTW it looks like contract says that price is fixed in LTC, but if you want raise certain amount of capital, won't it make more sense to fix it in EUR?

Offline Ethera

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #9 on: June 22, 2013, 10:45:39 AM »
Quote

I guess you saw it this way because you think it is similar to Litecoin mining, where one can just buys parts in store and assemble a mining rig in matter of hours.

But it is very different with ASIC miners: ones which are readily available are sold with insane markup, and people were waiting for like an year to get some at reasonable price. So getting ASICs at reasonable price in reasonable time frame is an art of its own.

lets not forget that by the time they start, the 3rd avalon asic batch gonna hit, the new russian asics hit, and the income curve that she predicts wont be anywhere close...
« Last Edit: June 22, 2013, 11:06:50 AM by Ethera »


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Offline killerstorm

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #10 on: June 22, 2013, 10:54:43 AM »
lets not forget that by the time they start, the 3rd avalon asic batch gonna hit, the new russian asics hit, and the income curve that she predicts wont be anywhere close...

It's possible, of course. If somebody can estimate profits independently, that would be great.

Offline WoodTech

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #11 on: June 22, 2013, 01:02:12 PM »
So I understood correctly? you have 22k euros in value, looking to raise 30k more through 10 percent of shares? meaning you have less then you want to get and value it 9:1 what it will be? isnt it a bit of a ripoff on a huge scale? And to add that you will be calculating returns post electricity quote "Dividends shall be calculated as the 50% of the mining revenue after costs (hardware depreciation, power, etc)".. i fail to see how people will get anything back besides those holding the initial 90%.

Read the business plan, and the comparison to BASIC-MINING (on BTC-TC) which has much less assets but a much higher value (the "IPO valuation discussion" secion). It is not just about the assets; it is about the infrastructure, the pre-orders (our ASICS start arriving in under a month), the people and the plan.

Your comparison is like saying that my main business, Memset Ltd, is worth the sum of the servers and data centre infrastructure we own. It is not; we are valued as a multiple of our earnings or even revenues. Our quoted peer group of hosting companies are currently achieving 7-8 times revenue, which equates to an even larger multiple of fixed assets.

Kate.

Offline WoodTech

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #12 on: June 22, 2013, 01:06:43 PM »
22k euro is just the cost of equipment/parts they have ordered. Once they will assemble these parts into mining rigs, value of those mining rigs will be much higher, of course.

Manufacturing and hosting these rigs requires labor and expertise, which are not free, that's why Kate and others get their shares: they are compensation for effort they'll put into it.

Here's an analogy: Suppose there is a person who can make $10 figurines out of pieces of clay worth $1. He currently has $50 worth of clay and wants you to buy $50 worth more, so that he can manufacture and sell figurines with total value of $1000. In return you get 10%, i.e. $100.

This is a good deal because you can double your money. But if you use reasoning you've used above, it is a bad deal because you get only 10% of profit when you cover 50% of raw material costs, an obvious rip-off.

I guess you saw it this way because you think it is similar to Litecoin mining, where one can just buys parts in store and assemble a mining rig in matter of hours.

But it is very different with ASIC miners: ones which are readily available are sold with insane markup, and people were waiting for like an year to get some at reasonable price. So getting ASICs at reasonable price in reasonable time frame is an art of its own.

Thanks for the good analogy. Another way to look at it; if someone wants to invest in cryptocurrency mining they could go and order some ASICs, find a builders, find somewhere to hoest them and so forth, but to do all that quickly would cost a very large amount.

By having all those elements lined up we are able to buy ASICs and other kit at greatly reduced prices (we are paying ~$10 for each ASIC which hashes at ~300MH/sec), and we are already up and running with pre-orders so our kit is arriving soon. We also already have substantial mining experience with our existing GPU rigs, plus the FPGAs.

Fundamentally, as I state in the business plan, all share valuations boils down to pay-earnings ratios. That is how companies are valued, not on fixed assets. This is what killerstorm is talking about.

Kate.

Offline WoodTech

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #13 on: June 22, 2013, 01:09:18 PM »
lets not forget that by the time they start, the 3rd avalon asic batch gonna hit, the new russian asics hit, and the income curve that she predicts wont be anywhere close...

It's possible, of course. If somebody can estimate profits independently, that would be great.

I have been quite aggressive in my estimations of difficulty, with a doubling time of 2-3 months. I have discussed it with a number of experts in the field and got their input too.

However, the whole point of this business plan is that by raising funding on the market we can achieve scale very quickly, and in doing so be among those first movers and able to take advantage of them. BTW, we have ASIC orders in batch 3.

Kate.

Offline Ethera

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Re: [LTC-GLOBAL] CIPHERMINE - New cryptocoin mining company
« Reply #14 on: June 22, 2013, 01:14:48 PM »
So with your prediction of current 19 mill difficulty reaching 60 mill difficulty you calculated those profits from the things you ordered? I get it you ordered the chips and fpga's. Sorry, with the hashing power you ordered on that difficulty (which is as you say predicted) you wont be getting anything (with your model of "fixed price prediciton"). So either there is a flaw somewhere in there, or you are not saying something.

Second, would you kindly address the "majority shares vote" issue?


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