BitcoinOverview & Investment Proposal. Prepared by Derek Leong

Transcription

1 BitcoinOverview & Investment Proposal Prepared by Derek Leong 1

2 What is Bitcoin(BTC)? Here is a short video on the overview of Bitcoin. Where you can spend your BTCs. Growing # of merchants bitcoin-merchant-sites/ Of course, investing in BTCs are also possible. There are a few exchanges to liquidate BTCs to SGD/USD and many others! Prepared by Derek Leong 2

3 How to obtain Bitcoins(BTC)? One of the methods to obtain BTCs would be to buy them off someone who already has them or buy BTCs off exchanges. Alternatively, if you have a skill or service, youcanworkforbtc! The focus of this presentation is on Bitcoin Mining The method of printing money. In this case, minting Bitcoins. A common method would be to mine for Bitcoins, which requires commodity IT hardware but preferably highly specialized equipment. Prepared by Derek Leong 3

4 How to mine Bitcoins? Bitcoin minting requires internet access, a Mining software and hardware to perform the required complex calculations also known as hashing. All hardware used in Bitcoin mining are measured by their hash-per-second performance(h/s). Prepared by Derek Leong 4

5 How fast can Bitcoinbe mined? GenerationofBTCdependson2majorfactors Network Difficulty Hashrate of hardware As an example, a 1 Gh/s (Gigahash) miner would mine BTC/day at today s difficulty(19,339,258 difficulty) That would mean, excluding other expenses like power and cooling, this miner is making USD$2.81/day Prepared by Derek Leong 5

6 What is Network Difficulty? Bitcoin miners produce Bitcoins. The rate of production is kept to approx. every 10 mins by the Bitcoin network. Every 2016 blocks of generating Bitcoins, the network automatically adjusts difficulty to maintain that 10 minstimeframe of BTC production. Thus, the more miners there are, the higher difficulty will rise. Prepared by Derek Leong 6

7 Network Difficulty Growth (est.) Start of Period End of Period Estimated Difficulty Average Diff Growth Monday, July 01, 2013 Sunday, July 14, ,263, % Monday, July 15, 2013 Sunday, July 28, ,983, % Monday, July 29, 2013 Sunday, August 11, ,661, % Monday, August 12, 2013 Sunday, August 25, ,490, % Monday, August 26, 2013 Sunday, September 08, ,706, % Monday, September 09, 2013 Sunday, September 22, ,589, % Monday, September 23, 2013 Sunday, October 06, ,476, % Monday, October 07, 2013 Sunday, October 20, ,776, % Monday, October 21, 2013 Sunday, November 03, ,977, % Monday, November 04, 2013 Sunday, November 17, ,669, % Monday, November 18, 2013 Sunday, December 01, ,558, % Monday, December 02, 2013 Sunday, December 15, ,498, % Monday, December 16, 2013 Sunday, December 29, ,512, % 20.29% difficulty increase is derived from taking all difficulty changes so far since 2009, and averaging the changes out. Since difficulty adjustments happen approx. every fortnight, this chart predicts thatdifficultyattheendof2013tobeat213m! That same 1 Gh/s miner used earlier would only be mining USD$0.25/day at the endoftheyear. Prepared by Derek Leong 7

8 Hashrateof Hardware Intel & AMD CPUs Very low hashrate(kh/s) Widely available AMD Radeon GPUs Good hashrate(mh/s) High power consumption Widely available Re-sellable for gaming applications Prepared by Derek Leong 8

9 Hashrateof Hardware Field Programmable Gate Arrays (FPGA) Good hashrate(mh/s) Low Power Consumption Not so widely available Re-sellable for re-programming purpose Application Specific Integrated Circuit (ASIC) Very high hashrate(gh/s) Low Power Consumption Not widely available as yet Not resellablefor other purposes Prepared by Derek Leong 9

10 KNCminerASIC This proposal is to seek funds from interested investors to share in the purchase of a Saturn unit from which costs approx USD$4000 including shipping/handling. This unit is spec ed to perform at least 175Gh/s using maximum power draw of 0.5kWh. In Singapore s context, that would be around SGD$105/month in electrical bills. Expected ship date would be in October Prepared by Derek Leong 10

11 Profitability Calculator & ROI Start of Period End of Period Estimated Difficulty Average Diff Growth BTC/day BTC/2 weeks USD/2 weeks Monday, September 23, 2013 Sunday, October 06, ,476, % , Monday, October 07, 2013 Sunday, October 20, ,776, % , Monday, October 21, 2013 Sunday, November 03, ,977, % , Monday, November 04, 2013 Sunday, November 17, ,669, % , Monday, November 18, 2013 Sunday, December 01, ,558, % Monday, December 02, 2013 Sunday, December 15, ,498, % Monday, December 16, 2013 Sunday, December 29, ,512, % , Taking into account an October delivery timeframe, above shows profitability of the Saturn unit every fortnight up till the end of the year. (assuming a steady 20.29% growth in difficulty) Thus,iftheunitarriveslateSeptember,totalUSDearnedwouldbeatUSD$8.1kat theendof2013androiwouldbesomewherearoundtheweekofoctober21. Prepared by Derek Leong 11

12 Conditions of Venture This proposal is to seek SGD$6000 of funding for the purchase of 1 Saturn ASIC from KNCminer for the purpose of mining for profit. The funds will be used for the acquisition, hosting and management of the miner. Anything left over is kept and all shareholders will have equal stake todecidewhattodowiththeremainder. Equal shares costing SGD$300 each(total of 20 shares) will be available for purchase for this venture. Upon hitting the required number of shares, an interbank transfer will be made to KNCminer to secure the order. Once delivery has been made (approx. October), miner will be secured at either (1) a local datacenter with unlimited power/cooling or (2) at my home where I will deduct electrical power costs from profits on a monthly basis. Prepared by Derek Leong 12

13 Conditions of Venture The immediate priority will be to ROI the venture. Upon mining the equivalent of SGD$6000, a shareholder meeting will be called to decide if all shareholders will be paid out their initial investment. All profits from subsequent mining will remain equally distributed to all shareholders up to a point where it is no longer profitable to run the Saturn unit. Should it become no longer profitable to operate, the unit will be resold and all proceeds including all remaining profits split equally to all shareholders. Should a shareholder decide to exit for whatever reason, his/her equal share at that point in time will be calculated and paid out. Subsequent profits will then be redistributed to remaining shareholders. Do note that exiting shareholder will not qualify for the proceeds of sale of the Saturn should it happen in future. Prepared by Derek Leong 13

14 Conditions of Venture Payouts will be decided during shareholders meetings if it will be in the formofsgdorbtc. LiquidatingmighttaketimeshoulditbeinSGD. Reinvesting for more hardware can be considered but will depend on shareholders. Do note that hosting with free power/cooling is limited and may not be available. Commitment by myself to update all shareholders regularly, possibly on a blog, on the status of all balances, including leftover from initial SGD$6000, and profits from mining, in BTC and/or SGD. There is no commitment for 24/7 operations. There may be times where network issues may halt mining and resumption of mining is on a best effort basis. Note that the only showstopper is internet connectivity. Power/cooling is guaranteed 24/7. I reserve the right to add/remove other conditions depending on the situation but will assure that it will be done to maximize shareholders benefits in this venture. Prepared by Derek Leong 14