Quote from: Meni Rosenfeld on November 25, 2012, 09:16:06 AM

Quote from: Epoch on November 25, 2012, 12:05:01 AM

Quote from: Inaba on November 24, 2012, 08:20:40 PM

I am going to be converting BFLS shares into BFLS.RIG at 1:1, so everyone will in one payout bucket.

A single payout bucket is welcome but I have a concern about the proposed 1:1 conversion: as commented on earlier in this thread (https://bitcointalk.org/index.php?topic=89902.msg1255003#msg1255003), a 1:1 conversion does not appear to represent fair value for BFLS shareholders. Unlike 'regular' mining bonds such as Gigamining, BFLS and BFLS.RIG represent a share of hardware, not hashrate, so:

BFLS (1 Single/200 shares): $600/200 = $3 per BFLS share
BFLS.RIG (1 MiniRig/6058 shares): $15295/6058) = $2.52 per BFLS.RIG share

This indicates that a BFLS share is worth more ($3/$2.52, or 1.19x) than a BFLS.RIG share. Put another way, 5098 BFLS shares ($15295) are worth the same as 6058 BFLS.RIG shares ($15295) which is the value of 1 MiniRig.

So to fairly convert the hardware value of BFLS into BFLS.RIG, 1 BFLS share should be converted to 1.19 BFLS.RIG shares. A 1:1 conversion would mean that BFLS shareholders take a 19% loss. If my analysis is flawed, I'd like to know where it fails.

The mistake here is assuming that a mini-rig is worth $15295.

At the time when the devices were bought, $15295 didn't get you a mini-rig. It got you a mini-rig to be delivered several months in the future. An actual mini-rig in your possession is hence worth much more than $15295.

Meni, I've always respected your analytical abilities and contributions to bitcoin (and continue to do so), but I'm not sure that argument applies here. What you describe happened in the past; it is not an accurate description of the current environment.

If I have 200 BFLS today, I can ask Inaba to convert them to a Single. He can do that immediately because he has the hardware. Similarly, I can ask Inaba to convert 6058 shares of BFLS.RIG (assuming I had them) into an actual MiniRig. Again, he can do that immediately with hardware in hand. There is the same amount of waiting involved in either case.

I understand that in the past there was more of a delay with the MiniRigs. But that was built-in to the market-driven bid/ask price of the shares. Today you can no longer order a MiniRig (or Single) from BFL according to their website so we can no longer use this as a comparison, but you can from Inaba if you have enough BFLS or BFLS.RIG shares.

You may recall that there was a BFLS.FUTURES issue created original just for this situation. If actual hardware was not yet in hand, people had to buy FUTURES. Once actual hardware was in hand, the FUTURES shares were converted into BFLS.RIG. But that is not the situation now; both devices are 'in hand' and thus their share value in terms of hardware cost can be directly compared.

One other point to realize is that any 'disadvantage' the early BFLS.RIG adopters had due to longer wait times, exponentially decays with time. In the long run, the difference approaches 0 and we again reach the point of directly comparing # of shares vs. hardware cost. And under that comparison, 1 BFLS share is worth 1.19 BFLS.RIG shares.

I won't belabour this argument; ultimately it is up to Inaba to decide how to convert the shares, and I'm ok with that. In my dealings with him he has always been open minded and fair, so I will respect whatever decision he makes. I just wanted to point out that the current worth of a BFLS share may not be as close to 1:1 as some may believe.