Quote from: Yogafan00000 on December 23, 2013, 02:10:14 PM

I would feel a lot safer if we had borrowed fiat to purchase equipment priced in fiat.

It is easy to look back now and say that we made a mistake taking debt when we did. The bullet run didn't make it by November and the BTC price increased. However, if BTC would have crashed down to $2, we would be talking about how genius it was to get debt in BTC. At the time, it seemed that jumping on the next-gen equipment was the only option we had and there were those advising me who believed I was far too bullish on BTC at the time, so I went against my instincts thinking that I was perhaps blinded by my own bullishness (turns out I was not).

The fact is that our debt has increased far faster than I had imagined at the time. However, I structured our debt so that this would never be a killer of the operation. In the loan it says that 25% of our mined income will go to debt. I want to make it perfectly clear that any amount paid over that would be strictly at MY OWN JUDGEMENT. Increasing the share of income that is paid to NASTY MINING's holding address does not necessarily correlate to paying down debt faster. I'm not saying I wouldn't use it to pay down debt ahead of further investments, but it is certainly within my rights and abilities as the operator of NASTY MINING. Going back to the debt structure... The debt we hold is the best debt you can have in the world. It is 0% debt with no timely required payments. Basically, if we wanted, we could take 100 years to pay back this debt and it would be perfectly within our agreement. That being said, I am the last lender to be repaid and do have a personal interest in this debt being repaid while I am still alive.

So is our debt a big deal? Yes and no. It's a large number, but it represents only a 25% share of our mining income. It never has to be more than that, and we can divert distributions to a separate account for future equipment purchases while only keeping 25% of our income going towards debt. Again, not saying that is what we should do. I'm just saying we still have a lot of options and while the debt amount is great now, it doesn't threaten us as long as BTC mining is still largely profitable. For example, at the current difficulty, NASTY MINING would still be able to operate profitably and pay down our debts with a $100 Bitcoin, and that is with our current soon to be outdated equipment. While the debt does pose a threat to the operation, it isn't as dire as it seems, since if BTC drops below $100 and our operation becomes unprofitable, we would have an easier time repaying the debt at a beneficial rate with savings we do accumulate, for example our alt coins that are saved until needed (like how they recently bought us 2TH of mining equipment with most fans not even aware we had that many alt coins).