# BCG - Bitcoin Group



## So_Cynical (29 July 2015)

Bitcoin Group is an Australian based pure play Bitcoin Mining operator, currently producing approximately 1.45% of global mining output, by operating 5.3 petahashes of mining hardware in seven mining sites across China, Iceland and Australia, planning to list in early September 2015, floating at 20c to raise 20m.

http://www.bitcoingroup.com.au/

1.45% of global BC output is a lot, one thing i remember from my BC days is that as time passes it get harder and harder to mine BC, as in a lot more time and power is required to produce a BC and that's why modern BC farming is expensive and requires a lot of hardware...much like a small data centre.

i reckon that a lot of mainstream investors will be very wary of this and rightly so, others will see the opportunity, others will not be able to get their head around it as we have already seen on ASF and other forums and media, i might throw a few grand at this.


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## So_Cynical (29 July 2015)

A couple of videos to show scale and how modern BC farming works, first a BC farming news piece, (NOT A BITCOIN GROUP FARM) so the uninformed can get an idea of the scale and setup required.
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And a mining video of how the BC creation system works, blockchain etc and some of the hardware required.
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## Tumbarumba (29 July 2015)

IPO on hold by ASIC.
http://qntra.net/2015/07/bitcoin-groups-ipo-hit-with-stop-order-by-australian-regulator/


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## So_Cynical (29 July 2015)

Tumbarumba said:


> IPO on hold by ASIC.
> http://qntra.net/2015/07/bitcoin-groups-ipo-hit-with-stop-order-by-australian-regulator/




Ah ok, surprised that the ASX site dosent say anything about that.

http://www.asx.com.au/asx/research/upcomingFloatDetail.do?asxCode=BCG

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The SMH has a recent write up on the delay.

http://www.smh.com.au/business/bank...-float-is-still-in-limbo-20150724-gij9i8.html


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## So_Cynical (8 September 2015)

Float seems to be moving forward, replacement prospectus released yesterday.

http://www.asx.com.au/asxpdf/20150907/pdf/4314n0t8ytt7xf.pdf

And ASX bookbuild announcement. 

http://www.asx.com.au/asxpdf/20150908/pdf/4315kyppx1pqqf.pdf


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## sinner (8 September 2015)

I wouldn't invest a dollar.

* Why buy hashes at all (which is all this company is), considering the current annual rate of change of terahashes in the total pool is still so huge as to make any fixed cost investment in mining equipment quickly obsolete.

* If I was going to buy hashes, why wouldn't I buy them on a liquid, transparently priced market in which I can transact 24/7, like cex.io offers? Is the GH/BTC or GH/USD rate even close to what I can buy on the spot market right now? Doubt it.

* So far, except for the very very beginning (I was mining bitcoins before they were cool  ) before bitcoins were trading at 3 figure valuations, it has been a much better bet to invest capital directly into buying bitcoins versus buying bitcoin mining infrastructure (at any scale). The parallels between buying gold vs gold mining shares, at this point, should be obvious. *Assuming* you believe in bitcoin, bitcoins represent a store of value while bitcoin mining represents a lottery ticket hopes and dreams.

* The entire bitcoin startup ecosystem seems like a joke to me. They spout the rhetoric about bitcoin, but all of the offerings are to centralise, increase convenience (read: massively decrease security), regulatory compliance, etc. Hypocrites and hypemongers, the lot of them, certainly not the ideological descendants of Satoshi (read: cryptogeeks) that you'd hope for. After scanning the prospectus this mob doesn't look any different. Seems like an excellent way for these guys to foist off rapidly depreciating mining equipment onto hype starved investors.

Possible outcomes:
* The hash rate declines precipitously, generating BCG lots of bitcoins but who cares, nobody, otherwise the hash rate wouldn't have declined.
* The hash rate stays steady, generating BCG close to their forecast rewards, but probably the BCG share price (and therefore the GH/BTC rate for BCG) will trade at way too high a multiple on hype, therefore not making it a good investment anyway.
* The hash rate appreciates rapidly, thereby completely obsoleting BCG out of the market, forcing them to raise capital for new mining infra if they want to stay in the game.
* The above points essentially apply identically for the BTCAUD or BTCUSD rate, unless BTC starts trading at a jillion real dollars or something (in which case, you should have bought bitcoins, not BCG).

There's no deep liquid place to hedge BTC FX movements, or changes in the hash rate (although some prediction markets can be used for shallow hedging requirements) - therefore BCG is completely at the whims of many different (largely speculative) masters.

You can replace the letters "BCG" above with any bitcoin miner really. 

Good luck to "investors".

EDIT: Edited to say, this really does seem like the perfect way to suck in capital from investors who know nothing about the topic. Compare these guys to cex.io which offer a fully transparent spot market for all the major blockchains, gigahashes, USD and EUR, backed by the largest mining pool in the entire world...the only people who would invest in BCG are those who are dying to get aboard something promising riches - those who are already proficient and familiar with the bitcoin economy and ecosystem get their hashes in that same ecosystem and economy.


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## prawn_86 (9 September 2015)

Very informative Sinner. Thanks


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## So_Cynical (9 September 2015)

sinner said:


> I wouldn't invest a dollar.
> 
> * Why buy hashes at all (which is all this company is), considering the current annual rate of change of terahashes in the total pool is still so huge as to make any fixed cost investment in mining equipment quickly obsolete.
> 
> ...




The way i understood it was that the hash rate always goes up, the more BC that gets mined the less is available to be mined, a finite amount.

The only way to create BC is to mine it...one can go fishing to acquire fish or one can go to the fish market, Buying BC is a straightforward punt at a known cost, mining gives a different result as the costs are not 100% fixed and the return is dependant on the BC price at time of sale.

One has to consider that the upside to BC mining is very very limited due to the limited quantity of BC, no bonanza find can be made, limited upside with substantial downside, buy and hold or mining BC - if the price collapses your toast.


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## sinner (9 September 2015)

So_Cynical said:


> The way i understood it was that the hash rate always goes up




You are thinking of "difficulty", but no, it doesn't always go up either.

The hash rate is simply the rate at which the entire pool of bitcoin mining computers is currently performing hashing operations "mining" for a block. As of September 04, it was 407,718,729 gigahashes per second.

The hash rate does not always go up, it is mostly a function of the number of computers performing hashing operations. If tomorrow all the miners woke up and decided that bitcoin is dumb and turned off all their mining infrastructure (unlikely, just an example), then the hash rate would drop to 0 hashes per second. To double the current hashrate, twice as many mining computers (ASICs) of the current aggregate average speed would have to be added to the pool (twice as much electricity, physical space, capex, etc) *or* ASICs that are twice as fast. Given the breakneck pace of ASIC development over the last 5y thanks to bitcoin, I think this will level off soon and therefore unlikely to be new major speed breakthroughs for ASICs.

Difficulty is a function of the hashrate, to keep the finite supply of bitcoins roughly constant/smooth. If the hashrate goes up, difficulty goes up to stop the aggregate total pool from mining (increasing supply) faster than programmed. If the hashrate went to 0 then any Joe with a $500 desktop computer could mine a few blocks an hour no problems.

Here's the 9 month chart (h/t https://bitcoinwisdom.com/bitcoin/difficulty), you can see difficulty going down a bunch of times:



(you can also see some miners trying to game the difficulty algorithm by waiting for difficulty to decline before adding new infra to the pool).


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