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Post by Proptechfish on Mar 7, 2019 20:38:55 GMT
ablrate Is there any IP/software attached to the mining hardware ?
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gibmike
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What is a cynic? A man who knows the price of everything and the value of nothing.
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Post by gibmike on Mar 7, 2019 20:53:10 GMT
I have read everything fully and most of what I was going to type has been covered in previous posts so I will try to look at the crypto business side only.
The background of the originator is good. A successful director with a track record of good success and also a relatively good net worth. Tick.
Now to the loan.
At first I thought this loan was going to cover the cost of creating a hash farm on which they sell the hash power from their miners. This would give an income as the costs are covered by the investors paying for the electricity etc. (see hashflare.io/ no affiliate link added here for example). We would then have a farm paid for by us via the loan and income secured by the mining investors. We would have a return pretty much guaranteed as the miners have to buy 6/12/24 month contracts.
Given what they are planning to do, I would not bring a mining farm to the UK, colder climates (Finland/Iceland/Russia) have natural cooling which is a massive part of the cost. Yes, they have an energy company which is owned by the said director of this company (which pays his other company £X pa) but the numbers seem at best "light" and at worst "overly simplified". These numbers need to be expanded. In addition to this, we have not been supplied the hashrate of the farm and in turn the potential of the mining. Difficulty only really goes up with the price (more profit = more miners being turned back on and in turn a higher difficulty) so given they have flatlined the income over three years I would expect them to say for example 500 GH/s which would not give away the trade secrets but give us some indication of daily revenue (other than a static income) at present.
In addition to this, the machinery is a problem. Many farms sold their miners by WEIGHT rather than unit recently as the value decreased significantly to the point where you could buy 200kg of mining equipment. A good example is the L3+ Antminer (ASIC miner). this cost around $1500 in January 2018 and today around $200. I knoew they are buying GPU based machines which they expect to be able to sell the graphics cards to recoup their cash. I doubt they can recoup that over an 18 month period. This worries me.
I can see a situation where the assets have devalued to the point where we are at a 150-200% LTV. Additionally, I can see BTC (not BTH as they state on the website!) reaching 6-9,000 USD so this would double-treble their income.
Therefore I would say this is speculative with a slant towards "it will work out ok". Certainly not the usual loan and I agree with previous posters asking for it to be an amortizing loan.
Apologies if this is rambling, I have tried to be constructive and not cover existing poster's comments.
Mike
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Post by GSV3MIaC on Mar 7, 2019 22:16:25 GMT
Having only briefly skimmed the proposal, it was not immediately obvious how the borrower intends to repay. If it is from profits, then it should definitely be in amortising loan form. If it's a lottery win in x months/years time, or a refinance from some other p2p company, Then I guess interest only is the only option.
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Post by Badly Drawn Stickman on Mar 7, 2019 22:54:00 GMT
Having only briefly skimmed the proposal, it was not immediately obvious how the borrower intends to repay. If it is from profits, then it should definitely be in amortising loan form. If it's a lottery win in x months/years time, or a refinance from some other p2p company, Then I guess interest only is the only option. An earlier Ablrate post hinted that he may have taken this point on board, hopefully a bit of restructuring is still possible to address at least that part of the problem with the loan. I do get the feeling many just don't like the concept full stop. I'm still just puzzled by the whole concept, but happy to stay that way.
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blender
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Post by blender on Mar 7, 2019 23:02:35 GMT
Having only briefly skimmed the proposal, it was not immediately obvious how the borrower intends to repay. If it is from profits, then it should definitely be in amortising loan form. If it's a lottery win in x months/years time, or a refinance from some other p2p company, Then I guess interest only is the only option. The 'illustrative forecast' shows how they might repay the principal. It is a basic cash flow forecast rather than any projection of profits. It misses out the £20k up front Ablrate fee from the sums (they will get £20k less). Essentially after two years income with no power costs they expect to have paid all costs and repaid the loan, and the income from then will be free cash. With full power costs it takes three years to get to payback. The problem is to ensure that the current loans from the director are retained in the company at a level to make up for the increasing lack of security cover by that hardware. Given that the bullet repayment is to be funded by the accumulated monthly income from the start, there is no justification, imo, for this being an interest only loan. It would be far easier to supervise that continuing 70% LTV promise as an amortising loan. Ablrate has said they will look at changing it, which I think means that they are going to plan B.
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macq
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Post by macq on Mar 8, 2019 7:55:22 GMT
Not sure the words you want to hear when investing are plan B
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blender
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Post by blender on Mar 8, 2019 9:46:05 GMT
Not sure the words you want to hear when investing are plan B I meant that Plan B would be an improved proposition for lenders, being amortising at least. But with 6% funding on the current basis, some of us will be hoping they dig deeper into the alphabet. There is no minimum amount on this loan!
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Post by GSV3MIaC on Mar 8, 2019 12:37:45 GMT
Having only briefly skimmed the proposal, it was not immediately obvious how the borrower intends to repay. If it is from profits, then it should definitely be in amortising loan form. If it's a lottery win in x months/years time, or a refinance from some other p2p company, Then I guess interest only is the only option. The 'illustrative forecast' shows how they might repay the principal. It is a basic cash flow forecast rather than any projection of profits. It misses out the £20k up front Ablrate fee from the sums (they will get £20k less). Essentially after two years income with no power costs they expect to have paid all costs and repaid the loan, and the income from then will be free cash. With full power costs it takes three years to get to payback. The problem is to ensure that the current loans from the director are retained in the company at a level to make up for the increasing lack of security cover by that hardware. Given that the bullet repayment is to be funded by the accumulated monthly income from the start, there is no justification, imo, for this being an interest only loan. It would be far easier to supervise that continuing 70% LTV promise as an amortising loan. Ablrate has said they will look at changing it, which I think means that they are going to plan B.
Exactly. I'd much rather the income accumulated in MY bank account rather than the borrower's. There is actually no justification for an interest only loan against a depreciating (to zero) asset. Oh, and don't even mention that it lives in (very mobile) shipping containers, some of it in far away and hard to monitor parts of the world (assuming I read it right).
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nick
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Post by nick on Mar 8, 2019 17:48:45 GMT
I think the nature of the business proposition is a distraction here. Potential lenders would do better to just look at the lending proposition. A company with no filed accounts, with share capital of £1 and run by a sole director who has lent it £600k. Wants £400k for no part of the company (at this stage). No valuation of the physical security. No first charge on property. No amortisation. (Makes an excuse and leaves). ablrate : would it be possible for the director to formerly subordinate their debt in the company to ABL under a tripartite agreement to help ensure, absent fraud, that this provides a permanent cushion for the duration of the loan. I believe this would significantly enhance the security being offered (we could then effectively view the director's loan as equity) at no/limited cost to the director. This would provide more tangible protection that the PG.
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Post by Proptechfish on Mar 8, 2019 20:07:15 GMT
Having re-read this thread in its entirety and the borrowing proposal several times I think i'm going to have to follow the sentiment of those older and wiser than me and fall in line and vote no on this. My concerns -
-Crypto is very volatile and I would want to see 20.00% plus return to reflect that.
-Also an amortising style loan.
-The chattel over the hardware is essentially worthless.
-The claims about preferential terms with Chinese suppliers I just can't get my head around.
-Although the borrower is purported to worth £10 mil, I have to wonder why they seeking high cost finance to fund 'such a fantastic opportunity'.
-I don't believe there will enough takers to get this loan off the ground anyway.
That said I do believe Crypto with serve a purpose in the future and I just don't think it's found that purpose yet. Looking entirely rationally at this the opportunity, can I lend my 'real money' to this opportunity with a reasonable expectation of success ? No
So based on this thread alone, I think this is the 1st Ablerate offering to be universally rejected.
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Post by dan1 on Mar 8, 2019 22:07:04 GMT
... So based on this thread alone, I think this is the 1st Ablerate offering to be universally rejected. depends what you mean by "universally rejected" but certainly not the first loan to struggle to get traction from lenders. reminds me of 1000091 in terms of it striking me as more of an equity proposition. not considered it myself seriously because I try not to invest in stuff I don't understand but that's not to denigrate the enormous work that Ablrate have put into preparing this opportunity, I welcome the fact that they attempt to break the mould even if I'm too chicken at times to jump aboard, keep it up. in terms of the security, or lack of, I did wonder whether this was tilted too much in favour of the borrower - why risk the wealth you've worked hard to build, or perhaps it's as simple as having nothing liquid enough or not already committed in one way or another.
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michaelc
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Post by michaelc on Mar 8, 2019 22:09:47 GMT
Socially and morally this investment is worth nothing, it merely burns electricity to make something of no inherent value, I will not be lending.
No, I'm not looking for an argument. Just my views.
As always, good luck to those who invest.
I think I agree with you but couldn't you say the same about say gold? I guess gold has some uses but none that justify its high value which is based (I think) almost entirely on its difficulty of mining due to its limited availability.
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registerme
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Post by registerme on Mar 9, 2019 0:02:00 GMT
Socially and morally this investment is worth nothing, it merely burns electricity to make something of no inherent value, I will not be lending.
No, I'm not looking for an argument. Just my views.
As always, good luck to those who invest.
I think I agree with you but couldn't you say the same about say gold? I guess gold has some uses but none that justify its high value which is based (I think) almost entirely on its difficulty of mining due to its limited availability. I'm not a gold bug, but gold has some industrial uses, and some cosmetic / jewellery uses, that in my book count as "real". It's also only made in neutron star collisions / supernovas. As far as any potential use as a currency it largely meets them - it can be used as a unit of exchange, it can be used as a unit of account, and it's value is somewhat stable over time*. Compare and contrast with a crypto currency. Ask yourself this, if you were a fighter pilot shot down behind enemy lines, or a special forces trooper doing something funky somewhere deniable, would you rather a gold sovereign in your boot, or a memory stick with a bitcoin on it up your proverbial? * Obviously only having, in terms of volume, roughly an Olympic swimming pool's worth of the stuff does tend to limit its use as a currency in a modern globalised economy.
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macq
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Post by macq on Mar 9, 2019 8:38:45 GMT
there maybe some merit in comparing crypto to Gold,Silver,Diamonds etc in the fact they are mined and at some distant point in time merchants decided there was a value in them and the idea stuck and there is a chance that may happen here But that is what is happening now with what may turn out to be a good thing but at this precise moment is basically a get rich quick idea with a rush to the finish line.If i buy a coin at this moment in time i have to hope the promoting of that coin in the media(or more likely social media) or news of a break through of how that coin can be used in the general world pushes its value up with like minded people in a closed shop. But while there is only trading within a closed market it is no different to art,stamps,rare books etc. As mentioned in a few places look up Tulip mania or South sea bubble is that any different to what happened to crypto a year or so back once it was in the newspapers and being mentioned in the tv soaps?
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macq
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Post by macq on Mar 9, 2019 8:49:50 GMT
From Abl's point of view you not only have the security,LTV etc mentioned by people willing to invest but from a main stream point of view you are comparing Two of the pet hates of the finance press P2P & Bitcoin or crypto which is probably not helping this loan.Imagine going on the MSE forum and saying you are about to invest in Bitcoin mining via a P2p platform and the replies you would get would be interesting and that could be the hurdle for this loan to get over
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