I have been talking with many people, and am waiting for a second electrical quote.  I am currently trying to solve the inherent scaling problem of moving from the basement to a fully rented space.  The extreme power demands of Bitcoin make this a perplexing issue.  Data storage space is proving too expensive, and I’m now starting to look towards space designed as “grow” houses.  They have the power, but may prove too expensive, as they are also decked out with other things the miner does not need.

In other news, before you get upset about the amount of power usage, take a look at this article.  While it is definitely clear in its fanfare, I find it to be an accurate and positive description of just what all that power is buying.  Look into it.

– Jonathan


What We Are

A member-owned blockchain processing collective in Portland, Oregon.  Our mission is to sustainably offset living costs for our member-owners and make a social investment in the future of a diverse and vibrant Portland – a city looking into the future.  We hold long-term profits in a cryptocurrency fund, and run the business with open finances and governing structure.

What is the BlockChain?

The blockchain is how Bitcoin verifies transactions.  It is basically a giant cloud network doing computations to ensure every transaction is legitimate.  While this is incredibly energy intensive, and there are far more efficient coins in the cryptocurrency market, Bitcoin is by far the most influential, accounting for over 50% of the entire cryptocurrency market.  It is, in short, not going anywhere.

The Blockchain Living Collective purchases and runs computers which “mine” Bitcoin.  This means that they are actively involved in verifying the Blockchain 24/7.  These processes take a lot of power, which is 100% offset with Green Power.

As for the future of Blockchain, someone recently said history will look back on the Internet as that 20 years of time before Blockchain.  Blockchain is truly in the process of revolutionizing everything.  Not only will we do financial transactions with it, but one day even your software will like be run via Blockchain.  We anticipate there being demand for blockchain processing power long into the future, and we intend to position ourselves to fill that niche.

How does the Collective Run?

The collective essentially holds your initial investment as a Mining Share.  We hold this for a minimum of 24 months.  This money goes directly towards the purchase price of a mining computer.  With profits from the mining on this computer we cover storage, maintenance, labor, and energy costs associated with mining Bitcoin.

As the computers mine Bitcoin, they create profit which is distributed directly to the member-owners to offset living costs as a Monthly Share.

You can invest whatever fraction of a Mining Share we are currently capping the number of Mining Shares to 7 per family household.

In the beginning, the money needed for initial investment outside the purchase of computers, will be borrowed in a distributed loan among Member-Owners.  Functionally they will be receiving a fraction of their Monthly Share.  This fraction will be recorded and repaid without interest by future Member-Owners who will receive a 0.9x multiple of their Monthly Share, until the initial distributed loan is fully repaid.  At this point, all Member-Owners will receive their full Monthly Share.

 

How It Works

Bitcoin is the most valuable and important digital asset in the world.  It is essentially a decentralized way to ensure that transactions occur, via the blockchain.  This means that you do not need a traditional financial institution such as a bank or government to secure the currency or transaction method.  You can hold and transfer currency with nothing more than a phone.  This is incredibly important around the world.  It is the countries without a sustainable financial architecture that are most driving the growth of Bitcoin.  Along with investor speculation, this has caused the price to surge.  Since its existence, Bitcoin has now produced 1000 billionaires.  They exist in the silence of an economy that is just being born, behind the economy of nation-backed fiat currencies.

We invite you to be part of this revolution and pay for your living expenses.

1 Mining Share = $2500 investment

Approximate Monthly Payout = $477.95 USD

What does that really mean?  It means that with any fraction of the $2500 investment, you supply a mining computer to Blockchain Living Collective which operates the mining process and distributes the profits to you.

Because mining has become such a lucrative operation, there are currently long back orders on mining computers.  For this reason, there is a 4 month Hold Window before you will receive your Monthly Share.   As we grow, we would like to do away with this Hold Window.  This allows enough time for the company to build the computer, and mine the first month’s Bitcoin.

Get it?

It should take about 8 months to repay your initial investment, after the initial 4 month Hold Window.  After that, it pays your living expenses.  That is equivalent to a 100% return on investment, not to mention the benefit of owning a fraction of a company investing the future growth of Blockchain.

Wild, huh?

Fractional Shares

You can purchase a fraction of a Mining Share down to 1%, or $25.

This is meant to be affordable for all people.  Fractional mining share investments will go on a waiting list for the next computer purchase.  For instance, if we are holding 38% of the cost of our next mining computer, and you invest 50% of a Mining Share (or $1250), we would wait for someone to invest the final 12% before purchasing the hardware.  You will have to wait for that amount of time before earning the Monthly Share, but in the long run we hope to even change that, so you will collect money as soon as you invest.  This is a First-In/ First-Out System.  We do not prioritize Mining Share purchases based upon amount of investment.

Fractional Share Reinvestment Plans

The idea of this whole company is to offset living costs.  Because we understand that many people will not have the upfront capital to invest in enough shares to immediately offset their living expenses, we have created a reinvestment plan.  You will start with a goal of how much you want to receive from the company and work backwards.

The profits from mining will be used to repurchase fractions of Mining Shares.  Realize that you will be taxed on this money, so the Collective will distribute needed funds to pay these taxes at the end of year, or quarter.

Here’s what a few very reasonable regular investment plans amount to.  These are calculated by investing the same amount each month and reinvesting post-tax profits.  The calculations show the estimated time to earn one full Mining Share.  These times will vary based on your tax bracket.  The below have been calculated for a single person making an annual income of $19,396, using a compounding formula with a percentage return of 13%, and regular additions of the same amount.  (Post tax Collective Profit/ Mining Share Cost  – $324.60/ $2500 = 13.7%)

If you invest $25/ month, and reinvest all post-tax profits, it will take 20 months to earn one full Mining Share.

If you invest $60/ month, and reinvest all post-tax profits, it will take 14 months to earn one full Mining Share.

If you invest $100/ month, and reinvest all post-tax profits, it will take 11 months to earn one full Mining Share.

Poverty Considerations

The Blockchain Living Collective is not designed as a means of investment for wealthy owners.  Although we are in no way opposed to all levels of income, we are focused on making this an investment accessible and in-reach for lower income communities.

As a token of this belief, we have a liquidation clause to protect our impoverished Member-Owners.  If for some reason the Collective has to end operations and liquidate its assets, the Share payouts will be prioritized in the following order:

1) Any share members/ households at or below 138% of the Federal Poverty Line will receive their full Mining Share.

2) The rest of the proceeds of liquidation will be evenly distributed by Mining Share percentage.

What does the Collective do with profits?

After the Bitcoin is mined, the Collective takes 20% of the mined coin to cover operating expenses and growth.  Any leftover amount remains invested in BTC for at least one decade.

Up to 3% of the above profits will be used as back pay for employees starting the company.

What if I want to leave the collective?

Your Mining Share buy-in is required to be held by the Collective for a 24 month period.   This is because we are limiting Mining Shares  to actual hardware costs.  The operating costs of the business come directly from Profits.  By requiring a 24 month hold time, we ensure the sustainable operation of the business, and also also give you the chance to truly reap the financial rewards of your investment.

After the 24 month commitment, you are free to leave Blockchain Living Collective at anytime.  You sacrifice Voting Rights as soon as you inform the Collective of your departure.

A Standard Exit will continue paying the Monthly Share until you have recouped the cost of your Mining Share. 

A Rushed Exit will pay out your Mining Share immediately, but you sacrifice 50% of the value.  This is simply because cashing out cuts into the company’s operating expenses.

How do I use Bitcoin, and what are the legal ramifications, taxes, etc?

Bitcoin that is mined, and profits from the market valu increase of Bitcoin are taxed differently.  All mined Bitcoin is treated as taxable income at the price it was worth when mined.

Any held Bitcoin that increases its value is taxed as a capital gain.  For the purposes of the Collective, this means the members will be taxed on all profits at their income level bracket, ranging from 10-40% for Federal Income Tax, and 5-9.9% for Oregon State Income Tax.

Portland City and Multnomah County business tax is 2.2% and 1.45% respectively.  These are the current taxable breakdowns for individual income levels.  You will need to consider your regular income, along with profits from the Blockchain Living Collective to understand your tax liability.

Since we do not intend to sell any Bitcoin investment for the first decade, we will only discuss the effects of the income and business taxes here.

How do I pay my taxes?

We are still in the process of determining how best to distribute taxable profits.  We intend to have pass-through taxation, which means all Profits from the Collective must be reported on your personal tax return, as taxable income.

Because it can be tempting to spend the money as soon as you have it, we will offer the option of leaving taxable income in a Collective fund (held in USD), to be distributed quarterly or annually, as you pay your taxes.

 

Tax Rates

Income Federal Oregon Multnomah Business Tax Portland City Business Tax
$0 to $9,325 10%
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
2.2% 1.45%
$9,325 to $37,950 $932.50 plus 15% of the excess over $9,325
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
2.2% 1.45%
$37,950 to $91,900 $5,226.25 plus 25% of the excess over $37,950
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
2.2% 1.45%
$91,900 to $191,650 $18,713.75 plus 28% of the excess over $91,900
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
  • 9.9% on taxable income of $125,001 and above
2.2% 1.45%
$191,650 to $416,700 $46,643.75 plus 33% of the excess over $191,650
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
  • 9.9% on taxable income of $125,001 and above
2.2% 1.45%
$416,700 to $418,400 $120,910.25 plus 35% of the excess over $416,700
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
  • 9.9% on taxable income of $125,001 and above
2.2% 1.45%
$418,400+ $121,505.25 plus 39.6% of the excess over $418,400
  • 5% on the first $3,350 of taxable income.
  • 7% on taxable income between $3,351 and $8,400
  • 9% on taxable income between $8,401 and $125,000
  • 9.9% on taxable income of $125,001 and above
2.2% 1.45%

 

Simple Tax Estimations

Total Income Federal Income Tax Oregon Income Tax Multnomah Business Tax Portland Business Tax Total Tax Remainder
$19,396 + 1 Mining Share = $25,000 total income $3610.13 $2014.34 $123.29 $81.26 $5829.02 $19,170.98
$28,792 + 2 Mining Share = $40,000 total income $5738.75 $3364.84 $246.58 $162.52 $9512.69 $30,487.31
$83,188 + 3 Mining Share = $100,000 total income $20,981.75 $8764.84 $369.86 $243.77 $30,360.22 $69,639.78

In the first example, this person is making $19,396 in wages and owns 1 Mining Share.  This means they receive a monthly payouts of $467 ($5604 annually) from the Collective.  Their total taxes owed come to $9512.69, of which $1516.08 is from Collective Profits

  • Federal and State Income tax for Wages = $4358.96
  • Federal and State Income tax for Collective Profits = $1265.51
  • Multnomah Business Tax on Collective Profits = $123.29
  • Portland Business Tax on Collective Profits = $81.26

This means that monthly tax liability on Collective Profits, in this income bracket, would amount to $142.40, making the effective Monthly Share = $324.60

 

In the second example, this person is making $28,792 in wages and owns 2 Mining Shares.  This means they receive a monthly payouts of $934 ($11,208 annually) from the Collective.  Their total taxes owed come to $9512.69, of which $3550.40 is from Collective Profits.

  • Federal and State Income tax for Wages = $5553.19
  • Federal and State Income tax for Collective Profits = $3550.40
  • Multnomah Business Tax on Collective Profits = $246.58
  • Portland Business Tax on Collective Profits = $162.52

This means that monthly tax liability on Collective Profits, in this income bracket, would amount to $329.96, making the effective Monthly Share = $604.04

 

In the third example, this person is making $83,188 in wages and owns 3 Mining Shares.  This means they receive a monthly payouts of $1401 ($16,812 annually) from the Collective.  Their total taxes owed come to $30,360.22, of which $3550.40 is from Collective Profits.

  • Federal and State Income tax for Wages = $17,454.30
  • Federal and State Income tax for Collective Profits = $3527.45
  • Multnomah Business Tax on Collective Profits = $369.86
  • Portland Business Tax on Collective Profits = $243.77

This means that monthly tax liability on Collective Profits, in this income bracket, would amount to $345.09, making the effective Monthly Share = $1055.91

Isn’t this too good to be true?

Actually, no.  Do some research into Bitcoin mining, and you will quickly understand its profitability.  The Blockchain Living Collective exists to serve as a forward-thinking business with a social function, because we believe the city culture will thrive as people are freed from paying rent.

Who is the Collective open to?

Anyone living in Portland City in the following zip codes: 97034, 97035, 97080, 97086, 97201, 97202, 97203, 97204, 97205, 97206, 97208, 97209, 97210, 97211, 97212, 97213, 97214, 97215, 97216, 97217, 97218, 97219, 97220, 97221, 97222, 97223, 97225, 97227, 97229, 97230, 97231, 97232, 97233, 97236, 97239, 97266

Who runs the Collective?

We currently have one employee, Jonathan Janis, who is founding the collective and handles operations.  He is currently working without pay to launch the Collective, and will be paid hourly back wages of $150 USD once the Collective is profitable (in BTC, of course).  We will take on other employees as needed, but because of the passive nature of mining, we do not expect to need many.  Jonathan’s hours are recorded and available to Member-Owners.

What about the finances?

The finances will be open and available to Member-Owners.

What is the governance structure?

Every individual investor account receives one equal voting share determining how the company is run.  Partnerships or cooperative housing models get voting rights for each person in the dwelling group.  Dependents are considered full voting members at 16 years.

Current Investment Breakdown

Initially we will be storing the computers in a basement in Foster-Powell Neighborhood.  Because of the power draw, we will likely need to install a new meter and breaker box.  We are going to have an estimate for this investment cost by Tuesday 1/9.

After the electrical buildout, we will buy the computers & power supplies, seen below:

Mining Computer: AntMiner S9

Click to read more about BitMain, the manufacturer of the AntMiner S9.

This computer costs 2500 USD and will be delivered in April 2018.  It draws 1456w, and has a hashing power of 14 TH/ s.  At Portland Green Power rates of $0.13 kW/h, 1 computer will mine 682.78 USD in Bitcoin every month.  This number is subject to fluctuation due to BTC prices, and network needs.

***The below numbers do not include the 1-2% Mining Pool fees.

We will pay 10% of mining profit in rent.

The Collective will hold 20% of mining profit.

It will use this money to pay employees, invest in long term growth, and hold a long-term BTC investment for the member-owners.

This brings the pre-tax Monthly Share to 477.95 USD.

As we are currently starting in a basement, we need to run more power lines to power the computers.  This has not been fully priced out yet, but will be by Monday, Jan 8th.

Long-Term Investment Strategy

The Blockchain Living Collective will use profits for long-term investment.

After operating costs, remaining profits remain within the collective and will be held in 85% Bitcoin and 15% alt coin investments managed by Jonathan.  The fund will not be drawn upon for a minimum of 10 years.  We are looking for long-term growth and investment for our members, as a side benefit of being part of the collective.  After 10 years, the member-owners can decide how to distribute or re-invest profit.

What are the risks?

There are a few factors influencing our risk and profitability:

  1. Rent & Infrastructure Costs
  2. Electricity prices
  3. Bitcoin Market Price
  4. “Difficulty Rate” & “Hashing Power”
  5. Bitcoin “Halving”
  6. Depreciation of Equipment & Technological Advancement
  7. Future of the Market
  8. Overview and OD (Operation Director) Opinion

 

Rent

The collective aims to keep rent costs to 10% of Mined Output.  As of January 4, 2018, the monthly mined output is estimated at $687/ month, after power costs.  This leaves $68/ month/ machine.  An Antminer S9 measures approximately 14″x 5.5″ x 6.5″.  Space needs are relatively low.  We are still waiting for exact quotes from an electrician, but we expect to have a capacity of 20 computers in the basement we will be renting.  Once we hit 20 computers, our rent budget will be 20* $68 = $1360/ month.  At this point we will start looking for a more expandable solution.

Any move will require some amount of buildout including but perhaps not limited to:

  • shelving units,
  • climate control
  • internet connection
  • power infrastructure

Because of the above costs, we may find that we cannot expand as quickly as we would like to.  We may have to run the computers a bit longer to earn to investment capital to build out a second space.

 

Electricity Prices

In some sense, we truly bemoan the power usages of blockchain processing, but we also see that we are entering a world where distributed computing power is the future.  Most Bitcoin mining is currently done in China, who has the cheapest (and dirtiest) power in the world.  Our values are not simply profit-oriented, so it is important for us to use clean Green power.  Even at Portland City rates of $0.13/ kwh for full offset Green power (*This means while not all the power we use will be “green,” we will purchase equivalent blocks of sustainable energy from other markets for all the power we use.)

You will see in the profitability calculations that even paying the higher rates, there is a clear path to profitability in a relatively short amount of time (8-12 months, depending on the Hold Window.)  For this reason, we think the electricity prices are not currently a huge concern.

Washington & Oregon Electricity Price Increases

 

Bitcoin Market Price

The profitabilty of Bitcoin mining has skyrocketed as the value of Bitcoin has increased.  Bitcoin has been notoriously volatile in its pricing since its formation, and our business profits are dependent on this price.  We anticipate there could be months when our Profitability and therefore our Monthly Share drops or increases without warning or expectation.

With this being said, we also believe there is no market like cryptocurrency on the planet right now, and we have seen strong growth since Bitcoin’s conception.  Below you will see a historical price graph for the price of Bitcoin, and you can click the image to further explore this chart:

We believe that one must truly understand the future potential and significance of the blockchain to understand what you are looking at.  This is not simply a digital asset, but the representation of all things blockchain. Bitcoin is a true equalizer of the global economy.  When one invests in Bitcoin, there are investing in an entirely new economy — one in which a poor African has the same access to financial resources as the wealthy American.  The scale and growth of this economy is staggering, as we look around the world.  Many of the social and cultural pundits consider the Bitcoin phenomenon a bubble, and this is something you must consider.  I encourage you to analyze the value of Bitcoin, cryptocurrencies, and the blockchain for yourself.

We are extremely bullish on the future of blockchain and therefore Bitcoin, which has become the “new gold standard.”  It is not by chance that we are in the business of “mining.”  As long as blockchain continues to increase its usage, we anticipate strong and consistent growth of Bitcoin and profitable operations.

In the coming years, we anticipate seeing many other cryptocurrencies overtaking Bitcoin’s market cap, but expect that the price per Bitcoin will define the market’s psychological price potential.  We fully expect the price of 1 Bitcoin to reach 500k – multiple millions over the next 10-50 years.

Bitcoin is currently the most consistently profitable coin to mine with the most advanced hardware.  We will continue to monitor the market in this sense, and look to expand our operations into the most promising yet conservative areas of Blockchain processing.   We remind ourselves that we are investing in the future of Blockchain and the future of the Portland community, not Bitcoin specifically.  We will continue to monitor the risk/ rewards of the market, with the securest outlook to maintain our Member-Owners Monthly Share.

Factors that could affect Bitcoin prices include governmental treatment of the coin including regulation or banning (which has been done in China), volatile markets, and other unforeseen factors.

 

“Difficulty Rate” & “Hashing Power”

Hashing power refers to the estimated number of tera hashes per second (trillions of hashes per second) the Bitcoin network is performing.  The S9 operates between 12.5-14 tera hashes/ second.

Difficulty Rate is relative measure of how difficult it is to find a new block. The difficulty is adjusted periodically as a function of how much hashing power has been deployed by the network of miners.  Bitcoin is designed to maintain block intervals of about 10 minutes.  This means that the Hash Rate and Difficulty Rate move together, which you can see below:

Historical Hash Rate:

Historical Difficulty Rate:

Any large increase of hashing power into the market of Bitcoin miners continues to make mining more competitive.  We have seen a drop-off of casual miners, as the investment costs continue to increase needing more powerful computers.  Alongside the price increase of Bitcoin over the past year (January 7th, 2017 price: 905.80 USD; January 7th, 2018 Price: 16,106.50 USD), we have seen the market consistently move towards specialization of blockchain processing, and we expect to continue to see this trend.  This may in fact be one of the last great windows to enter the blockchain processing sphere without inordinate capital expenditure, if Bitcoin prices continue to surge.

 

Bitcoin “Halving”

Bitcoin offers block rewards to Miners.  This determines how much Bitcoin a mining operation receives.  “Halving” refers to this number being cut in half, approximately once every 4 years.  This serves to keep the total circulation of Bitcoin at around 21 Million, and all Bitcoin is predicted to be mined by the year 2140.

No one fully understands the effects “Halving” will have in the future.  Many predictions were made for the last halving in 2016, and you will see that all in all, most things remained steady.  The next “Halving” is scheduled for 2020, and we do not know if the market will respond similarly as 2016.

Effect of Halving on Bitcoin Price & Hash Power in 2016

We expect the “Halving” to further the continuous shift towards specialization of Bitcoin mining, demanding more advanced processing power and investment.  This will place a demand on the Collective to grow its business operations with the market, and ensures that we cannot take a backseat position in the development of the market.

 

Depreciation of Equipment & Technological Advancement

This hardware is subject to decreases in value and eventual obsolescence.

We cannot say just how fast profitability will decrease on individual machines, as this is connected to the development of faster processing, Bitcoin market prices, and the global supply of blockchain processing.

What we can say is that there is very clearly demand for Bitcoin processing, as evidenced by the fact that the Antminer S9 is currently four months backlogged, and used versions are on sale for 6000-7000 USD on Ebay.

We are making the assumption that the computers will remain profitable for at least 24 months.  With a projected recoup of hardware investment in 6-8 months, we find this to be a particularly profitable niche to enter.

 

Future of the Market

In 2017, we have seen the world begin to understand and adopt cryptocurrencies.  Governments, business, and normal investors have all started to take note, and everyone is talking about cryptocurrencies, and the future potential of blockchain.  The company Ripple, who has its own cryptocurrency, and continues to build blockchain technology for business has announced partnerships with over 250 businesses including American Express.

Current banking partners testing Ripple’s technology include: Canadian Imperial Bank of Commerce (NYSE:CM), which is better known as CIBC, Swiss-based UBS (NYSE:UBS), Spain’s Banco Santander (NYSE:SAN), and Italy’s Unicredit (NASDAQOTH:UNCFF)  —> Read article here.

One company currently being traded on cryptocurrency exchanges is the Basic Attention Token, and we find this to be particularly indicative of the  future of blockchain in the next 3-5 years.  The Basic Attention Token is basically developing ad-free internet.  Instead of seeing visual click ads, they are developing a browser that will borrow some of your computer’s processing power as you surf the internet.  This processing power will be used to solve problems on the blockchain that have inherent value, and thus will drive profits to website owners & browser companies, and allow the end-user an ad-free experience.

Another company Loopring is developing entire currency exchanges that operate via blockchain.  This is where we think the long-term future of blockchain is heading.  Instead of websites being hosted on main servers around the world, we will begin to see all the infrastructure being built on the blockchain, completely decentralized and theoretically vastly more efficient.  You are already beginning to see more software offered online and via the cloud.  As the processing power of computers increases, along with data transfer speeds we expect to see a whole new layer of blockchain technologies, which are currently being developed by a new brand of tech company, currently traded only in cryptocurrency markets.

Since the beginning of Bitcoin, we have seen the rise of the phrase “HODL,” originally an enthusiastic misspelling of “Hold.”  You can think of the cryptocurrency market as playing a sort of game of chicken with the nation-state backed economy of fiat currencies.  At first they ignored, then mocked and derided, and yet the backers of cryptocurrency continued to wait, placing there belief in the intrinsic value and necessary adoption of the blockchain.  This has paid off to astronomical degrees, but remember that Bitcoin is still in some sense a “fake currency.”  I say “fake,” because while there are literally 1000 billionaires in terms of USD conversion, not one of those billionaires could withdraw all that money without crashing the market.  The early investors understand this, and this is why “HODL” has become a mantra.

The cryptocurrency universe must wait for fuller adoption to truly bring their wealth into full exchangibility with nation-state backed fiat currencies.  No one knows exactly how/ when/ if this will happen, but in my opinion we are seeing all the classical stages of Grief (denial, anger, bargaining, depression and acceptance) with the world economy learning to eventually accept blockchain-backed cryptocurrency as a real and valueable asset.  When you look at the historical price and market cap of Bitcoin and all other cryptocurrencies, this is what is being measured.

 

Overview & OD Opinion

I believe we are seeing the birth of a truly global economy, not the destruction of governments or business.  Government and business will adopt cryptocurrency and the blockchain as necessary technological advancement, however because of the inherent conservatism and skepticism in most circles that do not understand the technology, there is a slow adoption phase.  We are at the beginning of this turnup in adoption.  2017 has begun to change people’s minds, and I anticipate 2018 to be a very big year for blockchain and cryptocurrency.  Much of our short-term profitability is tied to business adoption of cryptocurrency and blockchain, and public perception of Bitcoin.  Coinbase (available in the App store) has made it simple to purchase the four main cryptocurrencies (Bitcoin, Litecoin, Ethereum, & Bitcoin Cash), and as of December 7th, 2018 became the most downloaded app in the store (reference).  I find this to be one of the most promising pieces of information when looking at the overall Bitcoin market.  The people are coming on board, and as they continue to do so, we will see continued growth.

As with the birth of all things, there is much inherent risk and infinite unknown factors.  We do not know how governments, regulation, and industry will adopt these new technologies, but we continue to keep our ear to the ground, and are placing our faith in the inherent soundness of blockchain technology.  I therefore do not remain attached to Bitcoin as the only vehicle for blockchain processing profitibility, and I believe the Collective must continue to keep its sights open for the best future potential of blockchain processing.  We are witnessing the rise of an entirely new industry, which has an amazing proportion of labor hours/ produced wealth.  I believe that with careful and wise positioning, we can establish ourselves in a niche with great long-term value and low labor hour demands.

The real question of risk is determined by how you view the future of blockchain and the global economy.  There are deep risks in this market, but I believe in the sustained long-term growth potential enough to build out this business for a community.

Can I Mine Bitcoin on my own?

Absolutely.  We exist to provide a social service that takes care of everything and helps you make a long-term collective investment in Bitcoin, with minimal hassle.  Think of it as carrying you and your community into the world’s financial future.

How do I join the Collective?

First things first: introduce yourself using the below inquiry button, and tell us about your situation.  If you would like to meet Jonathan and hear about what we envision, he is available for phone calls or in-person meetings.

As of right now, we are not yet running our Monthly Meeting.  When we are, you will be welcome to attend before becoming a Member-Owner.

Operating Structure

The company will be run by an Operations Director (OD), who is an employee of the Collective.

The Operations Director will be in charge of understanding the larger blockchain market, directing the daily operations to ensure sustainable profitability, and adherence to the values of the Collective.  The Operations Director will work unpaid, until the Collective is profitable and then will be paid Backpay for hours worked.

Long term Collective Profits will be managed by the Investment Director (ID), who does not function as an employee but a Member-Owner of the Collective.  This person will serve as a Board Member with a special term length of 60 months.

The same person may fill the role of Operations Director and Investment Director for at least the first term of the Investment Director.  Whether to separate these roles will be up for vote by the Board after the first term of the ID.

Mining Share is the standard block of investment for the Collective at any given time.  This number is determined by the price of a Mining Computer, and is therefore subject to fluctuation of market price.  The Mining Share should reflect the amount to required to purchase and set up a computer for mining operations, and nothing more.

Mining Revenue is the value of all Bitcoin mined each month.

The Collective will hold 20% of Mining Revenue before distribution to the Member-Owners.  This percentage will be known as Retained Earnings.

Pool Share is the percentage of Mining Revenue that will be paid to the larger Pool we are a part of.

Rent is currently capped at 10% of Mining Revenue. 

Monthly Distribution is the amount left after subtracting Pool Share, Rent, and Retained Earnings from Mining Revenue.  

Mining Revenue – Pool Share – Rent – Retained Earnings = Monthly Distribution

The Monthly Share is the pre-tax monthly amount due to our Member-Owners.  It is calculated by dividing Monthly Distribution by total number of Mining Shares.

Tax Withholding is a service provided by the Collective.  This allows us to hold the taxable percentage of the Monthly Share (treated by the IRS as taxable income) in a separate Tax Fund.  This Tax Fund will be managed and distributed by the OD, and will be held is USD or USDT (a digital asset tied to the value of USD).

Tax Distribution refers to the distribution of taxable income to Member-Owners and will happen no later than 2 weeks before taxes are due.

A quarterly Operating Budget will be created by the OD and approved by the Board.  It should not exceed 0.7x of the Retained Earnings for the previous quarter.

In the first Phase of the Collective, the remaining 0.3x of Retained Earnings will be directed towards repayment of the Distributed Loan by Member-Owners as well as backpay for employees launching the Collective.

Not more than 0.2x of Retained Earnings will be directed towards repayment of the Distributed Loan.  Not more than 0.1x of Retained Earnings will be directed towards Backpay for employees.

Minutes and Written Opinions of the Board Members, current quarterly Operating Budget, and actual working hours of employees will be made available to the publici at Blockchainlivingcollective.info.

After the Distributed Loan (*see below) and Backpay are paid off, the Collective will place not less than 0.3x of Retained Earnings into a Long-Term Investment Fund.

The Long-Term Investment Fund is meant to be a long-term investment vehicle for the Collective, and is intended to remain untouched for the first decade.

Withdrawals may be made from the Long-Term Investment Fund only in the case of special needs for business operations, or the decision to grow the business.  Withdrawals from the Long-Term Investment Fund require a 6 to 1 vote by the Board, or consensus with 7 or fewer Member-Owners.

 

Distributed Loan

Because we are limiting the investment of Member-Owners to the price of the mining computers, all operation costs are meant to be derived from profitable blockchain processing.  We need some initial investment, and the Distributed Loan is designed to spread the cost for the initial expenditures among the Member-Owners, while still paying out full Monthly Shares.

In order to pay for the Initial Capital Expenditures, the Collective will borrow money a Distributed Loan from all initial Member-Owners.  The loan amount will not exceed 0.2x of invested Mining Share, and Member-Owners taking on the Distributed Loan will be due the full profits of their invested Mining Share, throughout the time they have held it.

To make this work, the Distributed Loan will be repaid from two sources:

1) Not less than 0.2x multiple of Retained Earnings, unless the Collective has unexpected costs necessary for operations.  We will essentially wait to put money into the Long-Term Investment Fund until the Collective has paid what it owes its Member-Owners.

2) An extra 0.1x multiple from the Monthly Share of Member-Owners joining the Collective after the initial launch phase.  This only continues until the original Distributed Loan amount is paid off.  This allows all Member-Owners to absorb the cost of Initial Capital Expenditures.

Once the Distributed Loan and Backpay is repaid, all Member-Owners will receive their standard Monthly Share. 

 

Governance Structure

With fewer than 7 Member-Owners, the Collective will operate by consensus.  As we surpass 7 Member-Owners, the Member-Owners will vote 7 members to sit on the Advisory & Overview Board (AOB).

The AOB will serve to guide and direct the OD.  The Operations Director will present operational details, plans, and budget requests publicly to the AOB at the Monthly Meeting.

The Monthly Meeting will happen on the 1st Saturday of the Month within Portland City limits, at a public location within 5 minutes walking of Tri-Met Access.

Decisions concerning overall company vision, strategy, and budgets require 5 to 2 vote.

Decisions to withdraw funds beyond the Long-Term Investment Fund require 6 to 1 vote.

Operating Budget will be automatically approved for 0.5x of Retained Earnings.  Larger budget requests are subject to 5 to 2 approval by the AOB, or consensus before the existence of the AOB.

The Operations Director will be responsible for advocating a specific vision and plan for the Collective, and the Board will vote publicly in support or opposition to this plan at the Monthly Meeting.  Board members are encouraged to submit written opinions along with their votes.  These written opinions will be stored publicly, alongside the minutes of the Monthly Meeting, and are intended to direct the philosophy and considerations of the Collective in a larger sense.

The direction and guidance of the AOB is not meant to hinder the OD’s autonomy and direction for the Collective.  The OD will retain decision-making ability within the scope of approved Operating Budget and the Vision & Values of the Collective.

The AOB retains the right to determine the fitness of the OD for the sustained benefit of the Collective.

Board Members will serve an initial term of 18 months, except for the special position of the ID who will serve terms of 60 months.  There are no term limits, and subsequent terms for Board Members will last 12 months.  All terms for the ID will last 60 months.  Elections will happen in 6 month intervals as needed.

 

What’s in the future?

We are currently starting the collective, and simply using basement space for the mining computers.  We aim to shift these computers to a secure storage facility with high-speed internet, by the time we reach 20 computers.  All costs remain in flux in a changing market, and may change the Monthly Share at any time.  The Monthly Share is not a guaranteed amount, but a fractional share of the profit of the business.  As a Member-Owner, you are entitled to a percentage of this profit and a say in how the Collective runs its businesses.

We are a company looking to the sustainable future of Blockchain processing, beyond Bitcoin mining, in order to provide living expenses for our Member-Owners.

 

 


Blockchain Living Collective

Portland, Oregon

blockchainlivingcollective@gmail.com

(503) 558-5655