The worst business deal of the century, and bitcoin is seized up

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Steve Sokolowski
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The worst business deal of the century, and bitcoin is seized up

Postby Steve Sokolowski » Thu Dec 21, 2017 9:39 am

I wanted to post a quick comment on two issues this morning.

First, Nicehash apparently came back online after securing an investment from some new partners. This is quite possibly the worst business deal of the century. Let's take a look at Nicehash's assets and liabilities:

Assets:
  • The system's source code
  • Nicehash's money transmission licenses (these are worth millions)
  • A small number of their most valuable employees (like experienced developers; customer service personnel are not included)

Liabilities:
  • $60 million in debt to customers
  • A brand that has negative value
  • Legal fees to defend against lawsuits and government investigations

They say that they will pay customers back on January 31. All I can say is that if I were able to find investors that would buy a company that is worth less than zero for $60m, then I would be on a beach somewhere today.

This is an awful business deal. The investors could have waited until Nicehash declared bankruptcy, and then purchased their source code and hired some of the developers who worked on it. Their source code is the company's only asset that has any value, so any reasonable investor would have bought it, made some cosmetic changes, and relaunched the system with a different brand. That would have cost 1/10 or 1/20 of the $60m required to resurrect the site as-is, and eliminates the existing owners who now have a checkered past while getting rid of the poisoned brand name.

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Next, it's worth talking about the bitcoin network. As of today, I believe that the network is no longer usable. The transaction fees to get a one-input one-output transaction confirmed are now around $40, so everything less than that is dust. If we were to try to get our payout transactions unstuck, it would now cost about $5200.

In the past, the arguments were about abstract political philosophies over how the bitcoin network should be expanded. Today, as I said in 2014, this bubble has come to an end (for bitcoin) because the transaction limit has seized up the network. When you have people like us considering selling all our bitcoins into litecoins just so we can pay customers, that's a showstopper issue. Anyone who has bitcoins in off-exchange wallets is going to be in jeopardy of 0.5-bitcoin transaction fees as bitcoins plummet below $5000.

The Core developers are finally going to see a reckoning for what they have done. The Lightning Network is not ready, and even when it is, the fees will be too high for the on-chain transactions necessary for it to function. Bitcoin will probably rebound someday in absolute price, but the demand for cryptocurrency is astronomical right now, and the network simply isn't usable. Value is going to continue to flow out of the network very quickly as people like us see that our wallets are declining in price simply because of the fees required to spend them.
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AppleMiner
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Re: The worst business deal of the century, and bitcoin is seized up

Postby AppleMiner » Thu Dec 21, 2017 11:46 am

You are assuming they actually got picked up or are money solvent right now.

My understanding of no payouts until Jan, was they expected miners to just mine there and not get a daily payout until Jan also.
Not that they were going to pay back in january but that they wouldnt be able to pay anything out until then.

MMMM, mine at a place that already ripped me off, for a month and then I get to find out if I get ripped off again or not?
BIG PASS.

And if my company was making $1 million a day, I could totally see a corp buying buying it at $60 and running it for a year even to make their profits back.

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