Reply To: [HZ Mint] – New Asset on Horizon Asset Exchange (ROI in ~20 weeks)


Horizon: 0.00 HZ
17th December 2014 at 3:47 am

Hi, so apologies if this is a bit long, as I will try to be as detailed and thorough as I can in my explanation and reasoning.

So for the HZ raised, mostly it has been sold for BTC which was then used to purchase various mining shares (I use a cloud mining site as well as a 3rd party private hardware farm). I’ve been using the serviced provided by both sources for my own mining investments for a little over two months, and they have proved very stable and consistent, thus my reasoning for repackaging them together for HZmint.

Currently, HZmint owns around 160 mhs worth of Scrypt mining power. I’ve been portioning out between 5-20% of each week’s profits (variable depending on conditions) into a separate fund which will be used for reinvestments to even out profitability, and general emergency funds. You can think of it as a dev fund of sorts, mainly used for project-related expenses. Essentially, any non-payout funds we have leftover from each week will be put into this side fund which will be used for funding HZ-and-HZmint-related ventures (ex: multipool for HZ, paying various HZ bounties, etc). Note that while these ventures are not “necessary”, being an HZ investor myself, I think it would be wise to contribute to the HZ environment using HZmint profits. In the end, I try to model the weekly payout off the promised “3 HZ per share per week” estimation. If HZ prices are low, means we spend less weekly profits to buy HZ for payouts, means more money for reinvestment and for side fund. If HZ prices go up, means we spend more of weekly profits on HZ payouts, so less money for reinvestment and side fund. I take this approach as a method of hedging risk, as profitability decrease and unexpected delays are common in large mining operations.

As for source of payouts, so far the majority of HZ raised (80-90%) has been sold for BTC, for purchasing mining. Starting this upcoming week however, I will begin to use more of each week’s raised HZ for payouts due to a few reasons. Firstly, we will save quite a % on exchange fees, price slippage, etc, which will translate into HZmint payouts. Secondly, our current hashpower, while decent, is not large enough to make any real market impacts, which is one of my top goals for HZmint: to be able to build a large enough operation to become an HZ market maker. Thus, I believe it is wiser to save as much cost as we can, with an aim to build our operation as early as possible.

I understand there are concerns about Ponzi and pyramid-type schemes, which also use new investor funds for investor payouts, however I will explain the difference. In a Ponzi, there is no incoming cashflow aside from investor money; no new investor money, no cash inflow, thus no payouts. The difference with HZmint however, is that I am constantly monitoring our owned mining hashrate and weekly profit projections, to make sure that we are always making enough mining profit, to support current investors. Thus, in HZmint’s case, if no new investor money is coming in, there is no issue with payouts because we have our mining operation for the main source of cash inflow. As such, there will be no potential collapse of the system aside from the normal risks you take with traditional hardware or cloud mining.

In a sense you can think of our mining profits as our main revenue stream, and new investor HZ as a “complimentary” mechanism to save on exchange fees and price slippage. Since we are not able to make a real market impact yet, we should save our pennies where we can to build our operation up to a point where we can affect the market.

Thanks, and please do let me know if you have any other questions or concerns :)