MPIF (F.MPIF) August 2014 Statement

F.MPIF has a total of 2`186`753 authorised shares outstanding. The total assets per share implied value is thus 0.00021666 BTC. The cash+tangible assets per share implied value is thus 0.00021666 BTC.

Nominally F.MPIF has made a loss this month. However, considering that the 2 BTC charge for mining represents a commitment now that will deliver most of its fruits in the future (to the tune of about 1.5 BTC of that total 2, seeing how I only paid for two weeks in August, 0.24 and 0.22 respectively) we could just as well say we're ahead 3/4 BTC.

Of major concern is the sudden cash-heavy position F.MPIF finds itself in - we are now 90.3% cash and cash equivalents. This situation is certainly not by design, nor is it deliberate. It does not reflect a decision made by management, at any level, to decouple from the Bitcoin marketplace. This situation is moreover the result of the incredible fragility of the ecosystem - we used to have a significant portion of our capital invested with Just-Dice. A couple of months after our investment, the site closed. This exercise month Panacea closed as well, S.WOL is not yet developed sufficiently to be able to put our coins to very good use, and suddenly we're left without any real investment anchors. This is a very serious problem - without investments one can't realise profits.

No matter how serious a problem the foregoing, F.MPIF was designed and sold as a safe investment. Consequently I will not chase investments for the sake of being invested ; our selection process will remain as rigorous as it has always been, and if that means a large cash position then that's what we hold. Had F.MPIF balancesheet been significantly larger, this month would have also resulted in a significant capital distribution back to holders in the form of a dividend. As it is, I judge the size of F.MPIF too small for its sudden move to cash to significantly impact macro equilibriums, and since our own PC5 handles share repurchase and maintains the price reasonably alligned with intrinsic worth, there's no real micro consideration pushing for a distribution of capital.

This call on my part opens the door for an interesting exercise in pitting man versus market : if indeed my judgement is correct, and F.MPIF's position simply reflects yet another nuclear Autumn in Bitcoin finance^vii there will be no great demand to unwind private F.MPIF investments. If on the contrary the call is wrong, and there exist better investments to be made than what F.MPIF is holding then people will simply unwind, selling their shares into PC5's bids, and I will simply supplement the capital allocation to that unit qs. Time will tell either way.

Meanwhile, it must be said that F.MPIF has managed to attract some quite respectable management talent, and on the score of creating documented track records for their evolution it is doing exceedingly well. I am for this reason very pleased - because making money is always nice, but the people who can make money are quite priceless and in any case preferable.

1. Partial loan repayment in sum of 0.53687148 BTC and interest in sum of 0.02253487 BTC. [↩]
2. We've cut a deal to support ATC with some rented hashpower. Reading references : 1, 2, 3. While the commitment is spread out over the weeks, I'm just going to book it here upfront. The guy seems credible enough, if it needs renegotiation I'll just get more hashes rather than ask for BTC back. If he splits I'll do an income for the remainder then and that's that. [↩]
3. Interest and principal. S.WOL doesn't really need to hold on to 200 BTC currently ; we've made an arrangement where the loan is replaced with a line of credit, which they can draw as needed. [↩]
4. It closed down early this month. You know, just in time for the mega FOREX volatility yesterday. [↩]
5. 13.85084467 BTC PC 1 + 37.51316402 PC4 + 21.63433032 PC5 + 355.07405515 unallocated reserve. [↩]
6. 4.024047766738874 BTC (take that jurov!!1) in ATC in PC1 ; 11 BTC in bets made by PC4 ; 30.01411566 BTC PC5 + 0.68592309 BitBet credit line. [↩]
7. These happen with some regularity by now, Bitcoin is really incredibly seasonal for some yet ununderstood reasons. A similar freeze-up in August-September 2011 for instance completely disrupted S.DICE trading (at the time a major asset in some months successfully rivaling S.MPOE in market cap) and perhaps was one of the contributing factors to its ultimate demise. [↩]