Q&A with Richard Dwyer of Liquid Mining Inc

Unlike many new investment opportunities that are backed by a business plan and goodwill, an investment in LMI is secured by the equipment being purchased with the offering proceeds. There is a saying at Goldman Sachs that volatility is their friend. The same can be said for miners of Bitcoin if they are structured correctly. LMI has no leverage and other than the proceeds from its current offerings, has no debt. Many miners leveraged their equipment and Bitcoin at 2 times or more, and while this enabled them to grow very quickly they suffered significant financial stress as prices fell. This forced many to liquidate holdings, equipment, or cease operations.

The silver lining is that as Bitcoin prices have fallen, the cost of the mining equipment has also fallen, where it is currently at 30 - 35 cents on the dollar. This enables us to purchase 3+ times as much equipment as could have been purchased only 5 months ago. In addition, we are able to purchase high capacity low power usage units that when combined with our low cost of power makes us very profitable even at todays low prices. As Baron Rothschild said, ""The time to buy is when there is blood in the streets."" Now is the perfect time to engage in mining and minimize risk and maximize profits.

When you invest in Bitcoin directly you have a single asset that will fluctuate in value as market conditions change. With Bitcoin mining you have an enterprise value that is generating predictable income daily, even though that income will change as the price of Bitcoin changes. As an example, let's assume you invested $100,000 in Bitcoin at an average price of $23,000 per coin, you would then own approximately 4.4 Bitcoins. If the price tripled over the next two years, you would have about $300,000 in value. With our approach of continuously expanding LMIs mining capacity that same investment would have yielded between $500,000 and $1.5 million depending on when the price tripled. Furthermore, these returns would continue without any additional investment.

The barriers to entry for mining are low, the barriers to successful mining are daunting. You must first find a location that will provide you with the quantity of power you need and also do it at a rate that is low enough to generate a profit, under $0.055 per kWh. Next you will need to determine which equipment to acquire and how to get it. Then you will need to decide how you will deal with the tremendous amount of heat and noise that will generated from the mining equipment. Each unit puts out between 3.5kw to 5kw and generates about 75 db of sound. You will then need to have people available to do maintenance, installations, networking, repairs and manage operations. You will also need a way to accurately track mining activity, expenses, and taxes.

Investments have an initial three year holding period and can be redeemed after 36 months for the full face amount or the term can be extended on an annual basis. The financial model was designed with the anticipation that the price of Bitcoin doesn't increase above $20,500 for the foreseeable future. If Bitcoin stays at that level for the next 3 years then the returns for the first three years are 10%, 15% and 27% respectively, or a CAGR of 15.7%. If Bitcoin were to rise to $30,000 immediately then the returns are 33%, 97%, and 282% respectively, or a CAGR of 79%.

Any increase in Bitcoin between now and the end of three years should provide a return between these two examples. While we do expect to see Bitcoin increase in price significantly during the next three years, we are making no projections regarding that increase. In addition to the yield that will be received, each investor will have the option to convert their investment into common shares at a 20% discount upon a public offering, or they can redeem their investment for the full face amount.

Finally, we can custom structure a fixed rate of return for an investment group with $10 million or more to invest.