Brock Pierce: Bitcoin Foundation ‘running out of funds’

     The Bitcoin Foundation’s board of directors was told during a meeting on Oct. 20 that the foundation would soon run out of funds.

Minutes of the meeting were released yesterday and show chairman Brock Pierce opened the event with a statement declaring the foundation was "running out of money".

     Further disclosures during the conference showed it was struggling to generate significant revenue. The foundation’s last event, the third in a series of DevCore workshops held on October 16 in San Mateo, California, brought in just $2,000 in sponsorships.

     The foundation has already implemented cost-cutting measures to reduce the flow of money. Minutes from a September board meeting show that only "5% to 10%" of the "previous budget" was spent. The last time the foundation was spending $150,000 a month was last May, according to minutes released at the time. At that time, the foundation was run under a different board and staffed by executive director Jon Matonis.

Burn Rate

     The foundation is currently spending $7,500 per month, which is 5% of its $150,000 monthly budget. According to the July board meeting minutes, the foundation has $59,000 in funds. Based on these estimates, the foundation has enough funds to last until March of next year.

Bruce Fenton, executive director of the foundation, said at the October meeting:

     "What we need to do is raise money immediately... Revenue is key and we have cut expenses to the best of our ability."

     The foundation currently has two part-time staff. Fenton runs the organization at no cost. The majority of the board's expenses come from commitments made by the previous regime. These include supplier invoices, past employee expenses, paid leave costs and legal fees.

     The new board election took place in March. Candidates complained about an overhauled voting system, poor voter outreach and allegations that the organization was bankrupt.

     Disputes over unresolved payments were also raised at the October meeting. Interim Executive Director Patrick Murck has yet to underwrite $12,000 in travel expenses to attend the DevCore seminar in London in April. Meanwhile, former president Peter Vessenes still owes the foundation between $10,000 and $18,000, depending on whether his claim for unpaid travel expenses is accepted.

Short of Bitcoin?

     According to Fenton, the foundation’s monetary woes could be caused by the fact that the bitcoins were lost.

     The group had an Avalon mining operation in its early days that should have generated significant Bitcoin accumulation, but Fenton was pessimistic about tracking and recovering any lost coins, although Pierce suggested contacting a blockchain analytics firm to be able to track any lost funds.

     The meeting also discussed ways to make more money after the DevCore workshop, including sharing revenue through a partnership with conference organizer Inside Bitcoins. A similar idea to partner with this publication was also floated at the September meeting, but CoinDesk never received a proposal from the foundation.

     Pierce asked each board member to raise $10,000 a month before the next meeting, which ended. Only Bobby Lee, CEO of BTCC, China’s largest bitcoin exchange, said yes. Jim Harper, a senior fellow at the Cato Institute, said he would “do what he can,” while entrepreneur Olivier Janssens demurred, citing the foundation’s poor image as a major obstacle.

In response, Pierce managed to convene his board of directors to highlight the severity of the foundation's financial problems:

     "We are a foundation. We don't have any resources. This is who we are. If you don't like the foundation's position, then you don't like yourself... Every board member should be prepared to do their job to ensure that the foundation can continue to operate."

     Fenton pledged to donate $10,000 of his own income if the rest of the board committed to the fundraiser. Micky Malka of venture capital firm Ribbit Capital and Elizabeth Ploshay of bitcoin payment service BitPay were absent from the meeting.