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Even at 21 TH/s, this would still make Cado 5.4 times more efficient than AM using the same calculations and assumptions.

Many thanks, I'll bookmark it.  Obviously this posting isn't meant to bash either asset (again, I own both), but rather clarify why exactly investors have chosen to price the assets in such a disparite manner.  If ASICMINER has added future hashing power, this could be a possible reason.  However, you have to wonder if maybe the ASICMINER name has become priced higher than its really worth.

Many thanks, I'll bookmark it.  Obviously this posting isn't meant to bash either asset (again, I own both), but rather clarify why exactly investors have chosen to price the assets in such a disparite manner.  If ASICMINER has added future hashing power, this could be a possible reason.  However, you have to wonder if maybe the ASICMINER name has become priced higher than its really worth.

This means that Cado.AvalonB3 is, in theory under the equal-hashing-power-output assumption, is approximately 13 times more efficient than ASICMINER at the current share price.

So either I'm completely wrong, ASICMINER prices are very overpriced.

This is the dirty little secret the people pushing AM don't really want out.


FTFY.

This is the dirty little secret the people pushing AM don't really want out.


FTFY.

My opinions on this:
1. The marginal cost for ASICMINER is much lower.
2. ASICMINER is the developer of the chips. So they can sells as they develop better chips (Hence the latest 50 blades auction)
3. They have a headstart, A relatively long one at that.

I agree on the fact that the shares prices are overpriced at the moment in regard to the current hashrate. But this gap is getting smaller everyday and ASICMINER investors are speculating on what is going to happen after crossing the line of one ASICMINER share being entitled to more hash power than the price could buy.

My personal estimate is also considering speculation price increase after that so a share would be traded at 2BTC+

My humble opinion on the matter.

- Lophie

Are you suuuure it's overpriced?

Still butthurt over Asicminer not listing on your exchange, heh?

The domestic textile industry operates in a commodity business, competing in a world market in which substantial excess capacity exists. Much of the trouble we experienced was attributable, both directly and indirectly, to competition from foreign countries whose workers are paid a small fraction of the U.S. minimum wage. But that in no way means that our labor force deserves any blame for our closing. In fact, in comparison with employees of American industry generally, our workers were poorly paid, as has been the case throughout the textile business. In contract negotiations, union leaders and members were sensitive to our disadvantageous cost position and did not push for unrealistic wage increases or unproductive work practices. To the contrary, they tried just as hard as we did to keep us competitive. Even during our liquidation period they performed superbly. (Ironically, we would have been better off financially if our union had behaved unreasonably some years ago; we then would have recognized the impossible future that we faced, promptly closed down, and avoided significant future losses.)

Over the years, we had the option of making large capital expenditures in the textile operation that would have allowed us to somewhat reduce variable costs. Each proposal to do so looked like an immediate winner. Measured by standard return-on-investment tests, in fact, these proposals usually promised greater economic benefits than would have resulted from comparable expenditures in our highly-profitable candy and newspaper businesses.

But the promised benefits from these textile investments were illusory. Many of our competitors, both domestic and foreign, were stepping up to the same kind of expenditures and, once enough companies did so, their reduced costs became the baseline for reduced prices industrywide. Viewed individually, each company's capital investment decision appeared cost-effective and rational; viewed collectively, the decisions neutralized each other and were irrational, just as happens when each person watching a parade decides he can see a little better if he stands on tiptoes.

After each round of investment, all the players had more money in the game and returns remained anemic. Thus, we faced a miserable choice: huge capital investment would have helped to keep our textile business alive, but would have left us with terrible returns on ever-growing amounts of capital. After the investment, moreover, the foreign competition would still have retained a major, continuing advantage in labor costs. A refusal to invest, however, would make us increasingly non-competitive, even measured against domestic textile manufacturers. I always thought myself in the position described by Woody Allen in one of his movies: "More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray we have the wisdom to choose correctly."

For an understanding of how the to-invest-or-not-to-invest dilemma plays out in a commodity business, it is instructive to look at Burlington Industries, by far the largest U.S. textile company both 21 years ago and now. In 1964 Burlington had sales of $1.2 billion against our $50 million. It had strengths in both distribution and production that we could never hope to match and also, of course, had an earnings record far superior to ours. Its stock sold at 60 at the end of 1964; ours was 13.

Burlington made a decision to stick to the textile business, and in 1985 had sales of about $2.8 billion. During the 1964-85 period, the company made capital expenditures of about $3 billion, far more than any other U.S. textile company and more than $200-per-share on that $60 stock. A very large part of the expenditures, I am sure, was devoted to cost improvement and expansion. Given Burlington's basic commitment to stay in textiles, I would also surmise that the company's capital decisions were quite rational.

Nevertheless, Burlington has lost sales volume in real dollars and has far lower returns on sales and equity now than 20 years ago. Split 2-for-1 in 1965, the stock now sells at 34-on an adjusted basis, just a little over its $60 price in 1964. Meanwhile, the CPI has more than tripled. Therefore, each share commands about one-third the purchasing power it did at the end of 1964. Regular dividends have been paid but they, too, have shrunk significantly in purchasing power.

This devastating outcome for the shareholders indicates what can happen when much brain power and energy are applied to a faulty premise. The situation is suggestive of Samuel Johnson's horse: "A horse that can count to ten is a remarkable horse, not a remarkable mathematician." Likewise, a textile company that allocates capital brilliantly within its industry is a remarkable textile company, but not a remarkable business.

My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: "When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact." Nothing has since changed my point of view on that matter. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.

Thanks for the updated number, I couldn't find it anywhere (although I'm sure its prob posted a number of easily-accessible places).

Still butthurt over Asicminer not listing on your exchange, heh?

mining is a fixed income gig

obviously, he is.  

But thank goodness Friedcat could see through that nonsense.  He's done really well for the shareholders.

yeah, just look at how fixed that income is...

https://docs.google.com/spreadsheet/oimg?key=0AkPdXsQFT-vIdHRVUjQ5Ql9BQWR6OENLMkhyUktUblE&oid=22&zx=4hydcqj2azh62 (https://docs.google.com/spreadsheet/ccc?key=0AkPdXsQFT-vIdHRVUjQ5Ql9BQWR6OENLMkhyUktUblE#gid=12)

I wonder what other security offers 45+% APR in dividends?

Read up on that: http://polimedia.us/trilema/2013/the-best-investments-in-the-history-of-bitcoin/

Anyway, these threads are pretty funny. April 2012 nobody had heard or cared of Asicminer, everyone was gaga over gigavps' mining thing, which also went to about 1.5 before disappearing into the pits of nothingness, leaving behind the usual 70% hole in "investors'" pockets. Exact same "arguments" coming from a different set of six-week-old experts, meanwhile silenced by the inexorable workings of capital flow. Nobody wanting to sit down and do the math of how exactly PMB (http://polimedia.us/trilema/2012/the-problem-with-pmbs-ie-perpetual-mining-bonds/)s work and what portion of the "dividends" is actual yield and what portion reflects returned principal. Everybody knowing better on the grounds that hey, why not. It's the Internet.

I'm pretty sure come 2014 you'll be gone and I'll still be here, saying the same thing about the same nonsense while a similar bunch of nobodies will be telling me all about how I'm jealous over their pyrite find and whatnot. And I'll have one more bead in the track record of publicly humiliating forum experts, and the links to prove it, which no forum expert will have the patience to review. Too superficial for that and after all hey, why bother to do the work when you can imagine you're right anyway. It's the Internet!

Easiest job in the world, to be honest. I'm starting to like it.

yeah, just look at how fixed that income is...

I wonder what other security offers 45+% APR in dividends?

Anyway, these threads are pretty funny. April 2012 nobody had heard or cared of Asicminer, everyone was gaga over gigavps' mining thing, which also went to about 1.5 before disappearing into the pits of nothingness, leaving behind the usual 70% hole in "investors'" pockets. Exact same "arguments" coming from a different set of six-week-old experts, meanwhile silenced by the inexorable workings of capital flow. Nobody wanting to sit down and do the math of how exactly PMB (http://polimedia.us/trilema/2012/the-problem-with-pmbs-ie-perpetual-mining-bonds/)s work and what portion of the "dividends" is actual yield and what portion reflects returned principal. Everybody knowing better on the grounds that hey, why not. It's the Internet.

but if their 2nd generation ASICs fail to impress, then they're looking at some serious competition that is probably ready to deploy better hardware before them.

Batch 3 ? Good luck.


has they announced the 2nd gen plan ?

gosh, you are quite hurt about something deep inside aren't you.

I'm not saying you're wrong mind, just that you have a real attitude problem. You watch out for that you hear? You might get high blood pressure and you might bleed out a bit faster when you fall from that high place you're on at the moment. You pro level understander of business you

I don't think you quite catch the 'fixed' part. There's a fixed amount of BTC created each tick, and nothing AM can do will ever change that. That level is approximately 2 times what they're currently yielding or 4 times if they decide to screw Bitcoin over completely.

There is no way they can ever exceed that. Thus, fixed income, and the only thing that differs is the percentage of that fixed income that AM has.

Of course, theory makes it possible for AM to go outside BTC denominated income, do currency conversion to increase its yield to some extent,

This isn't a situation unique to Bitcoin or PMBs at all, it is a situation in all cross-currency investment. If you bought Apple shares denominated in US$ by selling Euros and the price of USD/Euro shifted, you'd have the same situation. The volatility of BTC makes this 'problem' more apparent, but it's far from unique.

Try running the same numbers for a stock denominated in Zimbabwe Dollars and you'd see you'd make a killing with a US$1 investment, having trillions or percent profit, but on the other hand, you'd still be stuck with $1 worth of assets when you convert your gazillion Z$ back to USD (assuming that was possible, of course).

It does depend on how you denominate your assets. Having ฿40 worth of mining equipment at $200/฿BTC is exactly the same as having ฿100 worth at $80 if you denominate your portfolio in USD. Thus, investing in mining is always a bet that prices of BTC goes down more than the depreciation of your USD-denominated equipment. Again, this is exactly the same as any cross-currency investments; If you invest in something denominated in currency A that produces revenue in currency B, you want currency B exchange rate to go down more than the depreciation of your A-denominated assets.

.b

I don't think you quite catch the 'fixed' part. There's a fixed amount of BTC created each tick, and nothing AM can do will ever change that. That level is approximately 2 times what they're currently yielding or 4 times if they decide to screw Bitcoin over completely.

There is no way they can ever exceed that. Thus, fixed income, and the only thing that differs is the percentage of that fixed income that AM has.

At current price levels or perhaps slightly above, AM needs to maintain their current percentage for the rest of the current block reward rate to just cover the expected drop in value after block reward halving, meaning that any competitor entering the scene will drive the value (not price) per share down.

Of course, theory makes it possible for AM to go outside BTC denominated income, do currency conversion to increase its yield to some extent, or hope the uptake in BTC usage and subsequent transaction fee increase will catch up to the block reward subsidy drop.

In a perfect world, where investors do their math, they are currently investing in the potential for such earnings, not in the potential mining value of AM, even if they manage to stay alive for the full current block reward and maintain their current share of the hash rate.

.b

Read up on that: http://polimedia.us/trilema/2013/the-best-investments-in-the-history-of-bitcoin/

So given these assumptions, shouldn't we all be able to determine the value of each mining share (within an expected range) of different companies at any given time using a time-weighted first-order Taylor approximation based on mining power?  At least it should be able to prove efficiency one way or another.

Amusingly enough the exact same theory with currency conversion etc was what idiots like Gigavps and scammers like oh, I won't bother to name the lot were proposing is allowing Pirate to pay out "exceptional" APR. Just a thought.

This is absolutely correct, but the combination of fixed income, commodified market and huge fx risk has to have a name. Something like the widowmaker, for that's what it is. In fact this particular tarpit has killed more BTC names than any other.

What AM does to throw a wrench in it is to not do mining only

This "not mining only" is perhaps mostly a red herring.

Wouldn't AM have much more to gain by opening their own exchange to replace gox?

Because that ~0.03 dividend is hard to argue with right now. 

In fact, it's easy as hell unless you think of AM as a short-term blip that will be gone or seriously crippled in a couple of years.

Speaking of this same share-of-mining-power argument though, are there any other assets/funds that have as robust of a expansion plan as AM though?  Because that ~0.03 dividend is hard to argue with right now.  That being said, I'm still rating AM as a "hold" rather than a "buy".  Wouldn't sell my shares (TAT's PT shares, actually...thanks again btw, TAT), but at the base shares trading at a price of >1.7 BTC, I can't really afford to throw down on additional shares atm, so I'm stuck where I'm at nonetheless.

And here we are about a week later with ASICMiner around BTC2.40 - BTC2.60. Don't know about you, but I'm glad I didn't sell out.

I've also been considering the fact that AM is selling Blades at a very healthy rate and very nice price (for the seller). That's essentially tapping into future mining, now. That means AM has effectively increased their total hashrate by the number of miners sold (less some possibly small percentage if you wish).

I read earlier where someone said it wasn't possible for AM to go beyond the 51% limit without essentially destroying BTCitcoin. That isn't true. Selling mining cards gives them essentially the ability to do just that: capture future mined BTCitcoin now.

That's why the dividend can be so far above the mine production rate.

I also notice that it's possible they are holding some of the proceeds from those sales to use for R&D or future dividends. That's excellent business management. I'm certain others have noticed also, and that's part of the reason for the current high share price. And it may continue.

They were pushing further up to around 3 BTC at the end of last week.  And yeah, the price isn't so important as is the rate of return via dividends.  It could very well be possible that people are just willing to accept a lower yield from AM in exchange for the safety of the asset.

^^^^^ it's really quite simple. Why would ASICMINER want to destroy Bitcoin, and the lovely highly profitable company they have made, with a 51% attack. That doesn't make any sense.

And it's not exactly an easy task to accidentally get over 51%, and accidentally then breaking everything. 1% of the Bitcoin mining network is an incredible amount of processing power. It's not like AM will be at 46% and than accidentally turn one too many 100 T/H server blades on and then destroy everything.

Sorry I started to ramble a bit there, but my main point was that I was wondering if it would ever be possible for prices to be pegged to AM's output.  This was the bigger question in my mind, although now that I think about it, the 51% attack actually would serve as a limiting upper bound in the market for that exact reason (that AM would never push beyond the 51% mark).  However, if they were in the 40-45% range (assuming they'd set up a buffer of sorts to make sure they didn't go past the 51), wouldn't they still be able to collectively control prices?  I mean obviously this is mostly a theoretical argument, but after studying economics in school, you start to postulate about these kind of things for fun.

Hashrate can be found at BTCGuild as user 67117 and BitMinter user realasicminer :-)

Any updated info on hash rates?

http://www.asicminercharts.com/live/

How do we get our shares or some compensation for our shares that have been transfered back to the issuer?

This project has ended now...he sold the avalons and the dividend plus hardware sale will be payed as a last dividend.
You need to send him a signed message of your bitfunder address to 1b34iev@gmail.com with a note that this is ok for you to get your dividend send to xxx address.

The thread is here https://bitcointalk.org/index.php?topic=194505.0 wonder why there is no translation in english for you guys...