Could it be someone is selling in order to have cash on hand to buy back cheaper during the expected "n00b drop" on Wednesday?

In that scenario, I assumed there would be hardware sales the next year. With hardware sales, the revenue can exceed what is mined in that year, because old money buys new gear. For AM, it brings revenue forward in time - instead of mining 25 BTC with a Blade over the next few years, they can sell the Blade for 25 BTC get the money immediately. So in that sense, it doesn't "break the laws of mathematics", so to speak.

(For the same reasons, it IS possible to exceed 0.064 btc/week dividend - by time-travelling revenue through hardware sales!)

But whether or not it is a plausible scenario, is an exercise left to the reader!

Surely AM will continue operating for more than one year!

Edit: However, it would be pertinent of me to add a discount factor to my "calculations" - but the effect would be tiny compared to the broad assumptions

Short term, I don't believe the difficulty increase to have a significant price effect. However, I think "low" dividends on Wednesday will cause a sell-off from more inexperienced "investors" who have done too little research.

There appear to be a good number of shareholders that are panic-prone and have little understanding of both investing and the company they have invested in. They will see lower dividends than they were led to expect [since hardware is out of stock], declare the whole thing a scam, then sell shares at discount prices because they believe the sky is falling down. The kind of "investor" prone to this kind of panic behavior is not the same kind of investor that closely follows network hash rate, so I think Wednesday's price movement will drown out anything we may see today.

But then again, maybe not.

According to some more calculations I did, gen 1 hardware continues to be profitable in operation until network hash rate reaches 29 peta-hashes per second, regarding the initial investment as a sunk cost - meaning that gen 1 hardware will remain profitable for a very long time still (unless BTCUSD drops dramatically). It is likely cheaper to produce gen 1 hardware than gen 2 hardware, so devices can be sold more cheaply and undercut the prices of competitors - and given that the devices will remain profitable for a long time still, I believe there will still be plenty of demand if the price is right. In my opinion, gen 1 is not ready to be retired after this 200 TH order is delivered. In fact, it may be just getting started.

Gen 2 will be an important step, and I am happy to see development happen right now because it takes time to design and plan. But it may actually not be lucrative for miners to buy, taking into account USD/GH and operational costs of gen 1, until network hash rate rises to double-digit peta-hash.

In the end, I don't know the production costs of Gen 2, but they play an important role in the dynamics of the situation.

Hopefully there will be other competitors soon, but I still believe AM can retain a 25% market share (mining+sales).

Edit: Does not constitute investment advice, all statements about the future are uncertain.

Optimism has worked out pretty well so far.

The estimate takes into account decreasing mining revenue, but may be on the optimistic side.

Let's do another one. First assume that selling hardware and mining generate the same revenue, then assume that AM hardware keeps mining 25% of the network hash rate - because of the first assumption it doesn't matter whether it is friedcat and friends that are hashing it or someone who bought AM hardware, revenue for AM is assumed to be the same in both cases. Say there's 5 million BTC to be mined over the next four years, then it works out to approx. 3.1 BTC per share.

Looking at the competitive landscape, can AM churn out 25% of hashing hardware? Well, they have already manufactured hardware for 46% of the current network hash rate. They have an established production line, great cash flow, no debt, undelivered orders already paid, and a production cost that (I'm pretty sure) outcompetes all the other companies. I am confident they can manufacture at least 25% of all hashing hardware for an extended period of time, possibly significantly higher than 25% in the short term.

So let's say - conservatively 3.1 BTC per share.

No idea what the current quote is, but let's make a short back-of-the-envelope calculation based on what is currently known:

1. 200 TH/s arriving soon (July?): assume the order is already paid in full, and that it is only Blades, i.e. 20 000 Blade units. Assume half will be sold and half will be used for mining. Sales price will be lower than earlier, let's assume 25 BTC per Blade. And let's assume that each blade will earn the same amount mining over the next year, so 25 BTC/Blade * 20 000 Blades = 500 000 BTC, or 1.25 BTC per share in revenue over the next year from this order only!

2. More hashing power based on current-gen tech could easily be ordered, costing 10k USD per TH/s. Assume two more 200 TH/s orders over the next year, each earning a revenue half of the preceding order, so 0.625 BTC and 0.3125 BTC (per share) respectively.

3. Next-generation technology: assume AM can squeeze the same amount of revenue over the next year from next-gen tech as they will with current-gen tech. 1.25+0.625+0.3125 BTC

One-year revenue forecast per share: 4.375 BTC per share.

Costs: R&D, production and operations - no idea! 1 BTC per share?

So based on these horribly vague and unreliable assumptions, I see dividends of 3.375 BTC per share over the next 12 months. Assuming performance halfs every 12 months (competition, market saturation, etc.): dividends of approx. 6.3 BTC per share over the next 4 years.

Based on plenty of assumptions, I estimate a fair value above 6.3 BTC per share.

This appears pretty reasonable in my opinion: would mean company value is about 2.5 million BTC or approximately 25% of the remaining BTC to be issued. It can easily be imagined that 25% of the remaining BTC will be mined using AM hardware, and if the hardware is sold at a price close to the break-even price it means 25% of the remaining BTC to be issued will fall in the hands of AM.

My speculated fair value: 6.3 BTC per share.

I read the article quite closely, and I'm quite sure there was absolutely no mention of that in the article. I couldn't find any direct or indirect reference to Bitcoin at all, actually.

I may be a little slow, but what on earth did that have to do with Bitcoin???

Inb4 Kiba!

(I.e. date wrongly formatted...)

Cat rich or fry tryin'!

First, let me apologize to all the other readers of this thread for harping on about this.

Secondly, I guess "value" is a very subjective notion and I am perfectly happy to agree to disagree on this.

Furthermore, I agree with you that the future is uncertain - also with respect to AMs future performance, it is by no means guaranteed that it will continue to be successful.

But the difference between AM and a piece of hardware is that AM is capable of strategic adaptation. I concede that a specific piece of hardware may outperform AM for a short period (your example arbitrarily showed one year, and I suppose that is OK for your purposes, but my horizon is longer). Beyond the very short term, however, the capability to adapt becomes more important: in three years the piece of hardware you purchased today will continue to hash at 5 GH/s regardless of what the network hash rate is (i.e. essentially earning very low returns), but at that time I expect AM has expanded and evolved way beyond what it is today and continues to rake in large profits.

It is uncertain whether or not AM will still be raking in huge profits in three years. But I can guarantee that your 5 GH/s miner will be more or less worthless at that time.

Those are just my thoughts, and anybody is of course welcome to disagree and invest as they see fit, focusing on the time horizon or risk profile that fits their personal taste. So now that I shared that, I will stop harping on about it - back to your regularly scheduled programme...

The comparison is faulty because AM is a company and the other alternatives are hardware.

Why is that relevant, you ask? Well, AM will (hopefully) continuously renew itself and its strategy in order to keep earnings high, whereas the hardware simply gets outdated and earns progressively less and less as time goes along. So: buying hardware may earn you more in the short term, shares in AM may earn you more in the long term.

There is a type of person (I know many of this type, don't know why) that (1) is a complete idiot, (2) is unwilling to learn anything from others, and (3) will insist he is right about everything all the time - even when presented with clear evidence that he is not.

There are surprisingly many of this type around, and in my experience a lot of them are actually in IT. There is probably some kind of psychological profile for this, but I digress. It can be frustrating to be around this type of person, but it makes for a hell of a wind-up!

In this case, comparing the sales prices of the offerings is misleading. AM can sell at high prices at the moment because they are delivering within days rather than months, and some people are happy to pay a premium for that, which is why AM can command a higher price.

In order to establish who is more competitive of BFL or ASICMINER, it would make more sense to look at the production costs, since this forms a lower limit to the price - the price to which the units can drop when competition gets stiff.

And with a production cost of around 10 USD per GH, I'm pretty sure ASICMINER has a good chance of beating the competition. Anybody have any estimates for BFL production cost, for instance?

At 3 o'clock UTC, 5863.26810147 BTC were moved from the ASICMINER mining address (but still unconfirmed):

https://blockchain.info/address/1HtUGfbDcMzTeHWx2Dbgnhc6kYnj1Hp24i

This will probably be the portion of the dividend from mining paid out this week, approx. 0.14658 per share. On top of that will be hardware sales, and operational costs might be subtracted. My guess is altogether 0.025 per share again.

Almost 1500 BTC still remains at the mining address [non-mature outputs, etc.].

Popcorn instead of chips?

Have fun on your vacation, I'm sure BFL will still be working on their backlog when you return!

It was obvious from the start that there would be competitors. I think everybody is surprised so far at the inability of the competitors to deliver, but I expect that competition is already priced into the shares at this point.

[Note: highlighted the important part in your quote - with BFL it's always two weeks until they have any impact!]

That would be a very clever system indeed. It's along the lines of the idea of contracts championed by Mike Hearn (https://en.bitcoin.it/wiki/Contracts#Example_4:_Using_external_state), which is currently under development. It's mind-blowing in itself, but difficult to say when it will be ready for testing/general use.

Some kind of service would need to be built around it to facilitate the matching of bettors, and "the oracle" would need to be fed regularly with event outcomes by a trusted party.


I see the same advantages of such a system.

The system I have in mind is a little more primitive, however, and works with existing Bitcoin features. Easier to explain by example - I can try setting up an example and running it here on the forum, anybody know of any upcoming events that would be fun to predict?

I don't think this is the right place to discuss such deals.

But just let me point out why nobody is interested in your offer:
Market price of 3xAvalons: Approx. 750 BTC
Market price of 500 ASICMINER shares: Approx. 1200 BTC