Your stake, since you are a miner is to try and keep AMC down, so that your hashing rate will make you more bitcoins.

You have said this in your post before and I will paraphrase "Mining is a zero sum game you have to take it away from some other miner to make it yourself".

So that is your stake in attacking AMC.  AMC is building a very large mining farm and you want to do everything you can to stop what we are doing.  It has nothing
to do with you trying to protect newbies and everything to do with protecting your mining income.  Yes, you are a competitor AMC mines bitcoins you mine bitcoins, very
simple.  

That is the truth, there are only 40 Million Issued shares of AMC.

@Entropy-Uc  Have you ever disclosed that AMC is your competitor, because you are a miner yourself.

Here is my calculation of the Price To Book value of AMC

5.651 TH/s future hashing starting by August 31, 2013 at 40,000,000 Difficulty (Over 2X the current difficulty) by that time would generate $1,458,007.07 in eight months, the time left for the 40,000,000 Million shares to receive 100% of the dividends.  Now, take 50% of that revenue stream and reinvested that back in mining to keep the revenue stream up with the rise of the difficulty for the next 8 months.  Now, the revenue stream after the 50% reductions would be $729,003.535.  Now, lets convert that to BTC at the conversion rate used in the profit calculation which was $104.87 so that is 6951.497425384 BTC.  Now, lets calculate the Price To Book Value which would be (40,000,000 * .0008) / 6951.497425384  = 4.603324729 Price To Book Value, which makes AMC at this point a great value. 

Of course, Bitcoinx.com "Extrapolating bitcoin difficulty or price is pure voodoo", but above we have tried to take a stab at something that just might be close.  This does give us some idea of what the value of AMC is at this point in time.

Kenneth E. Slaughter, CEO/CTO
Active Mining Corporation
95 Wilton Road
Suite 3
London
SW1V 1BZ
United Kingdom
Fax: +44 (0)20 3004 1756

Active Mining Corporation (AMC) is a Belize International Business Company DBA Active Mining Cooperative and
is a wholly owned subsidiary of Virtual Mining Corporation (VMC) a Delaware Corporation.

There are only 40 Million Issued shares.  See the proof below:

1 share of AMC on BitFunder represents 1/100,000,000th of 100% of the monthly profits after all expenses.

AMC shares offer no voting rights. Shares of AMC on BitFunder do not represent real world shares of the
company. The shares are solely a distribution mechanism for rights to profits.

20,000,000 shares will be retained by AMC to maintain a growth and expansion fund.

As of the time of this writing, up to 40,000,000 will be released over time to the public on a varying
time scale as capital is required to complete the project. Any remaining shares not included in the
IPO are owned/maintained/controlled by AMC. These shares will be used at the issuers discretion
for any uses deemed fit. These uses are not limited to, but may include employment.

As for the ethics ...

I have been struggling to educate people about PMBs for months. I have consistently voted NO on every one (except BFMINES) and have posted in their threads. I voted NO on TAT.VIRTUALMINE. My main concern is the huge misconception brought about by the name "perpetual mining bond". These are neither perpetual nor bonds, and it is not obvious from the contract that all the risk is borne by the investor and the operator risks nothing.

I am not concerned about people making poor investment decisions -- as long as they are fully informed. Nothing in the TAT.VIRTUALMINE about the payment of dividends is deceptive, misleading, or false. I don't believe these are a "ripoff" because of this. To me, overpriced is not the same as ripoff.

Now, I am not supporting TAT as much as I am trying to get people to really understand where they screwed up. If they don't understand why they have lost money, then nothing has really been accomplished. If you convince people that they lost money only because they have been exploited, then you are doing a disservice to them.

As for my "bogus calculations" ...

Perhaps they lack important factors, but at least everyone reading my posts now has rudimentary understanding of the valuation of PMBs. I consider that to be a valuable contribution. I am not afraid to learn why you consider them to be bogus. Please show me how they are bogus. Please show me how to do it properly.

As a buyer, a fair price would have to be competitive with the cost of buying your own hardware and operating it.  Once you come up with a value for that, you then have to discount the price to account for default risk on the part of the operator of the bond.  That discounted value is an actual fair price for a mining bond.  But, such a price would be less than the hardware value, as operations costs are minimal, and the default risk is very high (I know this very well, having operating an FPGA farm that was over 1% of the total network last fall).  Since no one would offer a bond for less than the cost of the hardware there is actually no possibility of mining bonds ever being offered at a fair price.

As I recall, both GIGAMINING and YABMC launched with a price to book of 2. And yes, this is why I have ignored most of the recent offerings. Virtualmine is a little different, although I must say I did not expect TAT to satiate demand by calculating the price and selling into the market. To a great extent you're simply not supposed to do that, as it is a means of manipulating the market. In this particular case it's a virtual security so it's a bit of a grey area, but it looks very dangerous to me. I still bought some tho

I curious why you choose to buy PMBs if they are overpriced?

If you bought TAT.ASICMINER at 0.007 BTC, it was because you believed that the difficulty was going up by less than 6.9% every two weeks. You might be right in the end, but so far you have been wrong and that is why you have lost money.

Of course, this is the nature of business. Someone with access to cheaper or better technology or resources will out-maneuver existing competition, like I am now with BFMines and like someone may very well do if or rather when cheaper resources become available.

If you think this is a lack of scrouples, however, I encourage you to build an actual business case around an asset like this. If you don't have experience running businesses and building business plans, run your new plan by someone with experience. I've previously started and run eight businesses around the world, but I still felt the need to run the numbers by someone with more experience.

If you think this is a pot of gold, again, feel free to join the competition; if it is as luxurious as you claim, I'm fairly certain we'd see a lot of cheaper options on the market, considering that the only thing that really differentiates one contract from the next is the price.

.b

P/B ratio is mostly of interest when analyzing shares in a company.

Most constructions on BTCT aren't proper shares. They're not really your regular flavour of bonds either (in case of PMBs).

So I don't think you can simply apply P/B analysis to PMBs. As an example, if mining hardware breaks down and the company suffers heavy losses, its shares will lose considerable value. A PMBs contract requires continuous payments independent of external factors like said hardware breakdowns.

 I know it's all the rage to throw mud at anything resembling a PMB this week, but lets try to keep it a bit objective and apply metrics that aren't really made for the oddball financial product that is a PMB.

I'm fairly certain you misunderstand how P/B is used, especially considering this isn't a company, it is a contract. Thus, there are no future income of any sort in these assets; it's the IPO income for the entire future.

However, I can tell you that just the direct costs are also above 2x what you proposed. In fact, not accounting for any work, the total cost of putting this asset online, not covering any running expenses, no risk, and no work, is much closer to 100$/GHs than $20/GHs. Your P/B, if this was indeed a company, would thus be much closer to 4, which from your analysis you think is more reasonable.

You are of course free to believe or not believe this as much or little as you like, but let me ask you this: If you think it's so profitable to do this at 2x the backing cost, and that such a ratio would be fair pricing to investors, where is your asset priced at $40/ghs?

.b

You're missing key elements in your pricing. The cost of BFMines is far above $20/GHs. In fact, just the purchase of the miner is above that, not taking anything else into account.

For one, you can add the BTCT expected time of 10-15 hours of work per week for the lifetime of the asset. This doesn't generate any revenue and must thus be added to the cost. Even if I 'pay' myself minimum wage of $7/hour, that's $10K-$15K over three years or around 30% of the IPO proceeds.

Second, you can add the overhead of risk of hardware failure, again not producing any revenue but must be locked in. If the hardware fails after 1 day of operation (ignoring warranty for a moment) then in 1 month, the payouts must be covered from that initial IPO funds. I bear that risk, are you willing to assume the same for free?

Your evaluation is the equivalent of pricing Apple based on their purhase price of components from their vendors.

.b

I absolutely had and have hashpower. In fact, my hashpower backing came at greater expense than hardware. ALL hashes sold are backed before they are issued, not after. I have committed to always maintaining this backing just like any hardware-backed mining fund or bond.

There are no tricks here. To accuse me of such is to accuse all hash providers, whether it be DMS, Pajka, JAH, BASICMINING, Avalon, or even ASICMINER. Selling hashes isn't the problem here. It's that participating in mining is betting that difficulty will remain low enough for the buyer to profit, and that act requires a savvy and agile trader.

Make no mistake, every IPO purchaser had opportunity to profit before DMS came along.

The future of mining has not yet unfolded, and people will make money trading PMBs regardless. Just don't get trapped thinking that trading mining assets is a mindless or risk-free practice.

My own rules of thumb on whole shares only -

PTs are worth a little less than directs due to increased counter-party risk.
Burnside's are worth a little more than DeaDTerra's due to better feature set, in particular the ability to convert to direct.
PTs on BTCTC are worth a little more than PTs on BitFunder due to reduced lag (3 vs 6 confirmations, and I reckon more than 1 investor has been surprised and confused by the weex requirement).
However, increased lag on BitFunder causes their PTs to be priced slightly differently.
PTs on BitFunder are worth a little less due to the amateurish-looking-ness of both BitFunder and WeExchange, and the perception that one or both may be easily exploited.

I was under the impression that people who jumped on this soon after it came out made profit. If this is true, then TaT is still not responsible because he did not raise the prices; the security holders did. He has no control over whether or not someone wants to buy a security at a higher price. If someone offered $10,000 per share right now, that is none of his business. So how can he possibly be held responsible if their $10k share did not earn that much in dividends?

I may be missing something big here... as I'm seeing this there is still not any problem.

This right here.

I was actually questioning around a week ago why people were buying into this and what I was missing, based on the math that proved that if you bought in now you would never see your return. People continued saying it was a good deal and I almost jumped in on it, but I decided to go with my own mathematical instinct and went against it.

I don't think TaT has done anything wrong. This is like someone coming up with a business idea that is bound to fail, you investing, and getting pissed off at them because your money was lost. There is always a risk. Always. Even if you were able to invest in a new Wal-Mart being built, there is still a risk.

As far as I can tell, TaT has followed through with everything he said he would. Does that make it a good investment? Not necessarily. But it's not like he hid information or anything. It was clearly laid out that each bond was worth 1 MH/s. Anyone who knows even the basics about mining knows that 1 MH/s, with difficulty constantly climbing, will keep getting less and less valuable.

Hi Entropy-uc,

Can you please confirm (through PM) that I sent you the payment of 2.95 BTC?
I've been waiting for this for 3 days now.

Thanks in advance,
bitfitted

The problem with that is this:

1.  Rises in difficuly early on have a much larger impact than ones later.
2.  Your bond doesn't start mining for months - i.e. AFTER the most important rises.
3.  10% rise per month (NOT per change) seems rather unlikely - given the rise when your miner and others from same manufacturer wil ship will far exceed that just on its own.

Your bond pays 20% extra for first 6 months after starting, supposedly to make up for not mining already.  But a 20% bonus for 6 months in the future is at best 1.25 months at current difficulty IF difficulty didn't rise at all.  As you can't mine without difficulty rising (as your miner can't even exist without increasing difficluty) that means it's actually far worse than 1.25 bonus at current difficulty.  So if comparing yours to ones already mining investors need to be aware that even with the bonus it represents significantly less payout than 1 MH/S mining already.

None of which says it'll never make a profit - it just looks exceedingly unlikely to do so in the sort of time-frames you quoted.

Mining is marginally profitable - any markup of more than 10-25% on cost of hardware is rarely going to make a profit (often selling at cost will make a loss).

Your math is fine - your assumptions aren't.  With avalons arriving, their chips due soon, BFL starting to ship, ASICMINER aorund and (if yours is ever to do anything) KNC (or whatever they're called) also shipping expecting rises of only 10% per month (i.e. under 5% per change) in the short-term is pure fantasy.  And that's without the scammier other manufacturers where one or more might turn out to be real.