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1  Economy / Securities / Gauging Interest: Difficulty Derivatives? Miners lock in future Diff. on: July 02, 2013, 02:35:48 AM
Just trying to gauge some interest here to see if this would be a worthwhile endeavor. I thought this might get more of an accurate reaction in the mining forum, but I think it would end up being moved here so... it is what it is.

I'm considering offering derivative difficulty contracts so that miners would be able to hedge against large spikes in difficulty.

The way I'm thinking it would be structured is this: one contract would represent "x" amount of hashing power at a certain strike (difficulty). Should difficulty spike above the strike price before expiration, the contract would pay out the difference between what "x" hashing power would have mined at the strike difficulty and what WAS mined at the current difficulty upon expiration. Obviously some premium would be paid for the contract based upon historical/implied volatility and whatnot. I'm not going to discuss the full pricing model in mind here, but if you're interested and considering backing this endeavor I would certainly entertain more questions privately.

Put simpler: 1 ghash would be expected to mine ~0.352BTC in a week with difficulty at 10,000,000. If difficulty happened to rise to 20,000,000 we would only expect that same ghash to mine ~0.176BTC that week. In this case, the contract would be worth ~0.176BTC at expiration which would be settled with and paid out to the miner.

Bear in mind that these contracts are not designed to make miners money on the whole. They are designed to hedge against downside risks associated with volatile difficulty in order to provide more stable returns over time. These would be more beneficial the larger your mining operation is. To a lesser extent, these contracts would also allow individuals to speculate on things like: massive btc price spikes bringing more rigs on board, new companies delivering equipment, etc. There are a plethora of ways these contracts could be used besides hedging a mining operation.

It's just an idea that I've been kicking around my head for a little while, and I've got a few other "products" in mind but this seemed to me like the most reasonable to start with.

What do you think? Poke some holes in it if there is anything that bothers you. I just want to see how much, if any, interest there is in a service like this.

Some background about myself: I work on the floor of the Chicago Board of Trade in the options pits, trade all sorts of financial instruments, and have had a passion for this sort of thing since I was a lad.
2  Economy / Speculation / Mining Hardware as a Hedge on: July 01, 2013, 11:12:45 PM
I've begun to try and think of total return in BTC, as opposed to some mix of BTC and fiat. I know this is hard for a lot of individuals like myself that don't have very large stakes in BTC; however for this thought process to make any amount of sense total return has to be measured purely in BTC.

Say, for instance, that we have an ASIC that is currently selling at 5 btc, and produces 5 ghashes of mining power. At current difficulty that would produce approximately .0825 BTC/week.

Now, if the price of bitcoins were to crash then we would lose a lot of GPU miners and the like causing total hashing power to go down and subsequently lowering the difficulty. If we lost (to pull a number completely out of my ass) 30% of total difficulty due to unprofitable mining, then this same device that we paid 5 btc on will now be generating roughly 1.17BTC/week. This increase in btc generation will partially offset the losses in price and therefore serves as a reasonable hedge and even an opportunistic play when considering what may or may not happen after such a crash.

So in terms of a total btc return, it would almost benefit miners for the price to crash assuming that it does in fact stop others from mining and subsequently lowers the difficulty.

This isn't rocket science, so I'm sure most of you already understood this. The point is, are any of you actively hedging your positions by purchasing mining hardware?

Also there is no way to know this for sure, but it might in fact be better to buy hardware now in btc than it would to purchase after a crash. If people are trying to cash out of btc then they are obviously thinking of their return in fiat as compared to how much they paid in fiat. If the price of bitcoin is crashing then the fiat price of the miners will likely drop but the btc price of them will increase as people try to recover their investment of fiat.

So which would you do? Would you purchase now if you anticipated a crash, or would you wait and see how the dust settles?
3  Bitcoin / Bitcoin Discussion / Tax Returns & Bitcoin on: January 28, 2013, 04:05:05 PM
So I hope I'm not the only one that finds it funny that my US Tax refund will be going almost 100% into Bitcoins for "savings".

This decision got me to thinking, how many other people were planning to do the same?

At that rate, if there are a lot of us, that would mean that there will be a rather large inflow of funds and a lot of liquidity over the next few months. Or there'll be next to nothing, so maybe this poll will help to shed some light on the subject.

Feel free to share your musings. This is just a general curiosity/amusement poll.
4  Economy / Services / [Personal Finance] Income/Expense forecasting, Budgeting, Loan Analysis & More on: January 19, 2013, 09:27:44 PM
Disclaimer: I am not a registered CPA or CFP, any analysis/forecast I do for you does not constitute an official statement of your personal financial situation and therefore cannot be used as such. Utilization of my services means you agree to this statement, and that I am not liable for any unauthorized uses of supplied documents.

---------------------------------------

Iím offering to help you take charge of your personal finances, and supply any detailed analysis / forecast / budget / schedule that you could possibly want.
For a basic idea of what this entails, please see the links below that I constructed for a friend who wanted to forecast his cash flow for the next six months along with an amortized schedule of his car loan.

Cash Flow Analysis/Forecast: https://docs.google.com/file/d/0B6z_dNwlUPoMSFM1S3diblhUeDA/edit
Car Loan Amort. Schedule: https://docs.google.com/file/d/0B6z_dNwlUPoMcmZlUFhCNjV4YXc/edit

(Zoom in to make them not blurry)

These are very simple examples, but I find that they are plenty for most people with the addition/subtraction of a few items particular to each individual.
I understand that many people are uncomfortable sharing this sort of information with others; but I believe this may be the best way of getting help. By utilizing my services, I donít even ever have to know your real name, much less any other personal details that are required by other firms. This could be a very cut and dry process that will help you make major strides to controlling your own situation better without sharing personal details with those that may actually know you and share those details.

Why would you want this service?
An important question, people that keep constant tags on their financial situation tend to do a much better job of budgeting/saving/investing and therefore end up with a better financial future. Perhaps you want to analyze just how quickly you can add BTC to your net worth over time (how much you can afford to buy at regular intervals or when to buy). Perhaps you are in a period of transition and would like to know what you can expect in the near future and how best to handle it.

For the first 10 people that reply in thread and then pm me with all the details they want included:
I will produce a forecast just like the one in the document(s) linked above (out to a year at most) for 1.00 BTC

After the first ten, the price will certainly go up, but I am unsure by how much. This depends on demand. However, I assure you that this will always be the cheapest service that youíll find for this sort of thing.

The goal of this thread/service is two-fold.
1.   I want to help people take control of their finances, the people I have helped before that have stuck to their budgets and whatnot still thank me to this day, as they have been able to enjoy their money infinitely more after getting it in order.
2.   Iím new to the forum (though not necessarily to bitcoin) and want to start building a transactional reputation because I am very business oriented and want to provide more services/goods in the future. Having high post counts and all that jazz doesn't account for much as compared to actually conducting successful transactions and providing a genuine service to the community. As such, you know that I will strive to do right by you and provide as much service as you request, since it would be damaging to me in the long run to provide half-assed work.

Requests for service above-and-beyond the type of work I have shown in the above documents (including budgeting advice, savings plans, etc.) will always be quoted on a case-by-case basis and are open to negotiation. I want to help you as much as I can, but need to utilize my time effectively meaning it may require a higher pricetag.

You can see additional financial services that I provide/will be providing in my signature below.

Services that I want to provide: (if any of these appeals to you, let me know!)
3rd party Bitcoin business financial reporting - For management use and also for verifying details of companies who want to seek investors
3rd party lender due diligence - I research and verify information from people seeking loans for a small fee
Bitcoin investment analysis - If you are looking to invest in specific bitcoin business/securities, I will do the due diligence for you.

If you have any questions or suggestions for financial services that you would like to see, please donít hesitate to reply in thread or pm me!

Best,
-MJ

Price estimates:
Forecast/Budget similar to linked: 1.00BTC (First ten only)
General budgeting & saving advice/plan: approx 2.00 BTC/hr subject to increase based on complexity
Discounted Cash Flow Analysis: 5.00 BTC (this one is for funsies, if you want to see what a business would value you at as a takeover target)

Note: This thread is for personal finances only. If you want this type of service for your bitcoin business / website / whatever other financial entity you may have, please pm me or visit the appropriate thread in my signature (threads currently pending demand).
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