I think the endgame is somewhat different than what has been presented here.

What we will see is margins cut closer and closer to production costs. Eventually and inevitably every possible amount of margin will be squeezed out of every device offered for purchase, until they are nearly unprofitable to even make. Every producer will eventually go bankrupt, leaving only perhaps one or two of the most efficient scraping by. But even they cannot last long. With a network so heavily leveraged by years of asic adaptation the hash rate will be so high that even the concept of trying to finance another generation of asics is ludicrous. It would be a negative equity endeavor on it's face. The last mining producers will eventually have to shutter the windows and close up shop as no miner built anywhere by anyone can squeeze out more than a few satoshis per day. At that point, the network stabilizes because even then no one will ever turn them off so long as they return above electricity costs.

Every few years, someone will get the bright idea to build a better asic, and collect money from investors. Some will actually get some built before going bust. These will probably just replace the ones that have failed in the network over the last few years, once again keeping is stable.

The only time it will ever be profitable to create more asic miners from this point would be if there was an exponential increase in the value of btc. That would be the correct incentive to build more for a short time, until margins are squeezed right out again. Just another short-term boom and bust for the industry, one of many.

The endgame is not going to be the end of bitcoins. It will just be the end of the asic arms race as we know it.

Your estimates appear pretty close. Glad to see they are shipping lots of units though. It was definitely a huge backlog. At this rate they may actually catch up by the end of October, aside from the minirigs.

I would consider this good news for the bitcoin community in general, as people can soon focus their energies on productive endeavors as opposed to being mired in muck writing tirades over late preorders. Glad to see this chapter in asic developments coming to a close. It is tough to create an entire industry from scratch. BFL was not the first to run into problems, and they won't be the last. But I doubt any others will ever garner this much negative attention.

I would like to build a bit on what Herp said at the top of the page.

It is really important to understand that the accredited investors Second market deals with are probably not what most people imagine. If they are single investors, they are likely over the age of 75 and are of a completely different generation and mindset. For them, investing in the bitcoin space does not mean the same thing to them as it does to us. Many of them still use AOL for their internet, and barely understand email. I'm not joking. They are usually not very technically savvy at all. But they invest in concepts. They bought Apple or Microsoft because it was a new concept. They bought Amazon because it was a paradigm shift. They bought Facebook because it was a new way of doing things. But they never bought a computer, books from Amazon, or used Facebook. And they won't use bitcoins, nor do they have any interest in doing so. But they will invest in them, and invest on an order of hundreds of millions, simply because it is a game changer.

Trust funds are a different story. The guys running them are not all old-school. But they are often looking to fill a portion of their portfolios with some amount of high-risk high-return securities, and a bitcoin fund sounds pretty attractive in that space. No one wants to be running a fund and have zero exposure to the "next big thing". So I think there will be some decent inflows from trust funds.

Lastly, the mighty hedgies. Selling a high-tech basket requires you fill it with all of the good buzzwords that get your clients excited. You need "Cloud" stuff, and "virtual reality" stuff, and every other catchphrase you can. You want "Bitcoin" and "Cryptocurrency" in there too for certain. They will buy just for the words.


So honestly, I think this is a much bigger deal than anyone currently expects. The are billions of dollars sloshing around looking for a place to land that gives them a decent return in a ZIRP environment. Some of them will land here.

This is why I own shares in AM.

Although it appears that waiting game is coming to an end. BFL is shipping metric asstons now.

One concept later BFL purchasers failed to recognize was that by the time they got their order, BFL would have shipped all of the orders before them in the queue. That is massive hash that would come online prior to getting theirs to plug in, running the difficulty sky-high. The only real winners were those who ordered very early. Many early pre-orders had to wait a year, but even so they still got the first mover advantage. Everyone else, well, not so much. In bitcoinland this advantage cannot be overstated. You see it again and again and again.

The hash attributable to delivered BFL devices is rather huge but tends to be ignored because of the blind hatred so many have for the company. And it is accelerating fairly rapidly. It would not surprise me if in a few months you can order as many Jallys or singles you want from BFL and get them delivered in a few days. That will have a pretty serious effect on other ASIC providers, AM included.

The problem here is that you are stacking lots of supposes. Change one of them and it becomes bleak. Suppose the chance that they will succeed and increase the hash is only 1% instead of 50%. Still want to take that bet?

It's not like October is a million years away...

When traders make money, it is because they are clever, a genius, or simply brilliant. But never because they were just lucky.


When they lose money, it is because they are unlucky, got screwed, or got cheated. But never because they were just stupid.

You make a good point. There is only one position that is as good as first mover, and that is last mover.

A notification has been posted to TAT.ASICMINER.  You have received this email
because you own shares of TAT.ASICMINER.

-----
Trading Halted in Preparation for Migration

Due to the announced closing of the BTCT.co virtual securities exchange, we have halted trading on this asset in preparation for a migration to TAT.ASICMINER on Bitfunder.com and/or AM100 on HavelockInvestments.com for all current shareholders.

We apologize for this inconvenience and appreciate your patience in this matter. We will be posting detailed instructions on the next steps for shareholders.

-----

Thank you for using BTC-TC

I am sure TAT will allow transfers to AM100. What else would he do?

The day before Lehman Bros collapsed the CEO told investors in a conference call that the company was in no danger of insolvency. He knew exactly what was happening.

His defense was that if he had told investors the true state of the company that it would have immediately collapsed due to share selling.

Does anyone understand the inherent conflict here? How can it be justified to withhold information that something is in danger of collapsing because disclosing it would hasten it?

Personally, I think that the truth should be laid out regardless of the consequences. If the truth causes a collapse, the collapse was inevitable anyway. All that gets bought by hiding the truth is a few days for the well-connected to get out and get clear.

I don't know the future of labcoin or any other security with any certitude. But I do know the truth when I see it. And the warning on BTC-TC was no exaggeration if you read this thread. If speaking the truth causes the price of a share to collapse, then maybe it should collapse. It is all the process of price discovery in a free market after all.

It seems to happen repeatedly in the securities business that owners refuse to deliver bad news because of the effect it will have on investors. They delay any real news as they scramble to put together enough performance to release a statement that is not bad enough to tank the shares. They delay, and delay, and delay. And then investors get antsy. And then they get frustrated. And then they get angry. And by then, no news will be good enough, and the whole thing comes crashing down.

When will owners learn that delivering bad news is part of their job?

Thank you once again for the constructive suggestions. It is always good advice for everyone to continue learning and improving themselves and their endeavors. I will certainly continue to do so upon your kind encouragement. I am glad we are in agreement, and I would also like to return the favor and encourage you to do so as well. Smarter minds make a smarter world.

I think the most germane concern should be the arrival of gen2 hardware.  As we have been told in the past (so far borne out by results) that the cost to AM for hardware is "Invincible", at least for products you can order and have hashing in a few days time. The question to ask oneself is whether this pricing invincibility will extend to gen2. It is not unlikely to assume that with the bankroll and experience that FC can order bulk levels of chips and other components in much higher numbers than most competitors, potentially in the tens of millions. On it's face, it would appear that FC can probably out-produce and outprice the competition for gen2 devices, and bring them to market in a timely manner.

It was not so long ago that FC actually held back hashing power because his share of the network hash was growing too large. Part of the strategy for hardware sales was to profit from blades he could not bring online without endangering the 50%+1 line. Currently, he seems more focused on eliminating gen1 blades that were ordered in anticipation of being needed due to anticipation of growth in global hash. That growth fell below his projections, so all new gen1 blades must go!

As FC transitions to gen2, I would expect quiet replacement of gen1 boards in his farm with gen2. This may actually be occurring right now. I expect the AM farm will be converted to gen2 and the original gen1 farm boards retasked to franchisees. Once this process is completed, the AM hash should stabilize at the 10%-15% we expect, with additional income from the franchised gen1 boards. Only then will the announcement come that gen2 boards are completed and available for sale. Additional boards will continue to be fabricated, meeting both AM hash requirements and customer purchases until the Gen3 designs are completed. Rinse, repeat.

If I am correct, we should soon see AM hash rise, drop, rise, drop, and then finally a slow but steady increase in AM hash up to around 15%. This should be the indicator that gen2 is deployed and gen2 blades will soon be available.

Let's see it my crystal ball if full of sparkles or full of crap. Time will tell.

I suppose you are correct. I have no real interest in discussing or critiquing a document I did not generate. The document in question is little more than a blog post. Perhaps if others want to discuss it, the thread it exists on is a more suitable venue.


Thank you for your opinion and concerns. I find it regretful that you were not inspired to confidence by pilot website. It appears that in your case it has failed to achieve one of it's goals. I would correct you that the IPO cost of outstanding shares is 250BTC, not 500BTC as you quoted. At current market rates this is slightly more than $30,000. Web development and deployment is not free, nor is the acquisition of existing platforms. The development of SatoshiSquared.com alone exceeded $5000, and the additional projects will require even more. I believe the 250BTC solicitation to be a reasonable sum to finance the scale of projects we would like to move forward on. Perhaps later one of our future projects will inspire more confidence in you and you will decide to invest at that point.

It appears you are looking for arguments where none exist. If you have specific questions that you would like to offer up, I would be more than happy to attempt to address them.

I certainly do regret that some people may be put off by my tone. And it is certainly possible that there is a potential to lose investment because of it. That said, I feel it best to speak honestly and not sugar coat things. As with any solicitation of VC funds, you need to know who you are investing with. It is actually my hope that potential investors will gain a clear insight as to how I would behave. That is, addressing all questions and concerns as honestly as possible. I will not "blow smoke up peoples butts" to get investors, and I have little respect for those who do because I consider it dishonest.

To your first point, I must disagree. To declare that a business that does not yet exist "will be" successful would certainly be folly. But to simply state that an existing business is currently successful and should continue to be so in the future is entirely reasonable. I invest in profitable and successful businesses on a daily basis. So do most other investors. When they are clearly profitable and successful, I see no reason for them to be ashamed of saying so. The issue of risk exists in every venture everywhere. While it is my opinion that Gee Unlimited will be successful well into the future, any number of disasters are possible. There is always inherent risk. I was not trying to imply that there was not, although it could have been interpreted that way. If a business needs more operating capital to expand, it is often a good sign. If they need it to stay alive, it is usually not.

To your second point, I most certainly do take suggestions seriously. I agree where appropriate, and discuss or reply with alternative positions when required. I answer questions as plainly and concisely as I can. I would never suggest that I have some sort of moral superiority over potential investors, nor have I ever told them to hit the road. It is a simple fact that not every investment suits everyone's portfolios. I do not feel it is inappropriate to simply state that all investments are welcomed, and that if there are investors for whom Gee Unlimited is not a good fit, then that is okay as well, and there is absolutely nothing wrong with that. No company can be everything to everyone and still be honest. Disagreement does not mean a deaf ear has been turned or concerns ignored. It just means a difference of opinion, which I always welcome so that points can be discussed and the best solutions determined. This reply should stand as a typical example. Your concerns were obviously read, considered, and addressed. They may not be the answers you would have preferred to have gotten, but they are honest ones.

Actually, I read that very post quite some time ago. I did find it somewhat helpful, although I felt it could use a little polish to smooth out the sharp edges. I guess different people have differing styles, and there is certainly nothing wrong with that. I initially let slide your suggestion that this offering was more akin to begging than a business since it appeared an off-the-cuff remark. But since you insist on supporting that viewpoint, I would like to point out that no external investment (or begging in your parlance) was required for the initial product. The founders bore the full development and implementation costs. The founders put their own money on the line and did not expect someone else to finance their vaporware, unlike most other groups with big ideas and no capital of their own.

This offering is an opportunity for investors to become part owners in a group of projects, one of which is already completed. They can look at the first one, and decide whether our style and our competency is something they want to be a part of. If they do not, that is fine. If this IPO fails, then the community has spoken and we will continue to produce and develop additional projects on our own, albiet at a much slower pace. Gee Unlimited will succeed with or without additional investment because it is already profitable. Whether others profit from it is up to each of them.

That is not strictly true. There will be a board of major shareholders, and they MUST approve all investments. The founders are not dictators by any stretch. This is a plan for a company, not a personal empire. We welcome anyone who feels they have the experience to help guide this endeavor to become involved enough to be seated on the board.

The pilot website SatoshiSquared.com was designed specifically as proof of capability of delivery of products. I suppose one could consider this prior work.

We have received offers to purchase shares prior to the IPO but have elected to not respond to them. Reserved offers will be taken first-come-first served beginning at the time listed above. If 50% of the offered shares are reserved in the first week, the IPO will be considered a success and payment addresses will be sent to all reserved parties. The remaining shares and those shares for which no payment is forthcoming will still be available for purchase on a first-come first-served basis until they are exhausted.

During the initial week we will post a daily tally of shares reserved, and from then on a daily tally of shares left, assuming there are any left.

All bitcoins from all share purchases will be placed into a single wallet, and that address will be posted for blockchain verification that the funds have not moved unless approved by board members. This will not be a dividend payment address, but rather an equity address for shareholders to monitor and verify legitimacy of funds. This address will also be the destination for all founder dividends for reinvestment. After 1 month (November 1st 2013) dissolution will be put to shareholders for a vote, with the founders shares not voting on this issue. If a simple majority of shares outstanding votes to dissolve, all shares will be refunded. From this point forward, no shares can be refunded. Once this vote is completed, a board will be selected by the shareholders.