For those of you who clearly aren't very up on what "share", "stock", and "equity" means: http://www.investopedia.com/university/stocks/stocks1.asp

MilkyLep is completely right here.  A democracy doesn't mean the majority should vote to treat the minority unfairly.  If this terrible precedent was set, what is to stop Garr from deciding to send out an email asking *everyone* to "re-claim" their shares, or forfeit them, one whatever arbitrary schedule he wants?  If we raised a motion today to do this, everyone who saw the motion would think "Hey, *I* will answer the email, so my shares are safe, and if we reclaim/destroy other people's shares, mine are more valuable" - so everyone who attentively checks the motion has a motive to vote yes, and everyone who doesn't doesn't get represented.  This is terrible.

Cognitive is as "real" a company as any.  The whole point of bitcoin is enabling companies outside of the tethers of government control.  If two people get married without government involvement, is their marriage "not a real marriage"?  If someone starts a company without filling out the paperwork in whatever arbitrary country you decide to care about, are they not "a real company"?  Who gave you the right to say such bullshit?  COG is as real as Garrett keeps it, by his own actions.  Real doesn't mean perfect, it doesn't mean successful, it doesn't mean recognized by arbitrary governments, it means "reflects reality".

Contractually, a "share" of a company is a contract saying you own one portion of a company.  If you destroy these, or reassign their ownership, not only are you breaking contract, you are also stealing someone's property and casting doubt on the future reliability of everyone else's shares.

The main problem with this is, would we invalidate those shares so they can never ever be claimed?  If not, then it's really just a loan that could be called in any time, and if yes, then we are literally taking people's shares.  We don't know if these people are dead, in a coma, on a 6 month cruise around the world, or what...

That's only true because bitcoin went up another 4x in value though.  We really paid 680BTC * ~200$/btc => $136,000.  If we make 134 BTC today, that's pretty close to an equivalent return.  If you want to invest in BTC, just buy BTC - you don't need cognitive for that - if you want to own mining equipment however, COG is a great way to do that.  If BTC goes up in value, BTC might have been a better investment than mining equipment - but that doesn't automatically make it a BAD investment.  Maybe bitcoin stays around $1000 for the next year so a year from now a 6-month-breakeven miner would beat just buying bitcoins - nobody knows the future.  A good investor adds exposure to several investments which are hedged.


That is probably true - I think that's the best explanation for our investment in scrypt miners - there wasn't a more logical bitcoin asic to buy at that time.  COG should probably hold on to their BTC for at least a few months now to see which way the price wars go, unless a particularly good deal comes along.

Been thinking a lot recently about the network growth thing.  Here are some more (completely out-of-my-ass and opinion based) thoughts:

Imagine in 6 months or so, the difficulty is 54,200,922,354 (30% per period projection).  At that time, 2TH/s will yield about 0.25BTC per div period.  If BTC is still around $1000/BTC, that is $250 every 2 weeks.  That means a $6000 2TH/s machine will cost 12 months to break even (and even more if the difficulty continued growing at 30% per period).

So obviously 2TH/s machines won't sell at $6000 each.  What price would they sell at?  Well, 6 month break-even is the absolute highest most people would consider a "good deal".  If we assume negligible network growth (which is obviously not the case, so we are low-balling it here) 6 months means 12 div periods means $3000.  add in 10% network growth and you are probably looking at more like $2000.  There is also cost-of-power to consider.  With all the sunk costs taken care of, can cointerra sell 2TH/s machines at $2000 and still turn a profit?  Probably yes.  But they won't be making so much money "hand over fist" to make investments in even more sunk costs, so they will make a constant number, rather than an increasing number, of machines, in all likelihood.

When GPUs went crazy exponential, part of why that happened was manufacturers were able to produce a LOT of GPUs and computers.  The infrastructure was pre-existing.  Also, people presumed that their hardware would be able to run for a long time, and if it become uneconomical, could still be used to play games or sell used.  ASICs won't look like that.  They are single purpose, and every company that has produced ASICs has sold out and been limited not by number of orders, but by manufacturing capacity.  110nm ASICs from AsicMiner would already be useless if the value of BTC hadn't increased as it did (thus lowering the relative cost of power).  Even as it is now they are likely to become uneconomical in the near future.  The thing is, theoretically, 28nm should never become uneconomical unless it was to be replaced with an even more efficient design (which for reasons I stated previously I think is very unlikely any time soon).

(calculation:  5W = 330MH/s, at current difficulty you produce 9.271602390864709e-05 BTC per day which at $1000/BTC is ~$0.092 and 5W means 0.005 kW*h, which is 0.12 kW*h per day, which at $0.15 per kW*h costs $0.02 cents per day.  If my numbers are correct a USB block eruptor is currently only producing 4x more money than it consumes, and when BTC was 100$/BTC it would be producing half what it consumes, i.e. no longer economical to run).


(the block eruptor blade is 75W for 10.7GH/s.  At current diff, produces 0.0030 BTC per day, or ~$3.01.  75W = 0.075 kW*h => $0.27 per day cost to run.  If BTC was at $100 per BTC, then a block eruptor blade would net only 3 cents per day and be a single difficulty bump away from being uneconomical)

(the same calculation for cointerra's 2TH/s 1200W device, on the other hand: 0.562BTC/day, or $562 per day at $1000/BTC, 1200W => 1.2 kW*h => $4.32 per day to run.  Even if BTC was still $100/BTC, it'd be producing more than 10x the power it uses, and as things are today, it produces 100x the power it uses).

All of this is evidence that the time very well may come when the network grows linearly, 2-10% per diff cycle, or even less, simply because if the network did keep growing at the rate it is, even the most efficient miners would lose money and people would sell them or turn them off (except those who get free/cheap power), putting natural limits on the network size.  And, once that occurs, existing hardware will last longer and be more profitable to hold on to, while buying new hardware will have risk and little additional reward.  At that time, all those other things I said about why COG > personally buying hardware become true.

(Disclosure: using the post-COG.FX numbers, I own roughly 1.6% of COG)

These numbers look pretty good, except the following two caveats:

Facts:
Note that these numbers are the total income - only 50% will be distributed as dividends.  That still bodes well however, because you can buy an awful lot of mining hardware for half of 380BTC.  Our order of 28TH/s with cointerra was 680 BTC (according to cognitivemining.com) and occurred in October, when BTC was under $200/BTC.  One has to imagine TH/s is cheaper due to rising diff and one knows factually that BTC has more purchasing power today, meaning COG can continue to grow.

Forward Looking Statements / Opinion:
Also, one would hope, the difficulty increase will not remain 30% per diff cycle for this long, so our miners will maintain some more of their value than this chart might anticipate [opinion].  We are unlikely to see miners at a smaller process than 28nm due to the extreme upfront costs of manufacturing such chips, and the increased complexity / expertise required.  As such, the existing manufacturers of 28nm hardware (hopefully this will grow to include AsicMiner and KNC as well as BFL and Cointerra).  At this point, with only minor improvements available and similar GH/W ratings, competition will drive $/GH down and cut margins to be razor thin.  That is the environment where COG can really be valuable, because it can organize large orders at bulk pricing that individuals cannot.  Individuals will want to own some shares of COG instead of buying a miner because it will be more efficient.  This will become especially true when miners are not losing value so fast (due to network growth leveling off).  This will mean the 50% reinvestment fund alone is enough to keep up with network growth and mining contracts (like COG.F1 and COG.F2) are not necessary (unless an especially good deal on an especially big order could be arranged, or an order from a new player is considered riskier and we want to isolate that risk from all share holders).

To Garrett:
If Garrett gets some help running cognitive, dedicates the proper time investments, and becomes better at communication, the future of COG is bright.  Seriously, Garrett - please do not fuck this up.  All of this pipedream about the future value of COG depends upon a typical miner feeling as comfortable investing in COG as they do buying hardware directly - given the recent history, that is probably NOT true.  People in this community are VERY jumpy about anyone throwing around the "S" word and for good reason - we have to move forward but we also have to acknowledge the past and show good faith.

EDIT: Tafelpoot also made the point before me about growth (*hopefully*) not remaining exponential forever.  Credit where credit is due.

I'd agree, but I'm pretty sure (their website is messed up for me now, probably under high traffic) I saw under "shop" that april orders were sold out and they were taking orders for may, implying that we can't just add to any order that would arrive before may.  And there is considerable uncertainty that 2TH/s in may for $6000 is a good deal at this time.

Remember initially there were 100 shares of Cog.F2 then Garr posted 500 additional shares, but then people were like "wtf, no motion", so then he paused trading and raised a motion... i forget what eventually happened with it, I think before anything else happened after that, BTCT announced closure and the resulting mess just obscured the details.  There were  suddenly *way* more important things to worry about than how many COG.F2 shares were sold (the effort was to raise a second order from cointerra at the time, if I remember correctly...)

EDIT:  btct.co is still up for legacy data, according to: https://btct.co/security/COG.F2 and https://btct.co/security/COG.F and https://btct.co/security/COGNITIVE there are 100 outstanding shares of COG.F2, 100 outstanding shares of COG.F1, and 10420 shares of COGNITIVE.  This means if these numbers are accurate, 92.9% of all shares have been claimed, and the total after COG.F1 and COG.F2 make will be 14420, which means all the numbers I ran in the past are actually under-estimates because I was assuming 26k shares I think.

Using the current diff of 1790mil, assuming a total hashrate of 28.75TH/s, if we got the machines today, we would project:

1.0/(1.790*1000*1000*1000*(2**32)/(28.75*1000*1000*1000*1000)/(60*60*24))*(25) => 8.077532385980616 BTC/day

This, at 14420 shares and 50% going to the reinvestment fund, means a dividend of 0.00196 per week, not including whatever the scrypt miners get us.  After the next difficulty increase, assuming 30%, the calculation yields 0.00151 BTC/week per share.  If we assume 30% network growth every 2 weeks, this means we would make 0.0085BTC/share over the first 2 months.  Given that there is considerable support at a current share price of 0.06 - 0.08, which would imply a return of 10% in just 2 months, I think COG is a very good value at the current prices and prices as high as 0.12 could be supported.  Once the hardware is received and confirmed hashing, and the majority of the risk is dispelled, I wouldn't be surprised to see 0.2 or 0.25 - but of course, this is not investment advice, just me dicking around with numbers.

The current numbers of claimed shares on havelock are as follows:
9577 COG shares plus 96 COG.F1 plus 95 COG.F2, which would result in a total of 13397 claimed shares.

However, I am thought there were originally 10420 shares total on BTCT and 100 COG.F1 and 600 of COG.F2, which would yield 24,420 shares.  I might be misremembering because I thought I had calculated 26,420 as the total number of shares at some point (and I think that is what I used in all my calculations I posted in Nov/Dec).  It might be that not all of these shares were actually sold, however.  I can safely say the upper limit on shares is 26,420 and the lower limit is probably 14000, and the best guess is probably ~20,000.  Again, it'd be really nice of Garr could give us an official answer on that.

That's a great question - historically we have had delays which have been attributed to havelock not moving as fast as we like.  Are there any potential blockers to F1 and F2 converting, or is it self-service and you can just click a button, Garr?

Oh dear =(  How credible is this theory?  Is there a thread that has the evidence all gathered?

Seeing huge network increases over the last day or two, I would wager some cointerra hardware is coming online.  Hopefully that means we'll see ours soon!

No, my cost basis is pretty high too.  But read my previous posts - I predicted the difficulty would be this high in january 2 months ago.  This is not a surprise.  The only thing we didn't predict was bitcoins 10x value increase, and all that does is make the "reinvestment fund" more valuable.  On an investment like this, 20% annual returns is great.  At the current price, the expectation is more like 100% return in under 3 months, plus we still own the hardware/reinvestment fund.  Pretty crazy.

At current difficulty 28TH/s (the actual amount we are scheduled to receive) we see:


That means each day it will find ~12 BTC


This means if we got the miners right now, and assuming 30% network growth and 12-day adjustments instead of 14, we would get 144 BTC in the first 12 days, 100.9BTC the second 12-day period, 70.65BTC the third 12-day period, and 49.5BTC the fourth 12-day period.  This means in the first 48 days we'd see 366 BTC, 50% of which would be 183BTC, which is better than break-even at the current market cap.  If cointerra comes through, the shares will pay for themselves in DIVs alone in under 2 months at teh current share price.  Getting a share in hardware that will break even in under 2 months is unheard-of practically.  Add to that that you still have the shares to sell (which are even more valuable because COG has 186BTC to spend on even more hardware) and it is still looking pretty good.

The only reason to sell remains uncertainty over Garrett (and it is very uncertain now, I agree).  That said, I'd rather hold and be wrong then sell and be wrong, so I'll take your cheap shares, tyvm.

Yes, divs are down across the board, but that isn't what we are talking about.  If you read the thread history you will see the divs from the time during which COG was between exchanges was lower than expected taking the difficulty into account, enough lower to be *very* unlikely due to random luck.

Absolutely.  There is no clear evidence of any wrongdoing, only lower-than-expected divs over a very short period of time.  Right now the simplest explanation is that the mining pools had a technical problem, or the miners were misconfigured, or something like that, and Garrett has the communication skills of a rock (and it's kinda sad that is the positive take on it).  If Garrett doesn't have time to post more than a few times a week, how long might it take him to notice the miners are wedged without proper monitoring?  That is a much more likely explanation that Garrett secretly stole 10 BTC from COG, but still paid out the rest, and instead of taking it all and running, is just keeping quiet and letting us continue to guess.

This is why, however, it is important that we get some straight answers from him.  Add "if you barely have time to post on the forum, how long would it take you to notice a wedged miner, are they being properly monitored?" to the list of questions (I don't just mean showing US the hashrate, I want Garrett or someone else with physical access to get an SMS or something the moment the hash rate drops - this is simple to set up).

What would people think about issuing a (very small number of) extra shares - or better get, Garrett could apologize by using some of his - to hire an extra person to help out?  They can do the website dev, hook up the hash rate, independently verify everything Gar says (send pictures!  We like pictures!), and be paid in COG shares (whose value will go up if they do their job right).  20 shares is a drop in the bucket in terms of dilution, but would currently represent about 1BTC (which is a lot for a job that should only take 2-5 hours a week) plus the dividends come January.

Back when COG was on btct.co the total number of shares were visible.  Though you can't see them now, if I remember correctly there were 10,420 shares of COG, 200 COG.F, and 600 COG.F2.  At 20 shares for each of those last two, that totals 26,420 once they have converted.  Hopefully Garr can correct me if I am off here?


All of these are great points.  I'd be really nice to see these questions addressed.

The other problem is the change in difficulty could be different.  We can't make decisions based only upon NOW, we need to make decisions based upon projections into the next 2-3 months.  6000% more than zero doesn't make sense.  Right now, GPU mining bitcoins makes you some money, but less than the power costs.  6000% more profit might cover power, but it might not, you need to do that calculation.  Then you need to include the rate of change of LTC difficulty.  To me, 100$ per card + power supply, mobo, etc, call it $500 charitably (probably would actually cost way more), making 5$ per day will take 100 days to break even, except if the difficulty increases just 5% every 14 days, it will take *way* longer because by the end of 100 days you are making only 60% as much per day.  And I just made up 5%, it's probably higher with all the people switching away from bitcoin mining...

The best evidence to consider would be a table with rows like this:

Cost of miner, daily/weekly return at the time we would receive it, estimated rate of difficulty change

Then the math is pretty straightforward to calculate the time-to-break-even and profit-per-unit-investment.

That was my impression too, but I have no numbers to back it up, I haven't done the research.  Before we jump on that, we should run the numbers.  Specifically, I want to see "we can get X MH/s at a cost of $P by <time delay>.  The last litecoin diff increase was Y% and the current diff is Z% therefore we can expect to break even after time Z assuming no drastic changes in rate of diff increase" - or the same analysis for the currently most profitable scrypt coin, as a proof of concept.

I'm not against LTC investments, but I don't think of it as "diversifying" in the same way.  If BTC tanks, LTC is likely to tank too.  If LTC tanks, it may or may not be because BTC is tanking.  LTC is not actually "silver to BTC's gold", it's a faux comparison.  As long as divs are converted to BTC it doesn't really matter to me.

I would be interested in "diversifying" by buying units from other companies too though.  Maybe the hashfast or some sort of deal with asicminer for 3rd gen, or something like that is possible?  Any other manufacturer of lower-than-55-nm would be a good investment to hedge against complete failure of cointerra.

EDIT: of which LTC mining rigs is one example of hedging against failure of cointerra, so the actual calculation becomes "which makes more money, LTC mining rigs or BTC asics from other companies with which we might not have as lucrative a deal as we had with cointerra"?