It'll be nice if the exchange rate for bitcoin pops before Labrat orders anything, and stays up when using the scooped up dividends next month.
The price pattern for bitcoin is looking nice on the chart, so far.

For what it's worth, Labrat said he thought about 20% was used for Monarchs. I calculated this to be about $150,000 based on total bond sales, but he disputed that figure/amount was sent to BFL in a prior comment. Maybe it was closer to something like $90,000. Anyway, he said he could not speak anymore on the BFL order (I'm not sure why). Maybe he will clarify on some of this stuff today, it's still very early morning his time.

It's not exactly clear to me either, but my understanding is that there is the 16-18TH order that is suppose to be received by mid-October. From that hardware, two weeks of the initial mining dividends are fully kept by LRM for new hardware. That is, it's with those funds, that the very next order is placed near/around the beginning of November (this seems to be the 'followed close behind' order of 6-10TH that Labrat is speaking about). That would be a final total ranging from 22TH(minimum) to 28TH(maximum). I'm not sure if that includes the in-hand ~4.35TH or Dave's contribution, so if not, it can be an upper maximum of 33.15TH. It's hard to guess with the bit of secrecy about it. The only other hardware on order is the undisclosed quantity of Monarchs. I could be wrong, but this is how it is coming off to me.

For those that were criticizing me on this topic before, this is why I said that the plan on diverting of dividends will not necessarily place LRM in a position more favorable than was already describe on the LRM website. That is, the estimate was already that 30TH based on bond sales from some time ago.




It's my hope that when he says followed close behind, he is referring to some order of hardware to be made well before the purchase he plans to make with the two weeks of dividends diverted from the hardware expected to be received mid-October.

No problem. I also thought it was averaging 70% a month not too long ago. I think it was because I was thinking about difficulty going up about every two weeks. However, about every ten days is more accurate.

The price pattern has a few traits that I like.

If you look over the one year chart, you see a giant dip from end of May to late August. It wasn't as gradual a decline to the bottom as I would like, but it's not terrible. Also, the rising side of the dip is more bowl-like..which is good, imo. Then another pattern following this giant dip that is a relatively mild pullback and is now forming a tightening ascending triangle. Combined, it's reminiscent of a "cup and handle" pattern. Which is probably one of the more coveted price patterns to find in charting.

I think a significant price drop is the least likely outcome, and that there is a near toss-up between staying relatively flat and inclining over the next month. But with a slight bias to an inclining price... especially with the triangular pattern in the "handle" of the "cup".

Cup and Handle pattern. See here: http://www.investopedia.com/university/charts/charts3.asp



Ascending triangle pattern. See here: http://www.investopedia.com/university/charts/charts5.asp



Compare to Bitcoin from end of May to present for Cup and Handle. And note that the handle (in September) is developing into an ascending triangle:



From that, you can see why breaking above $148 to $150 would be quite bullish. Note the cluster of resistance from early April around the price of $180. At least three days there show a strong reaction to $180 as either a high, low, opening or closing price. There are probably plenty of people that bought at those prices that will want out if prices reach there again (i.e. anticipate selling pressure there). Keep that in mind. Now, note the leg from the bottom, mid July(~$65), to the recent peak(~$148). That is about an $80 range. Legs seem to tend to repeat in size and duration in a steady bull market. If that same leg were to happen again from the developing base(~$137), or recent low(~$120) since the peak, it would run bitcoin up to $200 to $220 on Mt.Gox. However, that cluster of resistance around $180 seems quite strong, and $180 isn't toooo far from $200. So, $180 seems like another place to develop some sideways movement, maybe there, another ascending wedge [EDIT: triangle, not wedge] will develop. In either case, it might be a good time to trade out of bitcoins (if trading), and wait to see how the market develops.

Haha. I don't know if you were being sarcastic or not It's so subjective. Or just thanking me for taking the time to answer.

Of course, this idea is no guarantee in my thinking. That would be foolish. It's subjective. But if I were an active bitcoin trader, I'd be quite interested at this point to either be accumulating or readying to buy at a higher level (e.g. breaking over $148-$150). But if accumulating, also ready to sell off (stop loss) if it went below ~$130 on Mt.Gox.

The surge is based on price activity/patterns. The $180 is based on MtGox values. It's pretty subjective, that's why I said it's not worth much.

It's mostly based on having watched prior price activities unfold in the past on all kinds of securities (a long time interest I've had). It's subjective, but based on historical observations. I'll feel more comfortable once it breaks $145 again, and especially $148-$150 on MtGox.

Yeah, BFL was probably not so optimal. I was just roughing it in the same line of thought as you, just looking at what a more accurate comparison of BFL singles produces might be. That is, only in terms production - it was nothing to do with costs.

For whatever it's worth - which is not much - exchange price for bitcoin looks (to me) ready to surge up over the next few weeks. $180 is quite doable.

Agree with the take home point. But wanted to edit the comment anyway. New one would have read:
EDIT: Good points. Seems likely that prices will drop fast and relatively soon. Only thought I can think to add is that Cointerra chips are larger in size per chip.
I wonder how much fabric 4000 Cointerra(CT) chips would cover in terms of BFL chips? If one Cointerra (CT) chip is 100 times faster, you'd need 100 BFL chips. But CT chips are about 5.3 times denser (i.e. 65^2/28^2). So, I guess the fabric size of a CT chip would be 100/5.3 = 18.86 times a BFL chip. So, maybe 4000 CT chips would be more like making (60*18.56) 1132 BFL Singles? Still something they should be able to manufacture in relatively short order.

Good points. The only difference however is that BFL SC Single's chips are smaller and simpler architecture (28nm is about 5.3 times denser). So, if you proportion that to 60 BFL Singles x 5.3 =  318 BFL Singles. Still not a lot. And then there are the other 28nm mfg's. So, from that, I'd still guess miner prices will drop a lot and relatively soon.

Don't take this as hostile, but why can't you comment on BFL? You already gave a proportioned value before (see below). Seems like it would be pretty basic and almost uninteresting info. I can't imagine why BFL order would be a secret. If I were thinking to invest in buying new LRM bonds, I'd probably like to know a little more about how funds are distributed. I suspect there is a good answer, but seems a lot can't be talked about.

The amount ($150,000) was figured from what you commented already. It was commented that maybe 20% went to BFL. Figuring that between roughly BTC4800 and BTC7500 were collected from bond proceeds. 20% of the minimum value (BTC4800) is ~BTC960. That is $134,400 @ $140/BTC. It's not $150,000 but in the ball park. The comment is copied below:

Yeah, that seems possible. In either case, the result to the miner is the same - hardware will have low profitability.

Just a few thoughts here: The cost to run 1TH of 28nm will be about $70/month. Assuming an ROI of 10 months as a standard that was common with video cards, that means hardware costing $700/TH would be the limit. And I bet mfg's would be profitable at that price. But that equilibrium won't happen until about a difficulty of 33 billion (it's currently about 148 million), or stated another way, until a little over 200 times as much hashing power hits the network. Hmmm. Looking at it like that, it kind of seems manufacturers would have a hard time delivering that much hardware anytime soon. Cointerra was talking about dropping 2 PH on the network by year end. That would only be 13 to 14 times the current hash rate. They and other 28nm manufacturers would need to ship ~16 times as much hardware as that to hit 33 billion.

I'm curious as to when miners will collectively seem to not buy hardware. Will it be when the the electrical cost is 20%, 25%, 50%, maybe 90% ... of the monthly coins generated? I don't think it has historically been much more than 10%, but I'm not sure.

I'm pretty sure he has ordered about $150,000 worth of Monarchs!! That is why I would like to see him sell out on that order. And asked others to ask him if they see a problem with that.
Being tied up with BFL Monarchs may be the biggest downside with LRM at this time, imo.

Why do you think 100% markup is optimistic? Seems pretty normal if you ask me. Do you think it's optimistic of the customer on the low side, or of the manufacturer on the high side?

I suspect retail price per GH will drop dramatically by summer. When/As that happens, miners will buy. There is a fundamental difference between what is coming verus past difficulty increases.
With GPU & FPGA mining the price/GH was tied to video cards or FPGA chips. And video cards and FPGA chips had margins - for the manufacturers - which were not tied to bitcoin mining difficulty.
In contrast, ASIC hardware manufacturers will be forced to lower prices. Expect a never ending cycle to the point that manufacturers will sell at just double the cost... which will be really low. Until that point, difficulty will just climb as fast as the various manufacturers can collectively pump them out.

LRM hash rate increased by 200% in the past 30 days. The difference is that LRM is still starting up. When the first 60GH went online, it increased an ∞ percentage.
Yes, I realize difficulty will slow down too.

Sorry, I already did, and will even help you with yours....

Recorded difficulty values can be seen here:
https://docs.google.com/spreadsheet/ccc?key=0AmcTCtjBoRWUdHVRMHpqWUJValI1RlZiaEtCT1RrQmc#gid=0



Note that current difficulty is actually 148,819,200

Now, calculate the percentage increase from 65,750,060 to 148,819,200

Difficulty increased by 125% in the past 30 days.

I don't mean to imply that Labrat intended to do this with all newly acquired hardware. I was commenting my view that it should be done, at least some, to help the company self-sustain. Let's assume realistically that he takes out ~10% for electrical costs + his fee from the 25% slice of all mining. Would a 15% re-investment be enough to overpower difficulty long term? It doesn't' seem like it would work well short term if there are far out shipping times. Sure, difficulty will slow down eventually - perhaps to a linear incline or maybe even average out flat - but it will also pop up it's head again eventually (if you use history). It sucks for dividends, but this is why the two week dividend re-allocation for new hardware should be done, imo. Perhaps, not always, but at least in certain times. But Labrat at least has his reasons for doing it now. I could be wrong, but it doesn't seem like it can work out without more re-investment. A good mathematical model showing this would be nice to see, but it would probably be difficult to factor in some of the several uncertain variables.