ASICMiner Shares - Newbie Econmics question

[11Blade]

It appears that direct ASICMiner shares are selling for 2.5 BTC and generate about 0.02-0.03 BTC per week.

I'm not an economist or bitcoin rocket scientist, but a payback of your original investment in approx 2 yrs
(100 wks) is ok if it continued to return that over the lifetime of 10-20 yrs. 

If it gets increasingly difficult to mine BTC and ASICMiner has to buy more hardware to maintain its share
of the hash pool - doesn't this represent investment risk?

I assume with BFL and knc and Avalon hitting the computing pool, ASICMiner will have to generate more
and more hashing power to generate the same return.

Does anyone see this as a problem and thus over-priced?

[rolloffacliffpleaseanddie]

Whats up with this craze over ASICS..

[ArcticWolf]

You earn dividends per week, but like any shares you can sell them at any time, earning back your initial investment. Dividends are profit, on top of your initial investment

[zeocrash]

ASICMiner also makes money by selling ASICs

[carpetbagger]

I'm not an economist or bitcoin rocket scientist, but a payback of your original investment in approx 2 yrs
(100 wks) is ok if it continued to return that over the lifetime of 10-20 yrs.

You get paid back the moment you sell your share, assuming the market price has not fallen below what you paid for it. Generally speaking the price has risen a lot and has held stable for some time, and I still think they're undervalued, but that's just like, my opinion.

If it gets increasingly difficult to mine BTC and ASICMiner has to buy more hardware to maintain its share
of the hash pool - doesn't this represent investment risk?

Not really, although any investment is a risk. Earlier on, AM took a slice of dividends to ensure they could buy the new hardware they are deploying now. It's all been paid for. They will probably do that again eventually I suppose, but it wasn't much anyway since they are in China and the parts/labor are cheap. It's a good thing if they do that. It's what you want, otherwise they would have a static hashrate and eventually be engulfed by competitors, whenever the competitors decide to stop taking pre-orders and offer some true competition.

I assume with BFL and knc and Avalon hitting the computing pool, ASICMiner will have to generate more
and more hashing power to generate the same return.

Yes, ASICMiner will, and they can, and they are.  No matter which way you slice it, they hold the advantage over every other manufacturer.

[Eva Braun]

ASICS are scams, dont buy them

[mirage]

I'm not an economist or bitcoin rocket scientist, but a payback of your original investment in approx 2 yrs
(100 wks) is ok if it continued to return that over the lifetime of 10-20 yrs. 

You are correct here

[ryan1894]

It appears that direct ASICMiner shares are selling for 2.5 BTC and generate about 0.02-0.03 BTC per week.

I'm not an economist or bitcoin rocket scientist, but a payback of your original investment in approx 2 yrs
(100 wks) is ok if it continued to return that over the lifetime of 10-20 yrs. 

If it gets increasingly difficult to mine BTC and ASICMiner has to buy more hardware to maintain its share
of the hash pool - doesn't this represent investment risk?

I assume with BFL and knc and Avalon hitting the computing pool, ASICMiner will have to generate more
and more hashing power to generate the same return.

Does anyone see this as a problem and thus over-priced?

ASICMiner doesn't sell direct shares anymore. The original shares were available through GLBSE which shut down, and now only passthrough shares (i.e. an operator holds the actual shares and has an ownership stake, but we trust him to pay us the dividends and pass on ownership rights) exist.

A return on investment of 2 years (i.e. 50% a year) is INSANE in comparison to something in the real world. A ROI of 7 years is expected in the real world, and as you can imagine, there is also a lot of risk involved with investing in ASICMiner and Bitcoin as a whole.

There are several major ASIC manufacturers, and ASICMiner is the only one which actually mines on the side. They auction off their old blades, their USB miners, and invest in new hardware to bolster their hashrates, and something around 60% of all profit is divided equally amongst shareholders.

I see ASICMiner as a prime candidate as an investment opportunity as compared to usual perpetual mining bonds (PMBs), they are not bonds, they actually create the future of bitcoin mining (ASIC design and creation) and they have incentive to constantly increase their own hashrate, as the owners have an ownership stake in the company as well. Most PMBs such as TAT.VIRTUALMINE, YABMC etc offer a higher payout % per mh/s i.e. 95% or 100%, yet they do not offer or promise increased hashrates in the future (when difficulty rises) so it is essentially diminishing returns until the bond is worthless, as it is simply a loan.

There is risk, but ASICMiner would be a company with the lowest risk at the moment, IMO.

[11Blade]

ASICMiner doesn't sell direct shares anymore. The original shares were available through GLBSE which shut down, and now only passthrough shares (i.e. an operator holds the actual shares and has an ownership stake, but we trust him to pay us the dividends and pass on ownership rights) exist.

A return on investment of 2 years (i.e. 50% a year) is INSANE in comparison to something in the real world. A ROI of 7 years is expected in the real world, and as you can imagine, there is also a lot of risk involved with investing in ASICMiner and Bitcoin as a whole.

There are several major ASIC manufacturers, and ASICMiner is the only one which actually mines on the side. They auction off their old blades, their USB miners, and invest in new hardware to bolster their hashrates, and something around 60% of all profit is divided equally amongst shareholders.

I see ASICMiner as a prime candidate as an investment opportunity as compared to usual perpetual mining bonds (PMBs), they are not bonds, they actually create the future of bitcoin mining (ASIC design and creation) and they have incentive to constantly increase their own hashrate, as the owners have an ownership stake in the company as well. Most PMBs such as TAT.VIRTUALMINE, YABMC etc offer a higher payout % per mh/s i.e. 95% or 100%, yet they do not offer or promise increased hashrates in the future (when difficulty rises) so it is essentially diminishing returns until the bond is worthless, as it is simply a loan.

There is risk, but ASICMiner would be a company with the lowest risk at the moment, IMO.
[/quote]

Thanks for clearing that up.

The missing piece on all this is that they sell off hardware as well as ASICs and reinvest into bolstering their hashrates. (which I did not know)

Anything that 'returns' 50% clearly has risk attached to it.

The risk appears three-fold share price fluctuation, dividend payout stability and Bitcoin fluctuation.  much akin to buying foreign stocks

interesting times.

11Blade

[litecoin_messiah]

Its a scam mate, just mine some litecoin

[FiiNALiZE]

ASICS are scams, dont buy them

How exactly are ASIC's scams?

[eltonjock]

It appears that direct ASICMiner shares are selling for 2.5 BTC and generate about 0.02-0.03 BTC per week.

I'm not an economist or bitcoin rocket scientist, but a payback of your original investment in approx 2 yrs
(100 wks) is ok if it continued to return that over the lifetime of 10-20 yrs. 

If it gets increasingly difficult to mine BTC and ASICMiner has to buy more hardware to maintain its share
of the hash pool - doesn't this represent investment risk?

I assume with BFL and knc and Avalon hitting the computing pool, ASICMiner will have to generate more
and more hashing power to generate the same return.

Does anyone see this as a problem and thus over-priced?

ASICMiner doesn't sell direct shares anymore. The original shares were available through GLBSE which shut down, and now only passthrough shares (i.e. an operator holds the actual shares and has an ownership stake, but we trust him to pay us the dividends and pass on ownership rights) exist.

A return on investment of 2 years (i.e. 50% a year) is INSANE in comparison to something in the real world. A ROI of 7 years is expected in the real world, and as you can imagine, there is also a lot of risk involved with investing in ASICMiner and Bitcoin as a whole.

There are several major ASIC manufacturers, and ASICMiner is the only one which actually mines on the side. They auction off their old blades, their USB miners, and invest in new hardware to bolster their hashrates, and something around 60% of all profit is divided equally amongst shareholders.

I see ASICMiner as a prime candidate as an investment opportunity as compared to usual perpetual mining bonds (PMBs), they are not bonds, they actually create the future of bitcoin mining (ASIC design and creation) and they have incentive to constantly increase their own hashrate, as the owners have an ownership stake in the company as well. Most PMBs such as TAT.VIRTUALMINE, YABMC etc offer a higher payout % per mh/s i.e. 95% or 100%, yet they do not offer or promise increased hashrates in the future (when difficulty rises) so it is essentially diminishing returns until the bond is worthless, as it is simply a loan.

There is risk, but ASICMiner would be a company with the lowest risk at the moment, IMO.

You can still obtain ASICminer shares through this forum.  They are auctioned off by current share-holders.  This site has a pretty good explanation of how the process works:

http://coin.furuknap.net/how-to-buy-asicminer-shares/#comment-334