[PicoStocks] 100TH/s bitcoin mine [100th]

[furuknap]

The question is not only that. The question is about short-term vs. long term. Sure, ASICMiner is starting with 65/55 nm now, but look at what friedcat's already done. The guy can deliver. Even if he's a couple of months behind TH, he will deliver, and in 1 years time, 100TH will still be 100TH but Asicminer could be already in 500TH for all I know.

This is where a lot of people get it wrong; there is no direct link between hashrate and earning. There is a direct link between percentage of network and earning, at least for the mining part of the equation. If AM rolls out 500TH and nobody else has rolled out more, then Bitcoin as we know it is dead.

If 100TH rolls out 100TH and AM rolls out 100TH (and let's forget the rest of the network for a moment) then that is the extent to which they can both grow. AM cannot add 200TH or even 2TH more and start earning more money.

If another actor adds 100TH for a total of 300TH in the network then AM can increase to 200TH but that will not increase its earnings by a single bitcent. It will only add costs, which is why we have seen the peak of AM profitability and AM cannot possibly impress anyone.

.b

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[MPOE-PR]

ASICMiner has just announced they've decided to go with 65/55 nm for their next gen chip, which means they haven't really come far in the process. 100TH seems to have that generation now or at least very shortly.

What difference would generation make for a:

1. Fixed TH offering. For all you care it could be done on CPUs, as long as it matches 100TH it's the same.
2. Dubious offering. This guy with no prior history came out of the blue one day claiming about 1 million dollars' worth of investment in Basic backing his stuff. Basic turned out a scam. Somehow magically the guy didn't make a loss on the deal, but just invested his (obviously imaginary - on the grounds that no explanation was offered at the time) million in another dubious venture. Even if it were the case Bitfury actually delivers, there is absolutely no proof this thing is going to receive anything from there.

It's not a matter of "risky". It's a matter of nonsense.

[abuelau]

This is where a lot of people get it wrong; there is no direct link between hashrate and earning. There is a direct link between percentage of network and earning, at least for the mining part of the equation. If AM rolls out 500TH and nobody else has rolled out more, then Bitcoin as we know it is dead.

Exactly!

So from an investment perspective, 100TH can only DECREASE the % of total hashrate they own, while AM can increase (if they choose so). This means that from the moment 100TH launches it will ALWAYS produce less and less dividends as time passes. While AM can at least stay constant or even increase (as they also sell hardware, don't forget that).

[furuknap]

While AM can at least stay constant or even increase (as they also sell hardware, don't forget that).

AM already has reached the peak it can safely operate. If AM is at 40% and one or two major miners or pools go offline, we have a 51% situation.

This will be mitigated by other miners and pools entering the scene, but AM can not increase its rate. AM can only increase costs. There is no way AM can make more money than they already are. Profitability can only go down. I'm not sure how many more ways I can say that.

Hardware sales is a temporary and minor boost at the moment. If you think otherwise, I have a bunch of Pentium IIIs chips you can buy for $1K each.

.b

[pitchbend]

Exactly, the hash rate will obviously keep increasing at a very fast rate as more players join the game, a project that is not designed to scale will be an always shrinking venture, losing % of the total hashing power everyday.

This is where a lot of people get it wrong; there is no direct link between hashrate and earning. There is a direct link between percentage of network and earning, at least for the mining part of the equation. If AM rolls out 500TH and nobody else has rolled out more, then Bitcoin as we know it is dead.

Exactly!

So from an investment perspective, 100TH can only DECREASE the % of total hashrate they own, while AM can increase (if they choose so). This means that from the moment 100TH launches it will ALWAYS produce less and less dividends as time passes. While AM can at least stay constant or even increase (as they also sell hardware, don't forget that).

[papamoi]

very good news

[pitchbend]

AM doesn't need to grow more, they just need to scale to keep their 40% of the hashing power constant, who cares if they are not able to make more profit from block rewards, as long as it stays constant it's a very very good profit. Also they don't need to divert money from their profits to pay for new hardware and R&D since they can sell blades to pay for those.

While AM can at least stay constant or even increase (as they also sell hardware, don't forget that).

AM already has reached the peak it can safely operate. If AM is at 40% and one or two major miners or pools go offline, we have a 51% situation.

This will be mitigated by other miners and pools entering the scene, but AM can not increase its rate. AM can only increase costs. There is no way AM can make more money than they already are. Profitability can only go down. I'm not sure how many more ways I can say that.

Hardware sales is a temporary and minor boost at the moment. If you think otherwise, I have a bunch of Pentium IIIs chips you can buy for K each.

.b

[furuknap]

AM doesn't need to grow more, they just need to scale to keep their 40% of the hashing power constant, who cares if they are not able to make more profit from block rewards, as long as it stays constant it's a very very good profit.

I'm not sure which part of this you don't understand but growth isn't possible and scaling means reduced profit. They have nothing to sell in a month or two. Profit for AM won't stay constant, it will go down.

The only situation in which AM profits can remain is that if one or very few large actors control the majority of hashing so there is no need to invest in the arms race. I don't consider this to be a very likely scenario, which means that, like for 100TH, profitability will go down with time.

Also they don't need to divert money from their profits to pay for new hardware and R&D since they can sell blades to pay for those.

OK, so how many Pentium IIIs would you like to buy? Shipping is, of course, included, and I can ship right now!

.b

[gyverlb]

ASICMiner has just announced they've decided to go with 65/55 nm for their next gen chip, which means they haven't really come far in the process. 100TH seems to have that generation now or at least very shortly.

. Dubious offering. This guy with no prior history

tytus, no prior history? You lived under a rock since the early days of Bitcoin mining?

came out of the blue one day claiming about 1 million dollars' worth of investment in Basic backing his stuff. Basic turned out a scam.

It failed, it wasn't a scam. I can attest to it personally: I was a bASIC customer and was refunded to the last cent.

Somehow magically the guy didn't make a loss on the deal

Why should magic been involved when bASIC did refund everyone? In fact if someone is still claiming otherwise now, you can suspect him/her to try to scam bASIC, given that hundreds of customers either reported being refunded or didn't even bothered posting about it.

but just invested his (obviously imaginary - on the grounds that no explanation was offered at the time) million

Why shouldn't people invest this kind of money if they can and why should they justify its source? And my understanding is that the 100TH-mine was funded by its current shareholders, not one single guy.
The largest shareholder has a little less than 2/5 of the shares (200_000 purchased at 0.04BTC => 8000BTC at the beginning of the year) where's your million dollar again?

in another dubious venture. Even if it were the case Bitfury actually delivers, there is absolutely no proof this thing is going to receive anything from there.

Yeah like Bitfury would let someone build a scammer company on his own reputation without reacting in any way. Makes sense  

MPOE-PR: stop being envious of other people actually building something and go back on your exchange nobody wants to use anymore. Attacking stocks that didn't select your exchange with so pathetic FUD only damages your own reputation (assuming it's still somehow recoverable).

[ronaldlee0917]

Exactly, the hash rate will obviously keep increasing at a very fast rate as more players join the game, a project that is not designed to scale will be an always shrinking venture, losing % of the total hashing power everyday.

This is where a lot of people get it wrong; there is no direct link between hashrate and earning. There is a direct link between percentage of network and earning, at least for the mining part of the equation. If AM rolls out 500TH and nobody else has rolled out more, then Bitcoin as we know it is dead.

Exactly!

So from an investment perspective, 100TH can only DECREASE the % of total hashrate they own, while AM can increase (if they choose so). This means that from the moment 100TH launches it will ALWAYS produce less and less dividends as time passes. While AM can at least stay constant or even increase (as they also sell hardware, don't forget that).

The same applies for all mining hardware.
We are buying shares of a 100TH mining hardware here, we all know clearly we will get 200MH per share before buying, whose network share would decreases with time.
The strength of asicminer is their PROMISE to upgrade their mining hardware with time, whose cost would likely be reduced from your dividends.
I don't know exactly their policy of giving out dividends, but for a normal company, all operational, purchase or investment costs should be be deducted from the income and a percent of the revenue is given out as dividends to shareholders.
With that said, all shareholders are paying the cost of hardware upgrades indirectly in order to keep asicminer's hash rate up with competition.
In the case of 100TH, we don't need to pay for the upgrade cost but we won't get a progressive hash rate either, but with 100TH, it should be able to stay relevant and give out hefty dividends within a year of two.
The only question is whether they will deliver on time.

[Dexter770221]

All is in business plan. Also nice graphs of predicted income. But few things changed. At startup there will not be a 500TH hashing power, and BTC is no longer 17$... Everything is paid, so you may easy calculated how dividends will look like... With AM you don't know a shit... If friedcat says that he must buy components then he will take 2000BTC and says sorry I had too... And who knows how much that components was? If someone saw a table with incomes and outcomes of AM then please post a link....

[furuknap]

ASICMiner has just announced they've decided to go with 65/55 nm for their next gen chip, which means they haven't really come far in the process. 100TH seems to have that generation now or at least very shortly.

What difference would generation make for a:

1. Fixed TH offering. For all you care it could be done on CPUs, as long as it matches 100TH it's the same.

This was actually more a response to the glory of AM than a praise of 100TH. The point was to show that AM isn't leading the race because of skill but because they are the only horse in the race.

Even if it were the case Bitfury actually delivers, there is absolutely no proof this thing is going to receive anything from there.

It's not a matter of "risky". It's a matter of nonsense.

I doubt Bitfury would post lengthy descriptions of his progress in the 100TH threads if he had no connections with them. Theoretically, he can scam 100TH and not deliver, but I doubt that is the case. There is an obvious connection between them, but that's not really important in terms of defining whether this is a profitable venture, only to determine risk, like you say.

I don't think that's a real risk so I hold some shares, if you think it is a real risk you're not willing to take, then you don't buy shares :-)

.b

[Dexter770221]

... if you think it is a real risk you're not willing to take, then you don't buy shares :-)

Yep, as simple as that, no need to spill an acid...

[abuelau]

Well, one thing is for sure: the GH/s cost of this share is one the low-end right now compared to other investments.

So as others said, it boils down to when they start hashing.

[tytus]

Oops, I missed the discussion on the thread ...

We are getting requests asking why we are "dumping" prices by offering shares from "73i6" (1AQxJQZtTNzUhviMjB8jqxxqL3Kbnm73i6 / Pico).
The main reason is that we want to increase liquidity because at low liquidity the price is too volatile. We can of course offer shares at higher prices but there must be a rational explanation of the valuation.
I believe the mine will be very successful in the first months but after that the revenues will drop (very) rapidly. The same will happen to the stock valuation. So this investment is quite tricky. To estimate the market cap of the 100th mine we have to predict how many BTC will be mined. 100k BTC are mined per month in total. I doubt the mine will make 100 BTC in the first two months. Other competitors will also fight for the mining revenues (BFL, maybe 28nm chip from helveticoin, and new batches of our chips). Also the chips have not been tested yet, so the investment is still very speculative.
We will update our projections in 3-4 weeks when we (hopefully) have functional boards.

[tytus]

Well, one thing is for sure: the GH/s cost of this share is one the low-end right now compared to other investments.
So as others said, it boils down to when they start hashing.

100th mine:
shares   518271
price per share BTC   0.2
market cap BTC   103654.2
hashrate [GH/s]   100000
price/hash [BTC/GH/s]   1.036542
BTC price   127
USD/GH/s   131.640834
   
BFL bitcoin miner:
GH/s   50
USD   2499
USD/GH/s   49.98

The 100th mine shares are now more expensive than equipment so the only reason to buy them would be the expectation that 100th can mine faster then own equipment when purchased. => The mine has to return revenues before BFL (and other) equipment will be abundant.

[furuknap]

Oops, I missed the discussion on the thread ...

We are getting requests asking why we are "dumping" prices by offering shares from "73i6" (1AQxJQZtTNzUhviMjB8jqxxqL3Kbnm73i6 / Pico).
The main reason is that we want to increase liquidity because at low liquidity the price is too volatile. We can of course offer shares at higher prices but there must be a rational explanation of the valuation.
I believe the mine will be very successful in the first months but after that the revenues will drop (very) rapidly. The same will happen to the stock valuation. So this investment is quite tricky. To estimate the market cap of the 100th mine we have to predict how many BTC will be mined. 100k BTC are mined per month in total. I doubt the mine will make 100 BTC in the first two months. Other competitors will also fight for the mining revenues (BFL, maybe 28nm chip from helveticoin, and new batches of our chips). Also the chips have not been tested yet, so the investment is still very speculative.
We will update our projections in 3-4 weeks when we (hopefully) have functional boards.

Thanks for the update, Tytus, I appreciate the information and projections.

The market must decide what the true price of a share is, which is the entire point of floating on an exchange. At that point, the founders are no longer 'allowed' to say what is a fair price, but should instead focus on providing the information that the market needs to evaluate the value.

Whether someone wants to pay more or less is not up to the founders; only the market and the investors on that market. That market may or may not have other information that makes them evaluate the risk and profitability differently than you.

However, you are sending a very wrong signal to the market when you 'dump' shares right before an important announcement, especially when you do so at below market bids. This causes uncertainty about whether you have more information than the market. In a regulated setting, this would be considered insider trading regardless of whether you have other information. The normal procedure is to announce such sales when they are done from key insiders.

From what I understand now, there is no new information that would change the previous evaluation that the market does. If anything, the update on the wafers is positive in terms of being in line with your previous projections. The market now needs to decide what to do with that information.

.b

[furuknap]

The 100th mine shares are now more expensive than equipment so the only reason to buy them would be the expectation that 100th can mine faster then own equipment when purchased. => The mine has to return revenues before BFL (and other) equipment will be abundant.

Again, you cannot decide on behalf of investors why they want to invest or what their reasons are. The cost of a scalpel and a clean bed is minute, but you'd still want to hire a surgeon to operate on you rather than asking a friend over to do it or even worse, do it yourself.

The cost of chips is also lower than a BFL box, which following your logic would mean that buying a BFL miners would be a bad investment and BFL should tell their customers to buy chips instead or even sell their boxes for lower prices to control the disappointment that their customers will see when they realize that people buying chips would get much cheaper hashing power.

Leave the market to do what the market is designed to do. I, for one, would not buy a BFL miner for a quarter of its price, simply because of the overhead of maintenance, risk of failure, because I'm moving shortly, because my wife doesn't like the color, or a ton of other reasons.

That should be my choice, not yours.

.b

[abuelau]

@tytus: I appreciate your transparency, but:

1) You are comparing your GH/s cost with the only company that is cheaper and by the way doesn't deliver. Not even the Jalapenos, much less the higher end machines.

2) My point on the price is that if you compare 100TH with other similar security options in Bitfunder, you are still cheap. The cheapest you can get in Bitfunder is about 200MH/BTC and here one can get 1GH/BTC.

[lysr]

Well, one thing is for sure: the GH/s cost of this share is one the low-end right now compared to other investments.
So as others said, it boils down to when they start hashing.

100th mine:
shares   518271
price per share BTC   0.2
market cap BTC   103654.2
hashrate [GH/s]   100000
price/hash [BTC/GH/s]   1.036542
BTC price   127
USD/GH/s   131.640834
   
BFL bitcoin miner:
GH/s   50
USD   2499
USD/GH/s   49.98

The 100th mine shares are now more expensive than equipment so the only reason to buy them would be the expectation that 100th can mine faster then own equipment when purchased. => The mine has to return revenues before BFL (and other) equipment will be abundant.

The problems with BFL are:
- they failed to deliver again and again
- there is a long queue of orders yet to be served. An order made today probably won't be served before the end of this year. Timeliness is critical in the field of mining as everyone of us knows competition and difficulty scale up with time. So, I won't buy a BFL even if they sell at one half of the price now. Why would people still buy the blades and usb from ASICMINER although they are nearly 10x the cost of BFL? Because they are paying extra for a quick delivery.

Let the market decide the true value of your shares, as an issuer the best you should do is to provide the most accurate information to the investors, they are taking the risks and profits on behalf of their own decisions. All you are doing now is unfair to those who bought at 0.3+ because of an anticipation of a sharp increase in price shortly. I really feel sorry for those guys because of your unjustified decision.