Furthering the S.DICE / AM comparison

[MPOE-PR]

If we get the 60TH/s online (conservative) in late April, and the hashrate of the full network from that time is 200TH/s which linearly increases to 1,000TH/s in late December. (200+1000)/2 = 600. So we will have 10% in average of the full network from late April to late December. That translates to about 88,000 Bitcoins total mined. That is 0.22BTC/share of gross income in eight months.

Admitting net is 90% gross (which from the looks of various debts, full teams working etc won't be the case) and admitting that Bitfountain itself gets half that, we could reasonably say that ASICMINER shareholders will be earning back via dividends .1 BTC over the course of the next 8 months.

This is, as best we know, a reasonable estimate. Let's quote from the collected wisdom of this forum:

So...all the public shares have a total of 10 millions, that's 10% of total shares.

Let's say I buy 1 million shares to get 1% of satoshidice.

1 000 000 x 0.0032 = 3200 BTC.
It costs 3200 BTC to buy 1%.

Expected to have 2700 BTC / month in total profit. 1% of 2700 BTC = 27 BTC.
It cost me 3200 BTC to get 27 BTC / month and it would take me around 118 months to recoup my initial investment, or around 10 years.

I like satoshidice and I appreciate its potential....but I'm not sure at all.

Given the figures of 65BTC/day, 10% across all shares, and so on, I got about 0.5%/month return. With your figures I got about 0.8%/mo. I understand that under most business plans 7%/wk is a clear scam, but this seems like the other side of crazy.

So basically: it takes ~8 months to "recoup your initial investment", provided that your initial investment is .1

With some basic present-value discounting and some very generous risk assumptions (what happens if some government raids ASICMINER DC and confiscates all gear, sometime between now and December? What happens if the entire wafer has a useful lifetime of 1000 hours under load, and no single chip makes it past that? What happens if a plane accidentally crashes into the building, or there's a shooting and the place becomes a crime scene, or etc?) it would seem the current value per share is somewhere in between 0.03 and 0.07 BTC or so. The lower bound is soft, in the sense that it may be much lower that that, but the upper bound is hard, in the sense that even if nothing bad happens, with MPBOR firmly in the 5 to 10% range .07 BTC now mean .1 BTC in December. So on purely financial terms 0.07 cannot be exceeded.

It would seem to me that all those users who haven't managed to sell out on the bubble started last month are SOL by now.

S.DICE IPOd at 3x and has been trading over 5x for months, making the dividends gains pale in comparison to stock appreciation gains (even as S.DICE has actually paid 64,396 BTC in dividends in the past 8 months).

AM sort-of brokenly IPOd at .65, under my previous lower bound estimate (*) and has about 0 chances of ever significantly appreciating in price to compensate. A sad showing, but such is life.

The moral of this story is twofold:

a. Management is the most important part of any venture whatsoever.
b. Mismanagement kills. It does not matter how good a tech team is, without good management they are doomed.

Hopefully this misadventure will be a lesson learned by the next Bitcoin enterprise, thus avoiding becoming the next originally promising but unfortunately blown Bitcoin entreprise. I think it's too late for Asicminer by now.

Sorry for everyone's loss.

(*) By the way, doesn't the mentioned lack of liquidity work wonders? What's the difference between 800 BTC traded in the first week and 10k BTC traded in the first day?

[Uglux]

Please stop comparing a gamble coinmixer, where every user will lose in the long run,  with a mining endeavor, that is supporting the network.
Thank you.

[wisard]

If we get the 60TH/s online (conservative) in late April, and the hashrate of the full network from that time is 200TH/s which linearly increases to 1,000TH/s in late December. (200+1000)/2 = 600. So we will have 10% in average of the full network from late April to late December. That translates to about 88,000 Bitcoins total mined. That is 0.22BTC/share of gross income in eight months.

Admitting net is 90% gross (which from the looks of various debts, full teams working etc won't be the case) and admitting that Bitfountain itself gets half that, we could reasonably say that ASICMINER shareholders will be earning back via dividends .1 BTC over the course of the next 8 months.

Each share earns 1/400,000 of the profits. If the profits are 88,000 BTC, then each share would earn 0.22BTC.
Net is 90% gross - that sounds ok.
But I don't understand why you assume that Bitfountain gets half of your share profits. Bitfountain owns 200,000 shares which is already accounted for.

Your error in the beginning means you are off by 50% through out all your calculations.

[MPOE-PR]

Each share earns 1/400,000 of the profits. If the profits are 88,000 BTC, then each share would earn 0.22BTC.
Net is 90% gross - that sounds ok.
But I don't understand why you assume that Bitfountain gets half of your share profits. Bitfountain owns 200,000 shares which is already accounted for.

Your error in the beginning means you are off by 50% through out all your calculations.

Ah, that indeed is a good point. So the correct figure would be more like .05 to .14 rather than the .03 to .07 I proposed. There may in fact be some room for profit for those who bought at original .1 prices.

[wisard]

A few more things to take into consideration as to why the shares are trading at 0.65BTC right now. And why even that might be a steal if things go according to ASICMiner's plan.

1. ASICMiner has already paid 43% of initial investment value of 0.1BTC per share. Thats in less than a month's mining.

2. ASICMiner's second batch is 50TH/s. They say they will have it up and running by end of April. If this is indeed true, then the current share price is really low.

In the month of May, approximately 111,600 bitcoins will be mined.

If ASICMiner gets their total of 60TH/s up by then, they will own anywhere from 25% to 50% of that in the month of May (depending on BFL.) (I doubt they will want to get anywhere close to 50% however.)

Thats 28,000 to 56,000 BTC in profit for the month of May itself.

0.07BTC to 0.14BTC per share in one month.

This number goes down per month from then onwards - until ASICMiner comes up with a third batch to keep up with everyone else.

3. If you think that BFL is going to get delayed even further, the numbers become even sweeter.

[MPOE-PR]

A few more things to take into consideration as to why the shares are trading at 0.65BTC right now. And why even that might be a steal if things go according to ASICMiner's plan.

1. ASICMiner has already paid 43% of initial investment value of 0.1BTC per share. Thats in less than a month's mining.

2. ASICMiner's second batch is 50TH/s. They say they will have it up and running by end of April. If this is indeed true, then the current share price is really low.

In the month of May, approximately 111,600 bitcoins will be mined.

If ASICMiner gets their total of 60TH/s up by then, they will own anywhere from 25% to 50% of that in the month of May (depending on BFL.) (I doubt they will want to get anywhere close to 50% however.)

Thats 28,000 to 56,000 BTC in profit for the month of May itself.

0.07BTC to 0.14BTC per share in one month.

This number goes down per month from then onwards - until ASICMiner comes up with a third batch to keep up with everyone else.

3. If you think that BFL is going to get delayed even further, the numbers become even sweeter.

I think you're mixing wildeyed speculation with what is intended to be factual.

Consider the quotes above and stop getting excited. 0.07 to .14 as a current share value is, based on what we know, more than reasonable. And is not to be read as "0.14" either, that's an upper bound, nothing more. The lower bound is probably more important.

[wisard]

Please tell me you have ASICMiner shares.
I will buy as many shares as you have for 0.28BTC per share - 2x your upper bound. 4x your lower bound which you think is more important.
Won't you make a killing based on what you consider is "reasonable"?

[🏰 TradeFortress 🏰]

Because there can be only one good investment in the entire world?

As long as BFL does not significantly ship, ASICMINER will be earning a boatload from the coinbase.

[wisard]

They've paid 0.043BTC in about 3 weeks. And you think 0.07BTC is reasonable.

I understand you're a PR person, but come on.

If you own the shares, I'll buy them from you at 0.28BTC per share.
If you don't own the shares, I'm willing to lend them to you if you want to short them. How about that?

Are you willing to put your money where your mouth is?

[DutchBrat]

AM is paying dividend on 200.000 shares only until the initial investment has been paid back....only then their own 200.00 shares will be paid dividend.... That point will be reached before April 1st.... But def before mid April.

Part of the mining profitability depends on if/when BFL starts shipping.... Then of course there is selling Asics and developing next gen chips....

[🏰 TradeFortress 🏰]

AM is paying dividend on 200.000 shares only until the initial investment has been paid back....only then their own 200.00 shares will be paid dividend.... That point will be reached before April 1st.... But def before mid April.

Part of the mining profitability depends on if/when BFL starts shipping.... Then of course there is selling Asics and developing next gen chips....

The mining profitability depends on the network difficulty, to which BFL shipping will increase it.

[zx9r]

Please tell me you have ASICMiner shares.
I will buy as many shares as you have for 0.28BTC per share - 2x your upper bound. 4x your lower bound which you think is more important.
Won't you make a killing based on what you consider is "reasonable"?

We have a winner 

[Monster Tent]

AM has nothing in common with S.DICE so its like comparing apples with oranges.

[ineededausername]

It is sort of interesting that MPOE is adopting the carrot-and-stick approach so blatantly.  First they congratulate ASICMINER and subtly hint that coughcough Bitfountain should become an MPOE client.  After Bitfountain refuses and PTs go up on other exchanges, MPOE-PR quickly goes sour!  I suppose "mismanagement" means "fuck you, you didn't host on our exchange."

If MPOE-PR really believes this, let's give them some rope to hang themselves!  I will offer MPOE-PR the ability to short some of my many shares and I am sure we can reach a suitable arrangement.

[velacreations]

S.DICE IPOd at 3x and has been trading over 5x for months, making the dividends gains pale in comparison to stock appreciation gains (even as S.DICE has actually paid 64,396 BTC in dividends in the past 8 months).

S.DICE was at .0035 this week

thank goodness AM didn't go to MPOE as an exchange, or their value would have dropped down to .1  
It jumped to over .7 today on BitFunder

[🏰 TradeFortress 🏰]

AM sort-of brokenly IPOd at .65, under my previous lower bound estimate (*) and has about 0 chances of ever significantly appreciating in price to compensate. A sad showing, but such is life.

G.ASICMINER-PT    ฿0.74900000

[MPOE-PR]

G.ASICMINER-PT    ฿0.74900000

Check the volume. But yes, GIGAMINING also IPOd at 1, went to 1.5 or thereabouts and then went nowhere. Maybe this is the general scheme of mining bubbles, go up 50% on the frenzy and then go to nothing. The good news is that there are a lot less BTC in the hands of the easily excitable today than there were last April.

[MPOE-PR]

It is sort of interesting that MPOE is adopting the carrot-and-stick approach so blatantly.  First they congratulate ASICMINER and subtly hint that coughcough Bitfountain should become an MPOE client.  After Bitfountain refuses and PTs go up on other exchanges, MPOE-PR quickly goes sour!  I suppose "mismanagement" means "fuck you, you didn't host on our exchange."

If MPOE-PR really believes this, let's give them some rope to hang themselves!  I will offer MPOE-PR the ability to short some of my many shares and I am sure we can reach a suitable arrangement.

Cool. Get in touch with MP on irc.

[Deprived]

G.ASICMINER-PT    ฿0.74900000

Check the volume. But yes, GIGAMINING also IPOd at 1, went to 1.5 or thereabouts and then went nowhere. Maybe this is the general scheme of mining bubbles, go up 50% on the frenzy and then go to nothing. The good news is that there are a lot less BTC in the hands of the easily excitable today than there were last April.

Think you're misunderstanding something.  The IPO was on GLBSE at 0.1 per share.  I think the chance of the price falling below that is pretty small and pretty much zero for it falling below that before all shares have received at least 0.1 in dividends.

Based on short-term mining I get a value of around .2-.35 per share : not too far off from your own (once you double yours for you error on the 400k shares and add on .04 for the higher dividends until 0.1 is reached).

Now if that were the only value of the share then the price would obviosuly drop as dividends were paid.  But the ability to produce more batches of the ASICs at minimal cost adds rather a lot more to the long-term value.  And assuming they learn from the various fuck-ups made this time, owning a portion of income from future ASIC development they do has to add some value to the shares as well.  As does the potential to sell units to the public (though I'm dubious whether they'll be in a position to do this before demand drops a load).

As for shorting - I'll be interested to see how that turns out.  I can see scenarios where it'll turn out to be a brilliant move (e.g. the ASICs only have a life-span of a few months) and ones where it could turn out to be a disaster (imagine shorting it then BFL's units only have a life-span of a week).  Keep us all posted on any significant shorts that happen.

[MPOE-PR]

Based on short-term mining I get a value of around .2-.35 per share : not too far off from your own (once you double yours for you error on the 400k shares and add on .04 for the higher dividends until 0.1 is reached).

Show a calculation tho, can't hurt.

Now if that were the only value of the share then the price would obviosuly drop as dividends were paid.  But the ability to produce more batches of the ASICs at minimal cost adds rather a lot more to the long-term value.

Well, it's not clear what minimal cost is. This original 12Th ish batch cost something like 20k BTC + maybe 100k fiat? (depends how you count those debts exactly) in terms of cash and about nine months in term of time (it's not actually online yet, but let's pretend). If indeed those new batches may be produced, they'd hit next spring at the earliest, and further dampen dividends up to that point through their cost. If things move linearly then 120Th costs 10 times what 12Th costs, and so there will be absolutely no dividends for the entire 9 month interval (but more debt accumulated).

As for shorting - I'll be interested to see how that turns out.

Me too, for that matter. So far INAU seems to have trouble connecting to irc. In any case, MP's shorts always have been publicly reported (as part of a more encompassing policy of his to keep his liabilities public knowledge).