[BTC-TC] Deprived Mining Speculation (DMS)

[baloo_kiev]

What happened to PURHASE offer? Can see no Ask orders at the selling price.

Offer is always taken down each day at around the time of dividends/report.  Once I've checked the accounting and that the new price is correct a new bid gos up.

Oh, sure! I forgot to look at the clock before posting))

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[Deprived]

J-D took some pretty heavy losses today.

Sold   5781
Swapped   0
Total   5781
Price   0.009291
Total   53.711271
Less Fee   53.60384846
Man Fee   1.608115454

BTC Balance (BTC-TC)   1133.781499
9071 LTC-ATF.B1    90.71000000
CIPHERMINE Bonds    379.86000000
Coinlenders CD 27/9   202.8462525
Coinlenders Cash   0
Just-Dice Balance    181.18000000
TOTAL ASSETS    1,988.37775163
   
Outstanding MINING   210972
Outstanding SELLING   210972
Outstanding PURCHASE   14135
Effective Units   225107
   
Block reward   25
Difficulty   112,628,549
Hashes per MINING   5000000
   
Daily Dividend    0.00002233
50 days (Min Liquid)    0.00111629
100 days (Forced Close)    0.00223259
365 days (Buyback)    0.00814895
405 days (IPO)    0.00904199
400 days (Post SELLING div)    0.00893036
410 days (Pre SELLING div)    0.00915361
   
NAV Post MINING Div    1,983.35203752
NAV/U Post MINING Div    0.00881071
Days Dividend Post Div   394.64
SELLING Dividend    -         
NAV Post SELLING Div    1,983.35203752
NAV/U Post Selling Div    0.00881071
PURCHASE selling price    0.009251
PURCHASE buy-back price    0.008634
   
J-D House profit at report   4675

[Deprived]

Big kicking for J-D today.  It's a competitor betting big and (so far) winning on it.  We're still well up on J-D investment overall - but this clearly shows why I wasn't willing to increase investment there above 10%.

Sold   182
Swapped   0
Total   182
Price   0.009251
Total   1.683682
Less Fee   1.680314636
Man Fee   0.050409439

BTC Balance (BTC-TC)   1135.022031
9071 LTC-ATF.B1    90.71000000
CIPHERMINE Bonds    375.45000000
Coinlenders CD 27/9   202.9673038
Coinlenders Cash   0
Just-Dice Balance    170.17200000
TOTAL ASSETS    1,974.32133521
   
Outstanding MINING   210972
Outstanding SELLING   210972
Outstanding PURCHASE   14317
Effective Units   225289
   
Block reward   25
Difficulty   112,628,549
Hashes per MINING   5000000
   
Daily Dividend    0.00002233
50 days (Min Liquid)    0.00111629
100 days (Forced Close)    0.00223259
365 days (Buyback)    0.00814895
405 days (IPO)    0.00904199
400 days (Post SELLING div)    0.00893036
410 days (Pre SELLING div)    0.00915361
   
NAV Post MINING Div    1,969.29155779
NAV/U Post MINING Div    0.00874118
Days Dividend Post Div   391.53
SELLING Dividend    -         
NAV Post SELLING Div    1,969.29155779
NAV/U Post Selling Div    0.00874118
PURCHASE selling price    0.009178
PURCHASE buy-back price    0.008566
   
J-D House profit at report   2220

[Lytse]

Can someone explain why the JD losses affect the DMS.mining value instead of DMS.selling?
 (Or is there another reason for the DMS.mining drop that I am missing?)

[Rannasha]

Can someone explain why the JD losses affect the DMS.mining value instead of DMS.selling?
 (Or is there another reason for the DMS.mining drop that I am missing?)

Value != price.

The price of DMS.MINING has dropped considerably the last 2 days. Yesterday started with quite a bit of SELLING buys, which pushed up the SELLING price and consequently MINING price was pushed down by arbitrage-action. Afterwards, there were pretty big dumps of MINING both yesterday and today.

The JD losses on their own will not affect MINING at all, as long as difficulty keeps rising. Since JD only makes up 10% of the NAV, it can only drop it the NAV by 10% (if the entire investment goes to zero) and that only becomes noticable for MINING if difficulty stops growing. As it stands right now, any investment gains and losses only affect the value of SELLING.

[Progressive]

Can someone explain why the JD losses affect the DMS.mining value instead of DMS.selling?
 (Or is there another reason for the DMS.mining drop that I am missing?)

DMS.MINING was way overvalued, that's the reason for the drop.

[Lytse]

Value != price.

Oops 

The price of DMS.MINING has dropped considerably the last 2 days. Yesterday started with quite a bit of SELLING buys, which pushed up the SELLING price and consequently MINING price was pushed down by arbitrage-action. Afterwards, there were pretty big dumps of MINING both yesterday and today.

Do you think those are panic sells?

The JD losses on their own will not affect MINING at all, as long as difficulty keeps rising. Since JD only makes up 10% of the NAV, it can only drop it the NAV by 10% (if the entire investment goes to zero) and that only becomes noticable for MINING if difficulty stops growing. As it stands right now, any investment gains and losses only affect the value of SELLING.

Thanks, this is what I thought. I was expecting a price drop in DMS.selling 

[Lytse]

Can someone explain why the JD losses affect the DMS.mining value instead of DMS.selling?
 (Or is there another reason for the DMS.mining drop that I am missing?)

DMS.MINING was way overvalued, that's the reason for the drop.

I don't know the right value price for DMS.mining. A right value price could be 0.002 BTC per share based on the block eruptor blade pricing at BTC guild. (not available for international shipment)

[Progressive]

My estimation is based on my guess of the future difficulty growth, not on the price of an overpriced hardware. I guess even 0.0017 is overpriced.

[Rannasha]

Can someone explain why the JD losses affect the DMS.mining value instead of DMS.selling?
 (Or is there another reason for the DMS.mining drop that I am missing?)

DMS.MINING was way overvalued, that's the reason for the drop.

I don't know the right value price for DMS.mining. A right value price could be 0.002 BTC per share based on the block eruptor blade pricing at BTC guild. (not available for international shipment)

The right price of MINING does not depend on what the competing hashing-related stuff is doing. The only thing that should influence pricing for DMS.MINING is the expected dividend-payments (and the speed with which they come). And this in turn depends on the difficulty evolution.

Simple mathematics tells us that if the difficulty increases by the same relative amount every time, the total amount of dividend paid out by MINING over its entire lifetime is:
14 * X / D
where X is the daily dividends right now and D the fractional difficulty increase per adjustment (so 0.2 for 20%). To get the correct result, this should be computed at the start of a difficulty cycle (or deduct the amount of dividends paid since the last adjustment from the computed result). Additionally, the block-reward halving is not included in the computation, but this is far enough away that dividends have become negligible by then (unless difficulty stops growing soon).

As an example, if you expect a 25% increase per adjustment, MINING will pay a total of 1.25 mBTC, counted from the start of the current cycle, so 6 days ago. Deducting the dividend paid over those days, you get 1.12 mBTC left.

So if you assume that the difficulty goes up by 25% per adjustment, you should not pay more than 1.12 mBTC for MINING right now. Of course, you'll want to pay less than that, because investing to break even after an infintely long series is not a good investment at all.

[tucenaber]

Simple mathematics tells us that if the difficulty increases by the same relative amount every time, the total amount of dividend paid out by MINING over its entire lifetime is:
14 * X / D

You are using 14 days here for the length of the difficulty period, and that is not correct when difficulty is increasing. Therefore your formula will overestimate the value of MINING.

[Rannasha]

Simple mathematics tells us that if the difficulty increases by the same relative amount every time, the total amount of dividend paid out by MINING over its entire lifetime is:
14 * X / D

You are using 14 days here for the length of the difficulty period, and that is not correct when difficulty is increasing. Therefore your formula will overestimate the value of MINING.

While it may appear like that, do the math, sum up the geometric series, taking into account that each cycle only lasts for 14 / (1 + D) days and you'll see the simple expression that I mentioned previously emerge.

edit: If you want to deprive yourself of the fun of deriving it yourself, you can check https://bitcointalk.org/index.php?topic=228327.msg2493461#msg2493461

[odolvlobo]

Rannasha,
I agree with most of what you wrote, but I disagree with these:

Value != price.

Price certainly does equal value. Price expresses the value that the market participants give it. If it did not, then the participants would trade until it did. This assumes that the price also reflects transaction costs and liquidity.

I don't know the right value price for DMS.mining. A right value price could be 0.002 BTC per share based on the block eruptor blade pricing at BTC guild. (not available for international shipment)

The right price of MINING does not depend on what the competing hashing-related stuff is doing. The only thing that should influence pricing for DMS.MINING is the expected dividend-payments (and the speed with which they come). And this in turn depends on the difficulty evolution.

There is no "right" price. The value you are describing is the present value of all the anticipated dividend payments. That is an excellent way to assign a value, but it is not the only way. Please note that you are forgetting to specify a discount rate. Your discount rate is what might cause your valuation to be very different from other valuations.

Now, this value is not the only thing that affects the price. Competing opportunities such as the price of a block eruptor blade certainly can have an effect on the price of DMS.MINING. If the alternative is cheaper, then people will switch, and then the demand for DMS.MINING will drop and so will the price.

[tucenaber]

Simple mathematics tells us that if the difficulty increases by the same relative amount every time, the total amount of dividend paid out by MINING over its entire lifetime is:
14 * X / D

You are using 14 days here for the length of the difficulty period, and that is not correct when difficulty is increasing. Therefore your formula will overestimate the value of MINING.

While it may appear like that, do the math, sum up the geometric series, taking into account that each cycle only lasts for 14 / (1 + D) days and you'll see the simple expression that I mentioned previously emerge.

Actually you are right. Not a bad rule of thumb.

[Deprived]

Sold   57
Swapped   0
Total   57
Price   0.009178
Total   0.523146
Less Fee   0.522099708
Man Fee   0.015662991

BTC Balance (BTC-TC)   1137.316759
9071 LTC-ATF.B1    90.71000000
CIPHERMINE Bonds    369.51000000
Coinlenders CD 27/9   203.0881027
Coinlenders Cash   0
Just-Dice Balance    167.00000000
TOTAL ASSETS    1,967.62486189
   
Outstanding MINING   210972
Outstanding SELLING   210972
Outstanding PURCHASE   14374
Effective Units   225346
   
Block reward   25
Difficulty   112,628,549
Hashes per MINING   5000000
   
Daily Dividend    0.00002233
50 days (Min Liquid)    0.00111629
100 days (Forced Close)    0.00223259
365 days (Buyback)    0.00814895
405 days (IPO)    0.00904199
400 days (Post SELLING div)    0.00893036
410 days (Pre SELLING div)    0.00915361
   
NAV Post MINING Div    1,962.59381190
NAV/U Post MINING Div    0.00870925
Days Dividend Post Div   390.10
SELLING Dividend    -         
NAV Post SELLING Div    1,962.59381190
NAV/U Post Selling Div    0.00870925
PURCHASE selling price    0.009145
PURCHASE buy-back price    0.008535
   
J-D House profit at report   1321

[Progressive]

I guess there is no reason to worry about future of DMS, right?

IMPORTANT NOTICE TO ALL BTC TRADING CORP WEBSITE PARTICIPANTS

As a result of recent changes in the virtual currency regulatory environment, the btct.co and litecoinglobal.com virtual stock market websites will be closing down.  The following is our current schedule:

Approximately a week ago, both sites were closed to any new users and new asset creation was disabled.
 
Effective immediately, in conjunction with this release, trading will be halted, all order books cleared, and trading re-enabled.
 
October 7, 2013, all forms of secondary market trading will be halted on both sites.
 
Approximately October 31, 2013, both sites will be taken offline.  It is strongly suggested that participants take the following steps to protect all of their virtual assets:
 
All participants should take steps to transfer all of your BTC and LTC (and any other data you wish to keep, such as CSV trade histories) held on the sites to your personal computer or another trusted site.
 
All participants should make sure that their public BTC or LTC address is properly set in the Account page on the Settings tab whereby it can be shared with all issuers.
 
All “issuers” should have the contact information concerning their “investors”, and we ask that all “issuers” communicate with their “investors” as soon as possible as to how they will ensure that all are treated appropriately.

We regret this development. However, we want to do everything we can to minimize problems arising from this transition.  It is our goal to keep this shutdown orderly and calm.

Thank you for your participation, creativity, loyalty and sense of community over the past year.  Additional communications will follow as we work out the details.

Ethan Burnside
BTC Trading Corp.

[baloo_kiev]

Shit( I think there IS reason to worry about the future of DMS as well as the future of BTC.

[FloatesMcgoates]

Deprived how are you going to handle the issue of the site shutdown?

Given your how you have demonstrated extreme competence in running this offering so far, and given how you have intelligently laid out your BTC investments in a way that can be easily recouped, would it be fair to assume that some form of buyback is in order as per either

1.)

BUY-BACK TERMS

It is the intention of Manager that this fund should be a long-term prospect (the prices of all three securities will gradually fall) however an option must exist for a shut down.  In the event of shutdown then DMS.MINING (and any outstanding units of DMS.PURCHASE) would first receive a dividend equal to the LOWER of :

a) All funds held by the securities,

b) 365 times the daily dividended due at current difficulty.

The scenarios in which closure under these terms could happen are:

a) Manager proposes a shut down and this is approved by a vote of DMS.SELLING units AND is voted in favour of by a majority of voting units not held by the Manager.  It is envisaged that this scenario would happen if difficulty rose massively AND there was no further interest in purchase of more DMS.MINING bonds.

b) Capital falls such that it is too low to pay 100 days of DMS.MINING bonds for 2 successive difficulties (i.e. before AND after a difficulty change).  In that scenario it is apparent that all of the capital will go to DMS.MINING holders (and DMS.SELLING holders got it totally wrong) so closure and payment of all funds to them immediately is the only fair course of action.

Following payment of the dividend to DMS.MINING, any remaining funds are divdended to DMS.SELLING (and to any outstanding units of DMS.PURCHASE).

Manager may, at his discretion, choose to make final payments by means of a forced purchase rather than through dividends (incurring trading fees but freeing the tickers up for reuse).

or
2.)

UNFORESEEN CIRCUMSTANCES

It is possible that cirumstances could arise where the Manager is unable or unwilling to continue operating the fund.  Should this position arise then immediately the Manager must:

Cease making new investments,
Liquidate investments where possible,
Cease selling new DMS.PURCHASE
Offer redemption at 100% (less any exchange fees) of NAV/U for DMS.PURCHASE and bundles of equal numbers of DMS.MINING and DMS.SELLING where it is possible to do so whilst retaining at least 50 days dividend cover in liquid BTC for the remaining DMS.MINING.
Manager must further seek to either:

Find a replacement manager to be approved by a majority vote by both all outstanding DMS.MINING and all outstanding DMS.SELLING.
Propose a split of funds between DMS.MINING and DMS.SELLING to be approved by a majority vote by both all outstanding DMS.MINING and all outstanding DMS.SELLING.
In the event of a vote with a proposal to split funds being left up for 7 days and (in either vote) the total of (Yes votes + No votes) being less than 50% of all outstanding shares then the Manager will determine a fair (in his best judgement) split of funds and execute final payments in accordance with that decision.  This clause is added specifically to address the scenario where most shares have been redeemed with a large part of those remaining outstanding being unable or unwilling to participate in reaching closure.

[FloatesMcgoates]

In any case I would propose for a motion to begin on DMS.SELLING to liquidate assets and commence buyback

[Rannasha]

I guess option 2 applies to this situation the most. Option 1 mostly covers a voluntary shutdown (which has to be approved by a vote).

There's also option 3, which I'd prefer: Move to another exchange and credit the shares there based on the BTCT records.