[BTC-TC] Deprived Mining Speculation (DMS)

[FloatesMcgoates]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

At .018 BTC/Share, DMS.MINING has the equivalent of .0036 BTC per Megahash/Second, which is 55% Cheaper than what you would get with TAT.VIRTUALMINE.

[Rannasha]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

Most difficulty predictions are based on the average hashrate for the period since the last adjustment. For most of that timeperiod, ASICMiner has been running with significantly less hashing power and they've only recently recovered. Consequently, the average hashrate since the last adjustment is relatively low and will rise if there are no other hashrate-drops.

[twentyseventy]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

At .018 BTC/Share, DMS.MINING has the equivalent of .0036 BTC per Megahash/Second, which is 55% Cheaper than what you would get with TAT.VIRTUALMINE.

I was long on selling until AM started decreasing its hash rate. I'm long on it long-term, but short term it doesn't seem like a great choice.

TAT.VM is extremely overvalued in my opinion, however, as most PMBs are. I'd think .002 per MH/s would be the most I would pay.

[FloatesMcgoates]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

Most difficulty predictions are based on the average hashrate for the period since the last adjustment. For most of that timeperiod, ASICMiner has been running with significantly less hashing power and they've only recently recovered. Consequently, the average hashrate since the last adjustment is relatively low and will rise if there are no other hashrate-drops.

Alright that's a pretty good point so I redid some calculations:

After ASICMiner recovered, total network power is at 146.13 TH/s
At last difficulty readjustment, total network power was at 138.43 TH/s

If we ignore the period over the last day and a half where total network power was hovering between 120-130 TH/s and just suppose it was at 146.13 the entire time, then we come up with a difficulty increase of 5.7%, which would receive a dividend of .0029 BTC/Share or so.
(Using numbers from the previous day:
TotalAssets/(EffectiveUnits*(Dividend*.943)) = 423.7108705177327560934408247899 (Days of dividends remaining)
(DaysRemaining-400) *(EffectiveUnits*(Dividend*.943)) = 23.7108705177327 * 2.55136776774 =  60.495150784 (BTC to be paid out in dividends to SELLING)
60.495150784/EffectiveUnits = 60.495150784/20809 = 0.00290716 BTC/share of DMS.SELLING paid out in dividends

Using infinite series calculations supposing difficulty readjusts every 12 days (CurrentDividend * 12 /(1-DifficultyIncrease)), DMS.MINING will pay out a total of

.0312 if difficulty increases 5% each time
.0208 if difficulty increases 7.5% each time
.0156 if difficulty increases 10% each time
.0078 if difficulty increases 20% each time

[coco23]

.0312 if difficulty increases 5% each time
.0208 if difficulty increases 7.5% each time
.0156 if difficulty increases 10% each time
.0078 if difficulty increases 20% each time

based on that the difficulty in 1 year (june 2014) will be around
83 million (5%)
169 million (7.5%)
336 million (10%)
4581 million (20%)

[Rannasha]

Using infinite series calculations supposing difficulty readjusts every 12 days (CurrentDividend * 12 /(1-DifficultyIncrease)),

Small correction: it is more accurate to assume that difficulty adjusts every 14 / (1 + DifficultyIncrease) days (target time is 14 days, the new difficulty is based on the average hashrate of the previous period). If you multiply this value with the sum of the infinite series you actually get a very elegant result:
14 * CurrentDividend / DifficultyIncrease
(for full derivation see this post: https://bitcointalk.org/index.php?topic=228327.msg2493461#msg2493461)

So with a 10% increase per readjustment, you can expect 140 times the current daily dividend from DMS.MINING.

[FloatesMcgoates]

Using infinite series calculations supposing difficulty readjusts every 12 days (CurrentDividend * 12 /(1-DifficultyIncrease)),

Small correction: it is more accurate to assume that difficulty adjusts every 14 / (1 + DifficultyIncrease) days (target time is 14 days, the new difficulty is based on the average hashrate of the previous period). If you multiply this value with the sum of the infinite series you actually get a very elegant result:
14 * CurrentDividend / DifficultyIncrease
(for full derivation see this post: https://bitcointalk.org/index.php?topic=228327.msg2493461#msg2493461)

So with a 10% increase per readjustment, you can expect 140 times the current daily dividend from DMS.MINING.

The target time is readjusted for difficulty increases that have occured in the past, so if difficulty increases by some amount after the readjustment, that 14 day number should be multiplied by somewhere over (1-%DiffIncrease) to get the approximate date before the next readjustment, this is why the last few adjustments have been at 12 days.

I guess it would be more accurate to say 14 days for a 5% increase, to 12 days for a 20% increase, and then waffle and say 13 days for numbers in between. If this were to be calculated, then DMS.MINING will pay out a lifetime of
0.0364 for 5% Difficulty increase
0.02253 for 7.5% increase
0.169 for a 10% increase

and the 20% number would be the same as the previous post

[twentyseventy]

I'm loving the analysis here, thanks guys. I did my own calculations (less complex, albeit) and came to an expected return of about .0011 for each 5 MH/s PMB equivalent, glad to see that that wasn't too far off. I'm thinking about 15% diff increase, average.

[Deprived]

Sold   150
Swapped   0
Total   150
Price   0.054412
Total   8.1618
Less Fee   8.1454764
Man Fee   0.244364292

BTC Balance (BTC-TC)    961.23784813
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    1,086.23784813
   
Outstanding MINING   20608
Outstanding SELLING   20608
Outstanding PURCHASE   351
Effective Units   20959
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    1,083.51271315
NAV/U Post MINING Div    0.05169678
Days Dividend Post Div   397.60
SELLING Dividend    -         
NAV Post SELLING Div    1,083.51271315
NAV/U Post Selling Div    0.05169678
PURCHASE selling price    0.05428161
PURCHASE buy-back price    0.05066284

[bitcoinplay]

Why are you charging a 24% management fee?

[eltopo]

Why are you charging a 24% management fee?

That's not % it's BTC

Fee is 3%

[crypto-finance]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

Most difficulty predictions are based on the average hashrate for the period since the last adjustment. For most of that timeperiod, ASICMiner has been running with significantly less hashing power and they've only recently recovered. Consequently, the average hashrate since the last adjustment is relatively low and will rise if there are no other hashrate-drops.

Alright that's a pretty good point so I redid some calculations:

After ASICMiner recovered, total network power is at 146.13 TH/s
At last difficulty readjustment, total network power was at 138.43 TH/s

If we ignore the period over the last day and a half where total network power was hovering between 120-130 TH/s and just suppose it was at 146.13 the entire time, then we come up with a difficulty increase of 5.7%, which would receive a dividend of .0029 BTC/Share or so.
(Using numbers from the previous day:
TotalAssets/(EffectiveUnits*(Dividend*.943)) = 423.7108705177327560934408247899 (Days of dividends remaining)
(DaysRemaining-400) *(EffectiveUnits*(Dividend*.943)) = 23.7108705177327 * 2.55136776774 =  60.495150784 (BTC to be paid out in dividends to SELLING)
60.495150784/EffectiveUnits = 60.495150784/20809 = 0.00290716 BTC/share of DMS.SELLING paid out in dividends

Using infinite series calculations supposing difficulty readjusts every 12 days (CurrentDividend * 12 /(1-DifficultyIncrease)), DMS.MINING will pay out a total of

.0312 if difficulty increases 5% each time
.0208 if difficulty increases 7.5% each time
.0156 if difficulty increases 10% each time
.0078 if difficulty increases 20% each time

How do you calculate "TotalAssets" (which I assume means net asset value)? EDIT: Ignore me, I just saw Deprived balance sheet post...

Is "EffectiveUnits" the number of shares outstanding, or the number of shares issued?

[Deprived]

I'm surprised people are still so bullish on SELLING when difficulty is currently scheduled for a measly 0.6% increase, which is far below the threshold required for selling to receive a dividend.

Most difficulty predictions are based on the average hashrate for the period since the last adjustment. For most of that timeperiod, ASICMiner has been running with significantly less hashing power and they've only recently recovered. Consequently, the average hashrate since the last adjustment is relatively low and will rise if there are no other hashrate-drops.

Alright that's a pretty good point so I redid some calculations:

After ASICMiner recovered, total network power is at 146.13 TH/s
At last difficulty readjustment, total network power was at 138.43 TH/s

If we ignore the period over the last day and a half where total network power was hovering between 120-130 TH/s and just suppose it was at 146.13 the entire time, then we come up with a difficulty increase of 5.7%, which would receive a dividend of .0029 BTC/Share or so.
(Using numbers from the previous day:
TotalAssets/(EffectiveUnits*(Dividend*.943)) = 423.7108705177327560934408247899 (Days of dividends remaining)
(DaysRemaining-400) *(EffectiveUnits*(Dividend*.943)) = 23.7108705177327 * 2.55136776774 =  60.495150784 (BTC to be paid out in dividends to SELLING)
60.495150784/EffectiveUnits = 60.495150784/20809 = 0.00290716 BTC/share of DMS.SELLING paid out in dividends

Using infinite series calculations supposing difficulty readjusts every 12 days (CurrentDividend * 12 /(1-DifficultyIncrease)), DMS.MINING will pay out a total of

.0312 if difficulty increases 5% each time
.0208 if difficulty increases 7.5% each time
.0156 if difficulty increases 10% each time
.0078 if difficulty increases 20% each time

How do you calculate "TotalAssets" (which I assume means net asset value)?

Is "EffectiveUnits" the number of shares outstanding, or the number of shares issued?

Can't say for sure what someone else is using in their calculations, but in my reports :

Total Assets (same as NAV) = all cash held + book value of all other assets owned.
Effective Units is the number of PURCHASE sold less any PURCHASE bought back.  That can be calculated in practice by looking at number of PURCHASE outstanding andd adding to it either of MINING or SELLING outstanding (as there's always the same of those).  It's how many PURCHASE would be outstanding if all MINING/SELLING were converted back to PURCHASE.  As all dividends paid to MINING OR SELLING are also paid to purchase it's the number of shares between which dividends are split - and also the number that NAV has to be divided bt to get NAV/U.

[crypto-finance]

Sold   150
Swapped   0
Total   150
Price   0.054412
Total   8.1618
Less Fee   8.1454764
Man Fee   0.244364292

BTC Balance (BTC-TC)    961.23784813
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    1,086.23784813
   
Outstanding MINING   20608
Outstanding SELLING   20608
Outstanding PURCHASE   351
Effective Units   20959
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    1,083.51271315
NAV/U Post MINING Div    0.05169678
Days Dividend Post Div   397.60
SELLING Dividend    -         
NAV Post SELLING Div    1,083.51271315
NAV/U Post Selling Div    0.05169678
PURCHASE selling price    0.05428161
PURCHASE buy-back price    0.05066284

Regarding the NAV/U, am I right in thinking that the only things that can affect it are:
a) dividends from LTC-ATF.B1 (positively only, this cannot subtract from the BTC balance)
b) paying out DMS.MINING dividends (subtracts from it)
c) paying out DMS.SELLING dividends (subtracts from it)

Just trying to make sure I understand the cashflow correctly...

[ThickAsThieves]

Is this gonna implode?

[Deprived]

Is this gonna implode?

What do you mean?

I can see it being possible MINING will fall even lower - but the relative prices of MINING/SELLING have no impact on what capital cover is maintained.  All they do is change the maximum potential profit you can make on each one.  As MINING falls lower, the maximum possible percentage profit you an make from a SELLING drops.  But that isn't implosion - it's just a part of how the market will finally settle at a price.  If the ratio moves far enough then those who bought SELLING cheaper will reach the point where they decide they're better off taking profit now rather than staying in - which will then move the prices back in the other direction.

[Rannasha]

Sold   150
Swapped   0
Total   150
Price   0.054412
Total   8.1618
Less Fee   8.1454764
Man Fee   0.244364292

BTC Balance (BTC-TC)    961.23784813
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    1,086.23784813
   
Outstanding MINING   20608
Outstanding SELLING   20608
Outstanding PURCHASE   351
Effective Units   20959
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    1,083.51271315
NAV/U Post MINING Div    0.05169678
Days Dividend Post Div   397.60
SELLING Dividend    -         
NAV Post SELLING Div    1,083.51271315
NAV/U Post Selling Div    0.05169678
PURCHASE selling price    0.05428161
PURCHASE buy-back price    0.05066284

Regarding the NAV/U, am I right in thinking that the only things that can affect it are:
a) dividends from LTC-ATF.B1 (positively only, this cannot subtract from the BTC balance)
b) paying out DMS.MINING dividends (subtracts from it)
c) paying out DMS.SELLING dividends (subtracts from it)

Just trying to make sure I understand the cashflow correctly...

Almost. There's an additional factor that can increase NAV/U, the sale of new PURCHASE units. Each PURCHASE is sold for 105% of NAV/U. Minus a 3% management fee on new sales, there's still a small premium over NAV/U, which goes into the fund and increases the NAV/U of all outstanding units (slightly).

[ThickAsThieves]

Is this gonna implode?

What do you mean?

I can see it being possible MINING will fall even lower - but the relative prices of MINING/SELLING have no impact on what capital cover is maintained.  All they do is change the maximum potential profit you can make on each one.  As MINING falls lower, the maximum possible percentage profit you an make from a SELLING drops.  But that isn't implosion - it's just a part of how the market will finally settle at a price.  If the ratio moves far enough then those who bought SELLING cheaper will reach the point where they decide they're better off taking profit now rather than staying in - which will then move the prices back in the other direction.

I have not taken the time deeply grasp the interactions here, but the pattern I see is the ceiling continuously lowering itself.

What if MINING buyers only post lower and lower bids? Yes, a bottom will surely be reached, but that bottom could get pretty damn low, right?

What if SELLING owners don't have enough people to unload shares to? This will also seek a lower and lower bottom, no?

The book value of those both affect the NAVU of PURCHASE, correct? Doesn't that also lower the ceiling daily?

[Deprived]

Sold   150
Swapped   0
Total   150
Price   0.054412
Total   8.1618
Less Fee   8.1454764
Man Fee   0.244364292

BTC Balance (BTC-TC)    961.23784813
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    1,086.23784813
   
Outstanding MINING   20608
Outstanding SELLING   20608
Outstanding PURCHASE   351
Effective Units   20959
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    1,083.51271315
NAV/U Post MINING Div    0.05169678
Days Dividend Post Div   397.60
SELLING Dividend    -         
NAV Post SELLING Div    1,083.51271315
NAV/U Post Selling Div    0.05169678
PURCHASE selling price    0.05428161
PURCHASE buy-back price    0.05066284

Regarding the NAV/U, am I right in thinking that the only things that can affect it are:
a) dividends from LTC-ATF.B1 (positively only, this cannot subtract from the BTC balance)
b) paying out DMS.MINING dividends (subtracts from it)
c) paying out DMS.SELLING dividends (subtracts from it)

Just trying to make sure I understand the cashflow correctly...

a) could include other investments as well.

There's also a couple of other things that can change NAV//U upwards:

d)  When a new PURCHASE is sold, after management fee is taken on it the funds added to capital are still above NAV/U.  That increases overall NAV/U very slightly.
e)  If someone sells PURCHASE back (or a MINING + SELLING - not available at present but will be if it ever becomes needed) it would be at 2% below NAV/U, also increasing the NAV/U of remaining units.  Selling MINING + SELLING back will only be offered if/when there's a need for it - i.e. if it isn't possible to sell a MINING + SELLING to market for at least the amount a buy-back at NAV/U -2% would give.  That's necessary (and promised in the contract) to ensure noone is ever locked in with zero demand for BOTH MINING and SELLING.

On point e, I'll already buy back pairs of MINING + SELLING in decent quantities if anyone wants to get out at NAV/U -2%.  That guarantees a minimum level of liquidity - and gives a baseline price people can rely on if they want to close a position by buying the other of the pair to match their holdings.

[Smidge]

DMS.MINING is just tanking every day anew...

Lesson learned.