[BTC-TC] Deprived Mining Speculation (DMS)

[furuknap]

furuknap, I have to ask several questions. Why do you write articles about stuff you don't understand? Why do you talk about economic principles if you have no idea about them? And finally, why do you contribute to Deprived's threads with the only intention to confuse people who already have hard time understanding Deprived's securities?

I am assuming Deprived cannot answer my PM as he doesn't have time because of ignorants who are trying to dissuade people from investing into his securities, stating blatantly inaccurate claims and writing articles full of errors. That is a big shame as there are few sources about Bitcoin economy in my country (I am pretty much the only one that writes on a regular basis) and our community could really use answers from Deprived as he is one of a few people around who understands it.

I suggest you delete your article altogether as the majority of it is simply wrong. Go over the DMS contract again, read more carefully and write something that makes sense. I am not saying it is easy to understand; English is not my native language and it took me two hours to get it, but your conclusions are so off it is hard for anyone to select seperate parts that are wrong as most of it is. Deprived was quick with a very nice explanation why, I won't bother repeating it.

Actually, Deprived reviewed the article over the weekend to point out factual errors and corrected only the fact I hadn't included the reinvestment benefits from funds held in DMS.Purchase.

I'm sure you understand much better than him how his asset works, though, so I invite you to comment on what you believe is factually wrong.

.b

[vandinn]

Actually, Deprived reviewed the article over the weekend to point out factual errors and corrected only the fact I hadn't included the reinvestment benefits from funds held in DMS.Purchase.

I'm sure you understand much better than him how his asset works, though, so I invite you to comment on what you believe is factually wrong.

.b

He must have been busy; he couldn't even answer my simple question (which I understand as I gave him no economic incentive to do so; and it also might have been a little too personal). No wonder he didn't spend his valuable time trashing your article if that is something anyone can do. If you are still unsure about what is wrong with it, I suggest you go over Deprived's posts in the last day again. He pointed to your mistakes on several occasions. The reason why I don't understand his assets as well as he does is simple: I don't need to do precise calculations and can be off by a percent here and there. The reason why you don't understand it is a mystery to me.

[Deprived]

My belief, as I have stated before, is that in the long run (and given a rational market) Bitcoin mining will tend to be marginally profitable. New technologies will create volatiilty but not cancel out the long-term profitability.

Because there are, and probably will always be, people that are willing to mine at a loss, you can't assume that mining will be profitable in the long run.

That is true only as long as those willing to take a loss outperform those that would not.

Miner A will stop mining at 10% profit
Miner B will stop mining at 0% profit
Miner C will stop mining at -10% profit

I already mentioned the reason this isn't the case.  But here it is again.

When I talk about mining being profitable I'm talking about it making enough operational profit to repay capital costs before the equipment fails.  With GPUs the situation was nearer to what you indicate - as when operational profit (coins mined - cost of mining them) fell low the GPUs could be sold off for use in gaming computers etc.

With ASICs there's no such second use for them.  So the ASICs will continue to be used to mine all the time doing so costs less than the coins they generate - even when it's unprofitable to mine if capital costs are taken into account.  So as soon as an ASIC is bought you can pretty much rely on it mining until either it fails or the cost of the power used in mining exceeds the coins generated.  And that latter point is WELL below the point at which mining has ceased to be profitable.

Your example appears not to understand the difference between operational profit and 'true' profit.  People can (and will and do) mine where they mine more coins than it costs in power but still end up with a loss due to never recovering what they paid for the hardware.  That scenario is especially common when BTC rises strongly vs USD (and moreso if profit is measured in BTC rather than USD).

[Deprived]

sorry if I missed it, but Deprived, did we get an answer to how we've put in to JD total?  House profit/loss is useful, but I don't know how much our % of the house stake is.

Yeah I answered before - we deposited a total of 160 BTC.

But you don't need to know that to work out our % of house - what matters is what we currently have there as a percentage of total investment there.  I don't particularly want to start giving increasingly detailed financial reports on J-D as the more info I give the more I can get wrong and lead people to act incorrectly.

You can see what our investment is in each report and what house profit was at that time.  You can see how the house profit/loss has changed since that report.  If you divide that change by the total invested in J-D then that will give a pretty decent indication of how our investment has changed in value.  It won't be accurate - and there's nothing I can provide to allow an accurate calculation.  That's because amount invested there total changes a lot - with people investing/divesting when whales show up etc (ours always all stays invested).  So in theory house profits can rise whilst we take a loss or vice-versa (though the change would have to be pretty small for that to be likely).

It's a situation where if I provide more information it doesn't actually allow a more accurate calculation - it just misleads people into believing they can calculate something more accurate.

[stripykitteh]

sorry if I missed it, but Deprived, did we get an answer to how we've put in to JD total?  House profit/loss is useful, but I don't know how much our % of the house stake is.

The J-D house stake can vary quite a bit. It was around 20,000BTC a few days ago, the last time I looked it was over 30,000BTC. Most of this is not profit/loss, but investment/divestment. A bigger house stake obviously lowers returns in the long run, but also tends to reduce volatility.

[Lohoris]

The reason why you don't understand it is a mystery to me.

If he was a simple user I'd say he's just trolling: he's a troll, he trolled in AM threads too before, he's like one of the first persons I've put into ignore here.
But now it's more than trolling.
That's deliberately misleading the audience, tricking them into buying his crap.
I'm not sure if there's a specific term for such a situation, maybe "sabotage"?

[stripykitteh]

DIVIDENDS FOR DMS.MINING

Dividends will be paid daily, targetted for payment at 16:00 GMT.  Manager may makes the payments a few hours early or late (scheduling is not an optimal option due to the need to ideally adjust downwards PURCHASE price at the same time).

The daily dividend paid is calculated as follows:

5,000,000 * Block Reward * 86400 * (65535/2^48)/Difficulty

5,000,000 being the notional 'Hashing Power' of one unit

Block Reward currently being 25 (BTC per block found)

86400 being the number of seconds in a day.

65535/2^48 being the constant that needs to be divided by difficulty to calculate the likelihood of generating a block in a single hash.

DIfficulty is the difficulty of mining BTC at the midnight prior to the dividend payment.

This calculation is the standard one used to calculate the average mining output of hash-power assuming no stales and no down-time.

I can see a dividend queued for DMS.MINING for 0.00009611/share, i.e., the same as yesterday before the difficulty change.

Difficulty increased before midnight last night GMT time, didn't it?

I was expecting today's DMS.MINING dividend to be

5,000,000 * 25 * 86,400 * (65535/2^48)/31,256,960.72776893 = 0.00008045/share

Sorry if I've misunderstood how this rule works.

[Deprived]

DIVIDENDS FOR DMS.MINING

Dividends will be paid daily, targetted for payment at 16:00 GMT.  Manager may makes the payments a few hours early or late (scheduling is not an optimal option due to the need to ideally adjust downwards PURCHASE price at the same time).

The daily dividend paid is calculated as follows:

5,000,000 * Block Reward * 86400 * (65535/2^48)/Difficulty

5,000,000 being the notional 'Hashing Power' of one unit

Block Reward currently being 25 (BTC per block found)

86400 being the number of seconds in a day.

65535/2^48 being the constant that needs to be divided by difficulty to calculate the likelihood of generating a block in a single hash.

DIfficulty is the difficulty of mining BTC at the midnight prior to the dividend payment.

This calculation is the standard one used to calculate the average mining output of hash-power assuming no stales and no down-time.

I can see a dividend queue for DMS.MINING for 0.00009611/share, i.e., the same as yesterday before the difficulty change.

Difficulty increased before midnight last night GMT time, didn't it?

I was expecting today's DMS.MINING dividend to be

5,000,000 * 25 * 86,400 * (65535/2^48)/31,256,960.72776893 = 0.00008045

Sorry if I've misunderstood how this rule works.

You've understood the rule fine - correct dividend under the contract IS what you calculated above.

What you miss is that I previously promised that if difficulty changed prior to midnight (but after previous day's dividend) then I'd pay the difference between old and new dividend myself - so MINING investors never got a smaller dividend than investors in TAT.VM.

Report will show the correct new dividend in it - and I'll refund DMS for the difference between the two (that calculation will also be in the report - as it was the previous time this happened).

So for SELLING holders no need to worry that you're paying extra to MINING than you should.  MINING WILL be getting more than contract says they should - but the extra comes from me personally.

[stripykitteh]

You've understood the rule fine - correct dividend under the contract IS what you calculated above.

What you miss is that I previously promised that if difficulty changed prior to midnight (but after previous day's dividend) then I'd pay the difference between old and new dividend myself - so MINING investors never got a smaller dividend than investors in TAT.VM.

Report will show the correct new dividend in it - and I'll refund DMS for the difference between the two (that calculation will also be in the report - as it was the previous time this happened).

So for SELLING holders no need to worry that you're paying extra to MINING than you should.  MINING WILL be getting more than contract says they should - but the extra comes from me personally.

Ah, thanks for the rapid explanation! 

[Deprived]

Sold   967
Swapped   0
Total   967
Price   0.039422
Total   38.121074
Less Fee   38.04483185
Man Fee   1.141344956
   
Units   53800
Excess Div   0.00001566
Refund   0.842508

BTC Balance (BTC-TC)    1,444.94443172
11293 LTC-ATF.B1    112.93000000
Coinlenders CD 29/7    203.19674236
Coinlenders CD 13/8    100.60799494
Just-Dice Balance    158.89987361
TOTAL ASSETS    2,020.57904263
   
Outstanding MINING   51003
Outstanding SELLING   51003
Outstanding PURCHASE   2797
Effective Units   53800
   
Block reward   25
Difficulty   31,256,961
Hashes per MINING   5000000
   
Daily Dividend    0.00008045
50 days (Min Liquid)    0.00402236
100 days (Forced Close)    0.00804471
365 days (Buyback)    0.02936320
405 days (IPO)    0.03258108
400 days (Post SELLING div)    0.03217885
410 days (Pre SELLING div)    0.03298332
   
NAV Post MINING Div    2,016.25098742
NAV/U Post MINING Div    0.03747678
Days Dividend Post Div   465.86
SELLING Dividend    0.00529794
NAV Post SELLING Div    1,731.22208419
NAV/U Post Selling Div    0.03217885
PURCHASE selling price    0.03378779
PURCHASE buy-back price    0.03153527
   
J-D House profit at report   -312

[BTCThousandaire]

Why was trading halted on PURCHASE? Was there a price change with the halt?

[somestranger]

Why was trading halted on PURCHASE? Was there a price change with the halt?

Yes. Every time a SELLING dividend goes out trading is halted while the price is adjusted.

[Deprived]

Why was trading halted on PURCHASE? Was there a price change with the halt?

I did the halt later than usual today.  But I always halt PURCHASE when a SELLING dividend gos out if there's any bids over what the new Ask price for PURCHASE will be - as I can be certain whoever placed those bids wouldn't want them filled.

I don't halt on MINING or SELLING as I don't (and can't) fix a price on those.

[FloatesMcgoates]

Hmm.. I think I'm going to see how going long on DMS.MINING instead of DMS.SELLING this cycle will do me. Seems as if there is significant stagnation in difficulty growth rates due to most of the batch 3 avalons being released last cycle as well as the fact that ASICminer seems to be in the middle of two generations of technology and are not adding to their hashrate.

If history shows anything, its that mining declines by a HUGE amount after/during selling's dividend as people rush to get in their SELLING shares only to bounce back by 10% or so. However, this time it will be bouncing back with the added bonus of a lackluster difficulty increase in the future.

[stripykitteh]

Hmm.. I think I'm going to see how going long on DMS.MINING instead of DMS.SELLING this cycle will do me. Seems as if there is significant stagnation in difficulty growth rates due to most of the batch 3 avalons being released last cycle as well as the fact that ASICminer seems to be in the middle of two generations of technology and are not adding to their hashrate.

If history shows anything, its that mining declines by a HUGE amount after/during selling's dividend as people rush to get in their SELLING shares only to bounce back by 10% or so. However, this time it will be bouncing back with the added bonus of a lackluster difficulty increase in the future.

DMS.MINING seems to be well on the way back to where it was a day ago. If there is a stagnation it will be interesting to see how long it lasts. 100TH have been delayed by another couple of weeks according to recent reports.

[somestranger]

Hmm.. I think I'm going to see how going long on DMS.MINING instead of DMS.SELLING this cycle will do me. Seems as if there is significant stagnation in difficulty growth rates due to most of the batch 3 avalons being released last cycle as well as the fact that ASICminer seems to be in the middle of two generations of technology and are not adding to their hashrate.

If history shows anything, its that mining declines by a HUGE amount after/during selling's dividend as people rush to get in their SELLING shares only to bounce back by 10% or so. However, this time it will be bouncing back with the added bonus of a lackluster difficulty increase in the future.

I think you might make some money this way. 0.01 actually seems like a reasonable price especially considering the next difficulty increase will probably be less than 10%. Because of this prediction I actually liquidated my SELLING for ~12% profit over the last month (I paid a lot @ .042 before the first dividend  ) and invested elsewhere.

[FloatesMcgoates]

Hmm.. I think I'm going to see how going long on DMS.MINING instead of DMS.SELLING this cycle will do me. Seems as if there is significant stagnation in difficulty growth rates due to most of the batch 3 avalons being released last cycle as well as the fact that ASICminer seems to be in the middle of two generations of technology and are not adding to their hashrate.

If history shows anything, its that mining declines by a HUGE amount after/during selling's dividend as people rush to get in their SELLING shares only to bounce back by 10% or so. However, this time it will be bouncing back with the added bonus of a lackluster difficulty increase in the future.

I think you might make some money this way. 0.01 actually seems like a reasonable price especially considering the next difficulty increase will probably be less than 10%. Because of this prediction I actually liquidated my SELLING for ~12% profit over the last month (I paid a lot @ .042 before the first dividend  ) and invested elsewhere.

Yeah well someone just snatched up my ask at .01458 that I paid mid .012 to low .013 for, so looks like this experiment will end shortly and profitably for me.

[Deprived]

Sold   3195
Swapped   0
Total   3195
Price   0.03379
Total   107.95905
Less Fee   107.7431319
Man Fee   3.232293957

BTC Balance (BTC-TC)    1,259.46595650
11293 LTC-ATF.B1    112.93000000
Coinlenders CD 29/7    203.34013100
Coinlenders CD 13/8    100.67872209
Just-Dice Balance    168.57606624
TOTAL ASSETS    1,844.99087583
   
Outstanding MINING   53918
Outstanding SELLING   53918
Outstanding PURCHASE   3057
Effective Units   56975
   
Block reward   25
Difficulty   31,256,961
Hashes per MINING   5000000
   
Daily Dividend    0.00008045
50 days (Min Liquid)    0.00402236
100 days (Forced Close)    0.00804471
365 days (Buyback)    0.02936320
405 days (IPO)    0.03258108
400 days (Post SELLING div)    0.03217885
410 days (Pre SELLING div)    0.03298332
   
NAV Post MINING Div    1,840.40740100
NAV/U Post MINING Div    0.03230202
Days Dividend Post Div   401.53
SELLING Dividend    -         
NAV Post SELLING Div    1,840.40740100
NAV/U Post Selling Div    0.03230202
PURCHASE selling price    0.03392
PURCHASE buy-back price    0.03166
   
J-D House profit at report   1534

Very good profit on J-D today - meaning value of PURCHASE rose by 1.5 days' dividends even after paying today's MINING dividend.

[Deprived]

Sold   14
Swapped   0
Total   14
Price   0.03392
Total   0.47488
Less Fee   0.47393024
Man Fee   0.014217907

BTC Balance (BTC-TC)    1,242.97011711
11293 LTC-ATF.B1    112.93000000
Coinlenders CD 29/7    203.45889382
Coinlenders CD 13/8    100.73730243
Just-Dice Balance    168.81111024
TOTAL ASSETS    1,828.90742360
   
Outstanding MINING   53918
Outstanding SELLING   53918
Outstanding PURCHASE   2681
Effective Units   56599
   
Block reward   25
Difficulty   31,256,961
Hashes per MINING   5000000
   
Daily Dividend    0.00008045
50 days (Min Liquid)    0.00402236
100 days (Forced Close)    0.00804471
365 days (Buyback)    0.02936320
405 days (IPO)    0.03258108
400 days (Post SELLING div)    0.03217885
410 days (Pre SELLING div)    0.03298332
   
NAV Post MINING Div    1,824.35419689
NAV/U Post MINING Div    0.03223298
Days Dividend Post Div   400.67
SELLING Dividend    -         
NAV Post SELLING Div    1,824.35419689
NAV/U Post Selling Div    0.03223298
PURCHASE selling price    0.03384
PURCHASE buy-back price    0.03159
   
J-D House profit at report   1584

[Deprived]

Just a note on buy-backs.

I DO offer buy-backs for equal numbers of MINING and SELLING - as well as for PURCHASE.  The PURCHASE ones are handled via the market, where there's a Bid up at the price listed in each day's report.  You can get the same price for 1 MINING + 1 SELLING as well, however I will only do 1 such redemption per day per person.

So if you have a bunch of MINING or SELLING and want to get out of your position, DO consider buying the other half and redeeming them via me : on occasions that may well get you more than selling what you already hold.

There is no way I can ever buy back only one type (of MINING/SELLING) as I don't define the prices for them and there have to always be an equal number of them in circulation.