[BTC-TC] Deprived Mining Speculation (DMS)

[Lohoris]

Curiously, for the first time since I've made this spreadsheet, the arbitrage on buying PURCHASE and selling MINING over buying directly SELLING is negative (i.e. it is more convenient to just buy SELLING).

However this is not taking into account that buying PURCHASE increases a small bit the total assets, which is something you want if you plan to hold SELLING, right?

[1715012051]

1715012051

[1715012051]

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[Deprived]

Curiously, for the first time since I've made this spreadsheet, the arbitrage on buying PURCHASE and selling MINING over buying directly SELLING is negative (i.e. it is more convenient to just buy SELLING).

However this is not taking into account that buying PURCHASE increases a small bit the total assets, which is something you want if you plan to hold SELLING, right?

Right on both points.

Yesterday was second time I (briefly) noticed that trades in the direction you point out were profitable (or arbing in other direction made no sense).

There have also been a few occasions when it was cheaper to buy a SELLING+MINING than to buy a PURCHASE (of course PURCHASE still sold despite that) - which would also automatically meet the condition of buying SELLING making more sense.  Such opportunities don't tend to last long of course.

Whilst theoretically buying PURCHASE gives a small increase compared to arbing, that difference is absolutely minimal (as its split between 30k+ shares) so can be discounted for practical purposes.

[ft73]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

[Deprived]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

More amusing is that people still buy other PMBs/similar for even more than MINING.

Remember that there's no increase in difficulty that makes MINING (or any PMB) worthless - people just have to find the right price to buy at.  Is the current price a fair one?  That's for people to decide themselves - in general those buying think it is and those selling think it isn't (and some in both categories probably don't think at all - they just click buttons effectively at random and hope they end up with profit).

[twentyseventy]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

Lots of buys on Mining today, even. 24h Vol is ~1800 and most of those are Market Buys...

[ft73]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

Lots of buys on Mining today, even. 24h Vol is ~1800 and most of those are Market Buys...

Yes, curious timing for shopping on mining securities ...

[carnitastaco]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

More amusing is that people still buy other PMBs/similar for even more than MINING.

Remember that there's no increase in difficulty that makes MINING (or any PMB) worthless - people just have to find the right price to buy at.  Is the current price a fair one?  That's for people to decide themselves - in general those buying think it is and those selling think it isn't (and some in both categories probably don't think at all - they just click buttons effectively at random and hope they end up with profit).

I always get a kick out of Furuknap's borderline absurd explanations of what supposedly makes DMS.Mining so much different than other mining bonds....to paraphrase "it pays the same and acts the same, but its different because people can bet against it." (which in this case really means that its actually secured by funds to pay >1 yr of divs)

[Deprived]

Difficulty is going up of about 20% within a few days.
SELLING dividend coming, i bet.

That said, people still buy MINING ...

More amusing is that people still buy other PMBs/similar for even more than MINING.

Remember that there's no increase in difficulty that makes MINING (or any PMB) worthless - people just have to find the right price to buy at.  Is the current price a fair one?  That's for people to decide themselves - in general those buying think it is and those selling think it isn't (and some in both categories probably don't think at all - they just click buttons effectively at random and hope they end up with profit).

I always get a kick out of Furuknap's borderline absurd explanations of what supposedly makes DMS.Mining so much different than other mining bonds....to paraphrase "it pays the same and acts the same, but its different because people can bet against it." (which in this case really means that its actually secured by funds to pay >1 yr of divs)

Main argument I've seen from him is that it has more price volatility - by which I assume he means its price is more likely to drop to realistic levels because people who don't already hold shares can push it down.  But that's irrelevant to actual investors - who buy for the dividends (which are unaffected by its price) - and in fact is beneficial for them as if they believe the price is already good then if it gets pushed lower they get to buy more at an absolute bargain price.

Where MINING isn't so good is for those who want to rely on the price not dropping as dividends pay out (logically with difficulty increasing the price of MINING should fall - slower than dividends pay if it's profitable, faster if it's unprofitable).  But those are speculators not investors - they're gambling on market behaviour rather than relying on the underlying value of the asset.

And logically if the price of MINING falls and that of other PMBS doesn't then there's no actual extra value being retained in the other PMBs - just a longer window in which the current holders can pass on the over-priced element (be it less profit or more loss) to new ones.  Eventually some poor sod is going to lose out by the amount by which the PMB was over-priced compared to MINING - it just changes who from the current owner to the next.  The investment remains equally as bad (compared to a cheaper MINING) for ALL owners of it added to together - it just distributes the loss (or reduced profit) from overpaying less equitably.

[ThickAsThieves]

It's simple really. Furuknap won't compare DMS.MINING because it would show his asset is overpriced in comparison.

Any other rationale is hot air. He's only okay with comparing to TAT.VM because it has a little MORE volatility due to speculators and due to the lack of an instrument to bet against it (ignoring that *I* still can bet against it by issuing new shares).

All of Furuknap's arguments are bull. Any time the conversation goes in a direction he doesn't like, he says he he's not willing to make assumptions. However, any time it goes in a direction that paints his asset in a good light, or merely obfuscates its being overpriced, he has no problem making convenient assumptions.

[Deprived]

Any other rationale is hot air. He's only okay with comparing to TAT.VM because it has a little MORE volatility due to speculators and due to the lack of an instrument to bet against it (ignoring that *I* still can bet against it by issuing new shares).

Interestingly (to me at least) by the most normal definition DMS.Mining actually looks LESS volatile than real PMBs (or TAT.VM) - the price tends to be more stable and have a tighter spread.  Initially there was some volatility - from where i'm sat it looked like someone was trying to do a King Canute and pump the price but lacked the funds to do so when opposed by everyone else thinking it was too high.  They then had to sell off at a loss - which is what SHOULD happen to people who try to pump something above its value.

The betting against point is the other interesting one.  Attempting to criticise DMS.Mining because people can bet against it totally misses the point.  In any other PMB (where the hardware is already paid for) the issuer is betting against it - they believe they're better off selling the shares than not selling them.  DMS.Mining just removes the monopoly (and thus artificial price constraint) on betting against - it doesn't introduce some new factor that would otherwise not exist.

[odolvlobo]

Thats obvious. Question is, if we made a profit at just-dice, should we pay it out to ourselfes at some specific point? (Not the whole investment, only the profit)

Won't the profit be included in the coming SELLING dividend?

Yes - all profits from investments are included in NAV and add to the next SELLING dividend.  When we made 3 BTC on J-D yesterday that added 3 BTC to the total amount of dividend SELLING will receive in a few days (it looks safe to assume SELLING will get a dividend).

...

I don't disagree with what you wrote, but I think it was a little confusing. I would have preceded your answer with "No" instead of "Yes". It seems like he was asking if asset profits are separately added to SELLING dividends.

Profits from investments don't go directly to SELLING dividends. Instead, they just increase the the NAV, and SELLING dividends are computed normally.

The difference is that SELLING dividends are still not paid if the 410 number is not exceeded, even if assets show profits. And SELLING dividends are still the amount exceeding the 400 number, regardless of the amount of the profits from assets.

That is how I understand it.

[Deprived]

Thats obvious. Question is, if we made a profit at just-dice, should we pay it out to ourselfes at some specific point? (Not the whole investment, only the profit)

Won't the profit be included in the coming SELLING dividend?

Yes - all profits from investments are included in NAV and add to the next SELLING dividend.  When we made 3 BTC on J-D yesterday that added 3 BTC to the total amount of dividend SELLING will receive in a few days (it looks safe to assume SELLING will get a dividend).

...

I don't disagree with what you wrote, but I think it was a little confusing. I would have preceded your answer with "No" instead of "Yes". It seems like he was asking if asset profits are added to SELLING dividends.

Profits from investments don't go directly to SELLING dividends. Instead, they just increase the the NAV, and SELLING dividends are computed normally.

The difference is that SELLING dividends are still not paid if the 410 number is not exceeded, even if assets show profits. And SELLING dividends are still the amount exceeding the 400 number, regardless of the amount of the profits from assets.

That is how I understand it.

The yes was to the second point - that it would be included in the coming dividend.  Once it's certain a dividend will be paid even without any profits then the profits DO effectively go into the dividend (i.e. the dividend is larger by the amount of profits than it would have been had there been no profit).

But in principle you're certainly correct - if difficulty hasn't risen by enough to generate a dividend even with profits added then profits WON'T be dividended out to SELLING (and could end up going to MINING if difficulty continued not to rise by much).

And yes - when calculating the dividend no distinction is made between pre-existing capital and that generated from investments/markup on PURCHASE.  It's all part and parcel of NAV - with whether SELLING dividends are paid (and the size of them if so) determined purely on how NAV compares to the daily dividend for MINING.

[gski]

The predicted difficulty jumpy is looking pretty high for July 10th right? Quite a bit higher than the last jump or are my math/google skills total fail?

[twentyseventy]

The predicted difficulty jumpy is looking pretty high for July 10th right? Quite a bit higher than the last jump or are my math/google skills total fail?

Last DI was between 7-9% if I remember correctly, this one looks like it will be closer to 20%. My estimate is 25,750,000; might be a bit on the high side.

[gski]

Awesome thanks. So big jump in difficulty coupled with the just-dice and coin-lenders income running for a full dividend period should see a pretty high selling div right? I know the maths has been mentioned several time before so im not asking for anyone to go over it again. Im just a bit puzzled why I often see an "if a selling div is paid" type comment when as far as I can work out there will be a div paid out on this for quite awhile?

[FloatesMcgoates]

Awesome thanks. So big jump in difficulty coupled with the just-dice and coin-lenders income running for a full dividend period should see a pretty high selling div right? I know the maths has been mentioned several time before so im not asking for anyone to go over it again. Im just a bit puzzled why I often see an "if a selling div is paid" type comment when as far as I can work out there will be a div paid out on this for quite awhile?

If the difficulty adjusted right now to 25235779 then selling would receive a dividend of 0.006924 BTC/share. However, the difficulty is expected to continue increasing, so the actual dividend will probably be above .007.

[gski]

If the difficulty adjusted right now to 25235779 then selling would receive a dividend of 0.006924 BTC/share. However, the difficulty is expected to continue increasing, so the actual dividend will probably be above .007.

Wowzers, selling seems very conservatively priced currently...

[twentyseventy]

Awesome thanks. So big jump in difficulty coupled with the just-dice and coin-lenders income running for a full dividend period should see a pretty high selling div right? I know the maths has been mentioned several time before so im not asking for anyone to go over it again. Im just a bit puzzled why I often see an "if a selling div is paid" type comment when as far as I can work out there will be a div paid out on this for quite awhile?

Deprived doesn't like to make comments of an absolute nature (which I agree with); be prepared for ifs, coulds, and probablys in this thread!

[gski]

Fair enough if he/she is the security manager(Probably not the correct term). Thanks twentyseventy and FloatesMcgoates! 

[odolvlobo]

Im just a bit puzzled why I often see an "if a selling div is paid" type comment when as far as I can work out there will be a div paid out on this for quite awhile?

SELLING gets a dividend only if the value the assets is more than 410 times the daily MINING dividend.

If a SELLING dividend was paid at the last difficulty change then a SELLING dividend is paid at the next change only if the difficulty goes up by about 6% or more, assuming no profit or loss from assets and 14 days between difficulty changes: 410/(400-14). After some clever math, assuming no profits or losses from assets, a SELLING dividend is paid if the time between difficulty changes is less than 13.2 days.