[BTC-TC] Deprived Mining Speculation (DMS)

[runeks]

Last increases have been 19%, 20%, 10%, if I recall correctly...

I have the past difficulties up on my site here: http://runeks.dk/bitcoin/diff.txt

They auto-update every time the difficulty changes.

It also shows the length of the difficulty period in question, which is something that some people overlook. When the difficulty increases by, say, 20%, not only is the difficulty 20% higher but the adjustment also happened 20% faster than the 14 days that the difficulty adjustment targets for.

This means that if difficulty increases by 20% each difficulty period, it will be increase by a factor of 380 in one year, and not a factor of 116, which is the result you would get if you assumed a 14 day difficulty period.

[Progressive]

Last increases have been 19%, 20%, 10%, if I recall correctly...

I have the past difficulties up on my site here: http://runeks.dk/bitcoin/diff.txt

They auto-update every time the difficulty changes.

It also shows the length of the difficulty period in question, which is something that some people overlook. When the difficulty increases by, say, 20%, not only is the difficulty 20% higher but the adjustment also happened 20% faster than the 14 days that the difficulty adjustment targets for.

This means that if difficulty increases by 20% each difficulty period, it will be increase by a factor of 380 in one year, and not a factor of 116, which is the result you would get if you assumed a 14 day difficulty period.

Thank you very much, this is what I was looking for.

[Deprived]

Sold   755
Swapped   0
Total   755
Price   0.02806
Total   21.1853
Less Fee   21.1429294
Man Fee   0.634287882

BTC Balance (BTC-TC)    1,428.67935581
10164 LTC-ATF.B1    101.64000000
Coinlenders CD 28/8    201.89526460
Coinlenders CD 13/8    101.90366229
Just-Dice Balance    160.32389937
TOTAL ASSETS    1,994.44218207
   
Outstanding MINING   68505
Outstanding SELLING   68505
Outstanding PURCHASE   6066
Effective Units   74571
   
Block reward   25
Difficulty   37,392,766
Hashes per MINING   5000000
   
Daily Dividend    0.00006725
50 days (Min Liquid)    0.00336232
100 days (Forced Close)    0.00672465
365 days (Buyback)    0.02454497
405 days (IPO)    0.02723483
400 days (Post SELLING div)    0.02689860
410 days (Pre SELLING div)    0.02757106
   
NAV Post MINING Div    1,989.42754343
NAV/U Post MINING Div    0.02667830
Days Dividend Post Div   396.72
SELLING Dividend    -         
NAV Post SELLING Div    1,989.42754343
NAV/U Post Selling Div    0.02667830
PURCHASE selling price    0.02801
PURCHASE buy-back price    0.02614
   
J-D House profit at report   4433

[tucenaber]

I'm very impressed with the DMS.PURCHASE fund. It is a very clever construct that lets you go both long and short on mining. The problem with it is that it stops working when the two sides get "out of the money". Right now, in my opinion MINING is still overpriced but the potential profit on SELLING makes it unattractive.

For it to be an effective short it has to be more or less balanced, so that both sides has equal profit chances. SELLING is bounded above by the price of PURCHASE, so it has almost no upside when MINING gets cheap.

It could very well be the other way around if difficulty started decreasing, pushing up the price of MINING.

The optimal situation would be when we have the prices of MINING and SELLING roughly equal. This can be achieved by upgrading the MINING contract.

When MINING falls below a 25% of PURCHASE (NAV/U) then issue a new PURCHASE contract based on a mining contract with double the old hashrate. Whenever the price goes above 75% then issue one with half the hashrate. The old MINING/SELLING contracts don't need to be withdrawn.

Right now though, MINING has fallen in price so much that it would be better to quadruple the hashrate to 20. Rename the old PURCHASE to PURCHASE5 and issue a new instrument PURCHASE20 (=MINING20 + SELLING20) which is exactly like the old with one difference. The MINING part is a 20MH/s bond instead of 5MH/s. This will in theory quadruple the price of MINING to about 0.014 and lower the price of SELLING to about 0.014. Mission accomplished.

You then stop selling the old PURCHASE5 and start offering PURCHASE20 instead. Also offer the holders of current combo to turn every four pairs of MINING5+SELLING5 into one PURCHASE20.

The only question remaining is. What if you don't have an amount evenly divisible by four that can be converted? I don't see a real problem with this, since the market for MINING5/SELLING5 will still exist and anyone can just sell the instruments or buy a few extra to make the numbers work out.

Is this something you would consider?

[Hfleer]

I'm very impressed with the DMS.PURCHASE fund. It is a very clever construct that lets you go both long and short on mining. The problem with it is that it stops working when the two sides get "out of the money". Right now, in my opinion MINING is still overpriced but the potential profit on SELLING makes it unattractive.

For it to be an effective short it has to be more or less balanced, so that both sides has equal profit chances. SELLING is bounded above by the price of PURCHASE, so it has almost no upside when MINING gets cheap.

It could very well be the other way around if difficulty started decreasing, pushing up the price of MINING.

The optimal situation would be when we have the prices of MINING and SELLING roughly equal. This can be achieved by upgrading the MINING contract.

When MINING falls below a 25% of PURCHASE (NAV/U) then issue a new PURCHASE contract based on a mining contract with double the old hashrate. Whenever the price goes above 75% then issue one with half the hashrate. The old MINING/SELLING contracts don't need to be withdrawn.

Right now though, MINING has fallen in price so much that it would be better to quadruple the hashrate to 20. Rename the old PURCHASE to PURCHASE5 and issue a new instrument PURCHASE20 (=MINING20 + SELLING20) which is exactly like the old with one difference. The MINING part is a 20MH/s bond instead of 5MH/s. This will in theory quadruple the price of MINING to about 0.014 and lower the price of SELLING to about 0.014. Mission accomplished.

You then stop selling the old PURCHASE5 and start offering PURCHASE20 instead. Also offer the holders of current combo to turn every four pairs of MINING5+SELLING5 into one PURCHASE20.

The only question remaining is. What if you don't have an amount evenly divisible by four that can be converted? I don't see a real problem with this, since the market for MINING5/SELLING5 will still exist and anyone can just sell the instruments or buy a few extra to make the numbers work out.

Is this something you would consider?

The buyback and days of dividends kept would have to be lowered a lot for that security, otherwise it wouldn't just work out that way. 

[tucenaber]

I'm very impressed with the DMS.PURCHASE fund. It is a very clever construct that lets you go both long and short on mining. The problem with it is that it stops working when the two sides get "out of the money". Right now, in my opinion MINING is still overpriced but the potential profit on SELLING makes it unattractive.

For it to be an effective short it has to be more or less balanced, so that both sides has equal profit chances. SELLING is bounded above by the price of PURCHASE, so it has almost no upside when MINING gets cheap.

It could very well be the other way around if difficulty started decreasing, pushing up the price of MINING.

The optimal situation would be when we have the prices of MINING and SELLING roughly equal. This can be achieved by upgrading the MINING contract.

When MINING falls below a 25% of PURCHASE (NAV/U) then issue a new PURCHASE contract based on a mining contract with double the old hashrate. Whenever the price goes above 75% then issue one with half the hashrate. The old MINING/SELLING contracts don't need to be withdrawn.

Right now though, MINING has fallen in price so much that it would be better to quadruple the hashrate to 20. Rename the old PURCHASE to PURCHASE5 and issue a new instrument PURCHASE20 (=MINING20 + SELLING20) which is exactly like the old with one difference. The MINING part is a 20MH/s bond instead of 5MH/s. This will in theory quadruple the price of MINING to about 0.014 and lower the price of SELLING to about 0.014. Mission accomplished.

You then stop selling the old PURCHASE5 and start offering PURCHASE20 instead. Also offer the holders of current combo to turn every four pairs of MINING5+SELLING5 into one PURCHASE20.

The only question remaining is. What if you don't have an amount evenly divisible by four that can be converted? I don't see a real problem with this, since the market for MINING5/SELLING5 will still exist and anyone can just sell the instruments or buy a few extra to make the numbers work out.

Is this something you would consider?

The buyback and days of dividends kept would have to be lowered a lot for that security, otherwise it wouldn't just work out that way. 

Why? Remember that there will be only half (or a quarter) the number of securities outstanding.

[Hfleer]

The buyback and days of dividends kept would have to be lowered a lot for that security, otherwise it wouldn't just work out that way.  

Why? Remember that there will be only half (or a quarter) the number of securities outstanding.

If they change it to 20 Mh/s then the current dividend would be 0.00027 per share approximately.  400 days would be around 0.107 per share.  Subtract what the Mining security might be valued around 0.014, and the Selling security would probably be valued at over 0.08
edited: used wrong numbers

[tucenaber]

The buyback and days of dividends kept would have to be lowered a lot for that security, otherwise it wouldn't just work out that way. 

Why? Remember that there will be only half (or a quarter) the number of securities outstanding.

If they change it to 20 Mh/s then the current dividend would be 0.000336 per share approximately.  400 days would be around 0.1345 per share.  Subtract what the Mining security might be valued around 0.018, and the Selling security would probably be valued at over 0.1

I have no idea what you are saying. SELLING will always be valued at PURCHASE - MINING. Otherwise there will be arbitrage.

[Hfleer]

I have no idea what you are saying. SELLING will always be valued at PURCHASE - MINING. Otherwise there will be arbitrage.

You were saying Mining and Selling could both be valued at around 0.014, then Dms. Purchase would be around 0.028 which with 4x the hashing power(20 Mh/s) would only be 1/4 the days dividends, ~100 days.

[tucenaber]

I have no idea what you are saying. SELLING will always be valued at PURCHASE - MINING. Otherwise there will be arbitrage.

You were saying Mining and Selling could both be valued at around 0.014, then Dms. Purchase would be around 0.028 which with 4x the hashing power(20 Mh/s) would only be 1/4 the days dividends, ~100 days.

No. The total amount paid in dividends stay the same because there are 4 times as much money paid per share but only 1/4 as many shares.

[Lohoris]

Victims were people who did dumb things like clicking links from reddit whilst logged into exchanges etc.

This is unfair, it's totally not dumb to "click links", it's dumb to have such a hole in a site.

[Hfleer]

I have no idea what you are saying. SELLING will always be valued at PURCHASE - MINING. Otherwise there will be arbitrage.

You were saying Mining and Selling could both be valued at around 0.014, then Dms. Purchase would be around 0.028 which with 4x the hashing power(20 Mh/s) would only be 1/4 the days dividends, ~100 days.

No. The total amount paid in dividends stay the same because there are 4 times as much money paid per share but only 1/4 as many shares.

Since the numbers are per share it doesn't matter how many more or less shares there are.

[tucenaber]

Since the numbers are per share it doesn't matter how many more or less shares there are.

I give up. I'm obviously not getting through to you.

[Deprived]

Right now though, MINING has fallen in price so much that it would be better to quadruple the hashrate to 20. Rename the old PURCHASE to PURCHASE5 and issue a new instrument PURCHASE20 (=MINING20 + SELLING20) which is exactly like the old with one difference. The MINING part is a 20MH/s bond instead of 5MH/s. This will in theory quadruple the price of MINING to about 0.014 and lower the price of SELLING to about 0.014. Mission accomplished.

It doesn't work like that.  For MINING to be worth the same and SELLING to be worth less the number of days dividend held in reserve would have to drop a lot, so would the buy-back terms for MINING etc.  If that happened then the value of MINING would drop a lot and no longer be 4 times current price - plus the whole nature of DMS would be changed.

The relative percentages of the prices wouldn't change at all without terms also changing.

If you can't see this clearly then consider doing what you propose in 2 stages and it shold become obvious:

1.  Multiply everything by 4 - so MINING is worth 4 times as much and PURCHASE costs 4 times as much.  Hopefully you can see how if this were done then SELLING would also be 4 times the price - and 1 'new' share would be identical to 4 'old' ones with exactly same ratio of MINING:SELLING prices and so precisely same % profit potential on each.
2.  ?

What is it you think you can do in 2 that suddenly removes 75% of SELLING's value whilst leaving MINING unchanged?

[Deprived]

Sold   8832
Swapped   0
Total   8832
Price   0.02801
Total   247.38432
Less Fee   246.8895514
Man Fee   7.406686541

BTC Balance (BTC-TC)    1,663.14718263
10164 LTC-ATF.B1    101.64000000
Coinlenders CD 28/8    202.02801424
Coinlenders CD 13/8    101.93762759
Just-Dice Balance    160.60000000
TOTAL ASSETS    2,229.35282446
   
Outstanding MINING   78524
Outstanding SELLING   78524
Outstanding PURCHASE   4879
Effective Units   83403
   
Block reward   25
Difficulty   37,392,766
Hashes per MINING   5000000
   
Daily Dividend    0.00006725
50 days (Min Liquid)    0.00336232
100 days (Forced Close)    0.00672465
365 days (Buyback)    0.02454497
405 days (IPO)    0.02723483
400 days (Post SELLING div)    0.02689860
410 days (Pre SELLING div)    0.02757106
   
NAV Post MINING Div    2,223.74426475
NAV/U Post MINING Div    0.02666264
Days Dividend Post Div   396.49
SELLING Dividend    -         
NAV Post SELLING Div    2,223.74426475
NAV/U Post Selling Div    0.02666264
PURCHASE selling price    0.02800
PURCHASE buy-back price    0.02613
   
J-D House profit at report   4526

[Deprived]

Our 100 BTC Coinlenders CD matured today - left it in report as its final value.

I've bought a new one at same amount and am about to move the interest back to our BTC-T wallet.  I could have sent more cash and made it a 200 BTC one as our assets were high enough but didn't as there'll be a large chunk going out on next SELLING dividend.  What I'll do is in a week's time deposit more there and buy a new one once I see how much reinvestment there is after the SELLING dividend.

Today there was a LOT of activity on PURCHASE but I don't want to assume that will continue.  If it does then I can purchase a third CD next week and have our CD returns better spaced out anyway.  Ideally I'd like us to have 4 with one maturing each week.  The difference in rates between a 100 BTC one and a 200 BTC one are pretty small in any event.

[tucenaber]

What is it you think you can do in 2 that suddenly removes 75% of SELLING's value whilst leaving MINING unchanged?

Yes, you're right it doesn't work. It's pretty obvious too, now that I think about it

I didn't mean to multiply everything by four though. Only the mining side. Still, that would destroy the 1:1 ratio between mining and selling for the old shares, and the exchange into new would not work. Well, well.

[FloatesMcgoates]

I just recently started trading this again and I have to say props on the Automatic Transfer bot,as it really seems to have sparked significantly increased trading volume.

[Deprived]

I just recently started trading this again and I have to say props on the Automatic Transfer bot,as it really seems to have sparked significantly increased trading volume.

Don't think the extra trading volume was because of the bot - though I'm glad it didn't show up until after the bot was running (there were over 100 transfers in of PURCHASE yesterday - more than I normally get in a week).

I believe the extra trading volume is largely because MINING price has dropped to being a LOT cheaper than PMBs.  That's led to more interest in it - and to MINING+SELLING being much nearer to PURCHASE (so if someone wants a MINING or a SELLING it's often been cheaper to buy a PURCHASE and sell the other half - which wasn't the case for a while).

[tucenaber]

Someone was doing arbitrage. So it might not have happened without the bot.