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Author Topic: Why are people buying asic mining shares? are they insane?  (Read 9185 times)
Deprived
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June 15, 2013, 10:29:14 PM
 #41


They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming, AM's got 200 Th/s incoming taking it total to 250 Th/s, Avalon will have 250 Th/s, BitFury has 200 Th/s incoming and KnC has 200 Th/s incoming from the 500 pre-orders. That's about 1300 Th/s between them and AM will only have 250 Th/s of that. That's 19.23%. By the end of the year, AM will account for about 10-15% of the network share.


LOOOOOOOOOOOOOOOOOOOOL Cheesy

So funny, thank you.

Claims have no bearing on reality.

You're not living in reality, are you?

Based on reality, AM is the only one with accurate estimates, so really that's more like AM will account for about 80% of the network share. You know, except, they need to hold back.

BFL, Avalon, and Bitfury *have all been delayed*

The AM numbers come from Friedcat (initial wafer - 50 Th/s, second wafer - 200 TH/s).
The Avalon numbers come from 1500 63 GH/s units and 500,000 chip sales as reported by Yifu.
The BFL numbers come from this unofficial pre-order list.
The BitFury number come from 100TH.
The KnC number come from the 500 pre-order units.

This is the reality. You can pretend it isn't as much as you want, but it won't change the facts, it'll just lead to you making poor decisions.


Your numbers are missing exact dates of delivery, the most pertinent detail.

You little nit-picker!

Everyone knows that 10 apples (ASICs mining) are the same as 10 oranges (ASICs promised at some future date).
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June 15, 2013, 11:16:33 PM
 #42



The BFL numbers come from this unofficial pre-order list.


What this list shows is that BFL has delivered 130 of 4,085 orders, all only the Jalapenos.  The most recent order they delivered was placed August 14, 2012 - fully 10 months ago, and there remain as many unfulfilled orders from before then as they have filled.  Anyone buying a BFL machine now has almost 4000 people in line ahead of them in a line up that moves at about one person every other day.  We're looking at 30 years at the current delivery rate to get through that.  Maybe BFL will get their act in order, but so far it's promises that for the most part haven't delivered. 

If I could get mining power at BFL's prices I'd for sure invest in that over Asicminer, for the reason you cite, but these cannot be had.

Remember a $250 order for a BFL device a year ago is $250 sitting idle hoping for delivery, whereas a $250 investment in Asicminer last week has paid a dividend of over $3, and has had capital appreciation of about $25.  If you go back a whole year it's clear that Asicminer has been a profoundly better investment than waiting for Godot/BFL.
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June 15, 2013, 11:58:50 PM
 #43

I never got an answer. Just some first grade math here:

1) 2.5 BTC per share -> 0.036 weekly dividend = 0.145 btc a month = 17 month breakeven
2) 50 BTC (20 shares) = 3 btc a month
3) 50 BTC buys you a 13 GH asic card = 12 BTC a month  (factor in whatever difficulty increase it is still significantly better income, and keep in mind the mining shares dividend are also impacted by the difficulty increase).

So i really dont understand why anyone will buy asic shares? what is the point? the return on those are terrible, on top of absolutely insane counterparty risk dependent on some guy who is running a black box that tells you what dividend he will pay. 

Why would you not just have a physical card you own with no dependency on third party and make significantly more btc as income?  Yet so many smart people are buying those shares...there must be something i am missing?

waiting to be enlightened...
sound like a sound investment
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June 16, 2013, 12:05:13 AM
 #44

Income from hardware sales will obviously decrease as more valuable hardware from competitors becomes readily available.

LOL, dude, friedcat already announced price cuts on his hardware (blades).

He can just keep doing this.

Create good shit, *actually ship good shit in a timely manner* and cut the prices when necessary until he creates more good shit.

So, let me get this straight. Friedcat has already told you that the price of hardware will be getting slashed, and you don't think that will cause a decrease in dividends from hardware sales?

Which is the bigger value, x*10 or x*20?

Except it's not x and x, it's x and y. When cost goes down, quantity sold goes up.

The quantity available for sale is limited, so it is x and x.
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June 16, 2013, 12:08:45 AM
 #45


They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming, AM's got 200 Th/s incoming taking it total to 250 Th/s, Avalon will have 250 Th/s, BitFury has 200 Th/s incoming and KnC has 200 Th/s incoming from the 500 pre-orders. That's about 1300 Th/s between them and AM will only have 250 Th/s of that. That's 19.23%. By the end of the year, AM will account for about 10-15% of the network share.


LOOOOOOOOOOOOOOOOOOOOL Cheesy

So funny, thank you.

Claims have no bearing on reality.

You're not living in reality, are you?

Based on reality, AM is the only one with accurate estimates, so really that's more like AM will account for about 80% of the network share. You know, except, they need to hold back.

BFL, Avalon, and Bitfury *have all been delayed*

The AM numbers come from Friedcat (initial wafer - 50 Th/s, second wafer - 200 TH/s).
The Avalon numbers come from 1500 63 GH/s units and 500,000 chip sales as reported by Yifu.
The BFL numbers come from this unofficial pre-order list.
The BitFury number come from 100TH.
The KnC number come from the 500 pre-order units.

This is the reality. You can pretend it isn't as much as you want, but it won't change the facts, it'll just lead to you making poor decisions.


Your numbers are missing exact dates of delivery, the most pertinent detail.

Exact dates of delivery are irrelevant, what's relevant is the fact that AM now have competition and that competition will be bringing online just as much, if not more, hashing power. Because of this, they cannot maintain their current share of the network.
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June 16, 2013, 12:34:53 AM
 #46


They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming, AM's got 200 Th/s incoming taking it total to 250 Th/s, Avalon will have 250 Th/s, BitFury has 200 Th/s incoming and KnC has 200 Th/s incoming from the 500 pre-orders. That's about 1300 Th/s between them and AM will only have 250 Th/s of that. That's 19.23%. By the end of the year, AM will account for about 10-15% of the network share.


LOOOOOOOOOOOOOOOOOOOOL Cheesy

So funny, thank you.

Claims have no bearing on reality.

You're not living in reality, are you?

Based on reality, AM is the only one with accurate estimates, so really that's more like AM will account for about 80% of the network share. You know, except, they need to hold back.

BFL, Avalon, and Bitfury *have all been delayed*

The AM numbers come from Friedcat (initial wafer - 50 Th/s, second wafer - 200 TH/s).
The Avalon numbers come from 1500 63 GH/s units and 500,000 chip sales as reported by Yifu.
The BFL numbers come from this unofficial pre-order list.
The BitFury number come from 100TH.
The KnC number come from the 500 pre-order units.

This is the reality. You can pretend it isn't as much as you want, but it won't change the facts, it'll just lead to you making poor decisions.


Your numbers are missing exact dates of delivery, the most pertinent detail.

Exact dates of delivery are irrelevant, what's relevant is the fact that AM now have competition and that competition will be bringing online just as much, if not more, hashing power. Because of this, they cannot maintain their current share of the network.

Great, so how will you be investing?
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June 16, 2013, 04:30:45 AM
 #47


2) 50 BTC (20 shares) = 3 btc a month


So i really dont understand why anyone will buy asic shares?

refer to #2.

Instead of BTC lets think in $'s for a moment. If there was an investment that you could put $50k into and it yields $3k a month...would that not be a sick yield? Yes..it would. So much so that the share price would run up at least 300% to bring down the yield a bit..still accounting for risk.

This is why people are buying ASICMINER...and we don't have to worry about our shiny new ASICS that become obsolete in 2 months
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June 16, 2013, 09:14:43 AM
 #48

So, let me get this straight. Friedcat has already told you that the price of hardware will be getting slashed, and you don't think that will cause a decrease in dividends from hardware sales?

Which is the bigger value, x*10 or x*20?

Except it's not x and x, it's x and y. When cost goes down, quantity sold goes up.

The quantity available for sale is limited, so it is x and x.
You are talking nonsense.

Unless you sold out and you are not able to produce more units, lowering the price might increase the profit.

So it's x and y and you are terribly misguided.

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June 16, 2013, 10:58:23 AM
 #49

Some people pay several thousand dollars just to be able to trade on the online stock exchange.  Roll Eyes

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June 16, 2013, 11:18:51 AM
 #50


They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming, AM's got 200 Th/s incoming taking it total to 250 Th/s, Avalon will have 250 Th/s, BitFury has 200 Th/s incoming and KnC has 200 Th/s incoming from the 500 pre-orders. That's about 1300 Th/s between them and AM will only have 250 Th/s of that. That's 19.23%. By the end of the year, AM will account for about 10-15% of the network share.


LOOOOOOOOOOOOOOOOOOOOL Cheesy

So funny, thank you.

Claims have no bearing on reality.

You're not living in reality, are you?

Based on reality, AM is the only one with accurate estimates, so really that's more like AM will account for about 80% of the network share. You know, except, they need to hold back.

BFL, Avalon, and Bitfury *have all been delayed*

The AM numbers come from Friedcat (initial wafer - 50 Th/s, second wafer - 200 TH/s).
The Avalon numbers come from 1500 63 GH/s units and 500,000 chip sales as reported by Yifu.
The BFL numbers come from this unofficial pre-order list.
The BitFury number come from 100TH.
The KnC number come from the 500 pre-order units.

This is the reality. You can pretend it isn't as much as you want, but it won't change the facts, it'll just lead to you making poor decisions.


Your numbers are missing exact dates of delivery, the most pertinent detail.

Exact dates of delivery are irrelevant, what's relevant is the fact that AM now have competition and that competition will be bringing online just as much, if not more, hashing power. Because of this, they cannot maintain their current share of the network.

Great, so how will you be investing?

In AM and AMC. I'm just not fooling myself about AM though.
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June 16, 2013, 11:28:20 AM
 #51

So, let me get this straight. Friedcat has already told you that the price of hardware will be getting slashed, and you don't think that will cause a decrease in dividends from hardware sales?

Which is the bigger value, x*10 or x*20?

Except it's not x and x, it's x and y. When cost goes down, quantity sold goes up.

The quantity available for sale is limited, so it is x and x.
You are talking nonsense.

Unless you sold out and you are not able to produce more units, lowering the price might increase the profit.

So it's x and y and you are terribly misguided.


No, you are talking nonsense because you haven't followed the conversation. The conversation was about dividends from hardware sales decreasing. So, selling out is completely irrelevant. The amount of hardware AM has for sale is limited. That is a fact. They have a limited number of USB miners and any other hardware sales come out of the mining operation, so they only sell what they no longer want. How many Blades did AM sell?

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June 16, 2013, 01:23:16 PM
 #52

I find the certitude some posters display to be quite disturbing. There are a multitude of variables at play here when attempting to perform a reasonable analysis of the potential returns of the various available bitcoin investments. Most of those discussing this are limiting themselves to just a few, and by doing so provide themselves (and others) with projections of limited value.

The effects of the entire bitcoin ecosystem must be considered, and this of course also includes the fiat conversion rate of bitcoins. I find it odd that this particular variable gets ignored repeatedly, so perhaps it is worth exploring this aspect. Obviously many of the associated costs of mining and of hardware sales must be performed after a conversion to fiat. It is unlikely that Friedcat pays for the electricity in his farm directly with btc, nor does BFL pay their labor costs in btc. It should be safe to state that currently nearly all of those associated costs require a conversion to fiat. If one were to consider the values ONLY AT THE TIME OF CONVERSION you get an extremely different narrative. Imagine the following scenario:

Joe GPU is mining btc at home. He is making 1 btc per day. At $100/btc he makes $100/day.The difficulty doubles. Joe is sad, because now he finds that he is only mining 0.5 per day, for $50/day. But Joe does not need the money at the moment, so it just keeps going into his wallet. The difficulty doubles again. Joe is really pissed. Now it is only $25/day. You would assume at some point that eventually Joe's electricity cost would exceed his btc income, and then Joe will go extinct. All things being equal, you would be right. But all things are not equal. After all of these months of mining, the fiat conversion rate for btc has changed repeatedly. Suppose it is $500/btc when he is mining .02 btc /day. Amazingly, not only is Joe earning exactly the same amount (in fiat terms) as he was when he started, but the fiat value of his wallet has exploded in that timeframe. Miners who were running a GPU farms last year when the difficulties were low and the fiat value of a btc was $2 have seen this to be all too true.

Right now this scenario is being temporarily derailed by two factors, both related to ASICs. The first factor is the number of ASICs coming on line in a short time frame is causing btc to be mined at a rate higher than 6 blocks per hour. Although subsequent difficulty increases will stabilize the rate, the current supply glut is driving down the btc conversion rate driving down profits. This imbalance will inevitably self-correct with obvious consequences. The second factor is a desire by many miners to convert btc from ASIC mining to recoup the costs of the newly-delivered rigs in fiat form. Once these costs have been recouped, many miners will be more inclined to keep larger and larger potions of their btc in btc form, or to spend it within the btc ecosystem. Once the ASIC destabilization has corrected, the system should return Joe GPU (and now Mary ASIC) to the scenario above, wherein rising fiat conversions and rising difficulty rates work in sync to ensure stable mining rates (in fiat terms).

We have seen this relationship from another angle, that being the increase of share price (in btc) of ASICminer. In effect, we are all suffering from the Red Queen Syndrome when you look at it considering most of the variables. Miners are (in general) running as fast as they can just to stay where they already are. So are the investors in ASICminer. You may purchase a share of ASIC miner today for 3.0btc, which is $300 fiat. If in a year you may find yourself at a value of 3.0 btc, but a fiat value of $3000, with weekly dividends the same size today as measured in btc, but with a fiat value in excess of $100. Friedcat need only play the Red Queen in an environment of rising difficulty and rising fiat values, he needs only to maintain his share as the system grows and btc ecosystem expands. If you believe he can do so, then there is probably no better investment for btc at this time. But even if you believe he cannot, it is likely still a better investment than just sitting on coins or purchasing gear yourself.


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June 16, 2013, 03:14:03 PM
 #53

its not a direct comparison into buying mining hardware vs getting weekly dividends


you are missing the point that shareholders get huge weekly dividends which is an anomaly, yet ASICMiner does actually sell things and do things which people can verify up to an extent and are comfortable with


other assets dont offer that, anywhere across any markets
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June 17, 2013, 05:42:57 AM
 #54

Your looking at this completely wrong.  Your comparing apples and oranges.  When you buy shares of a company on the stock market, I dont know anyone that asks how long until the dividends completely repay the investment 100%.  The shares alone hold the value.

You are not considering the capital appreciation if the share prices rises, which it most likely will.  At any time you can sell back the shares and get the initial investment (and more) back so you dont have to sweat "breaking even"

I see, so most of you buying those shares are considering this similar to buying stocks in a publicly listed company with sec oversight and proper financial reporting, you are assuming you really own part of the asic miner "company" and all profits made by the "company" are reinvested in growth and shared among its share holders. And this is not just some guy in a basement with a spreadsheet that has your name on it and decide what he wants to pay you each week...

Ok now it's clear, i just couldnt figure out why people are buying those "shares".


there is a book called Intelligent Investor by Benjamin Graham... or Security analysis. Try before you write something, ehm, stupid

It was a question, no need to be rude. Well aware of what value investing is, i work in the capital markets for a living. Maybe you should ask graham what he thinks about paying $250 for an asic miner "share" Smiley

sorry to be rude, but let the mob doing same mistakes around Cheesy anyway, I think short term is AM good choice and we will see later. It is better to have coins making new coins then just sit in some wallet and wait for capital appreciation. Graham is dead, I am not so much into conservative investing, prefer risky leveraged ETF trading for oil and silver Cheesy

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June 17, 2013, 03:17:00 PM
 #55


So i really dont understand why anyone will buy asic shares? what is the point? the return on those are terrible, on top of absolutely insane counterparty risk dependent on some guy who is running a black box that tells you what dividend he will pay. 

Why would you not just have a physical card you own with no dependency on third party and make significantly more btc as income?  Yet so many smart people are buying those shares...there must be something i am missing?

waiting to be enlightened...

I suppose not everyone has hundreds or thousands of dollars to spend on such equipment.

I just bought $9 worth of mining shares with some BTC I wasn't using, I might only be making 3 cents a day, but thats 3c I didn't have this morning!

 Cheesy

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June 17, 2013, 09:30:40 PM
 #56


2) 50 BTC (20 shares) = 3 btc a month


So i really dont understand why anyone will buy asic shares?

refer to #2.

Instead of BTC lets think in $'s for a moment. If there was an investment that you could put $50k into and it yields $3k a month...would that not be a sick yield? Yes..it would. So much so that the share price would run up at least 300% to bring down the yield a bit..still accounting for risk.

This is why people are buying ASICMINER...and we don't have to worry about our shiny new ASICS that become obsolete in 2 months

I understand if you compare to a normal high dividend paying stock such as a reit etf that returns 6% a year this sounds like a great return currently as everyone who responded to my original post keep pointing out.

Lets even ignore reality and put aside the fact this is just a guy in the basement paying you whatever he wants and could disappear tomorrow and it doesnt even have a legal binding contract holding the person liable or backed by a us-based llc. Lets assume this is legit triple A rated corp that will not disappear, and freidcat is the most honorable man in the world who returns 100% of the profit to the share holders.

Even with those assumptions if you just look at the term structure, there is a static pool of hash power which generates btc and they are distributed to the share holders. If the difficulty increases as it has, the payout becomes less & less. Then the argument becomes new hardware will be added to counter that, so where do you guys think the $$ for the new hardware will come from? friedcat is not going to pay for those hardware out of his own pocket just so you can maintain your payout, only way to pay the new hardware will be from the dividend which means all share holder will take a hit to maintain their future income, rinse and repeat as difficulty continues to rise. It's a zero sum game without a winner aka ponzi, as the cash flow (or in this case btc flow will always be negative)

This is not rocket science, it's no different than mining on your own but forced to pay a dividend each week to your brother who gave you the money to buy the hardware initially...as difficulty continue to raise.

The bottom line is, the share holders are betting friedcat will be able to hold this up for at least 17 months to breakeven, then however much longer this operation lasts will be profit. Noone knows exactly how much income freidcat is actually getting, i am hoping he's getting significantly more income per share than the dividend paid, so he can maintain this 0.02 payout without much effort as difficulty continue to increase.  

Truly a game of musical chairs, and the last one left standing is the ...? Smiley

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JordanL
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June 17, 2013, 09:50:44 PM
 #57

1) 2.5 BTC per share -> 0.036 weekly dividend = 0.145 btc a month = 17 month breakeven

what is the point? the return on those are terrible

 Roll Eyes

Canada Savings Bonds: 1% return per year
High-interest savings account: 2-3% per year
Average stock portfolio: 9% return per year
ASICM shares: 60% return per year (@ BTC3)

what you seem to be missing here is the fact that you can sell your shares.

it's not a "17 month breakeven", it's DOUBLING YOUR INVESTMENT IN 17 MONTHS.

at the end of that 17 months, you have earned BTC2.5 in dividends, and you also have a share that's hopefully worth BTC2.5 or more.

only on bitcointalk will you find someone who says a stock with a 60% return is a terrible deal. i wonder what qualifies as a good deal?




This exactly. It's amazing and a little scary that people who don't understand the basics are actually investing their own money.

ASICMINER has already been one of the best investments in the history of mankind, and there is the potential for it to increase in value ten or 20 times again within a year... yeah us investors must really be NUTS.
JordanL
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June 17, 2013, 09:57:22 PM
 #58


2) 50 BTC (20 shares) = 3 btc a month


So i really dont understand why anyone will buy asic shares?

refer to #2.

Instead of BTC lets think in $'s for a moment. If there was an investment that you could put $50k into and it yields $3k a month...would that not be a sick yield? Yes..it would. So much so that the share price would run up at least 300% to bring down the yield a bit..still accounting for risk.

This is why people are buying ASICMINER...and we don't have to worry about our shiny new ASICS that become obsolete in 2 months

I understand if you compare to a normal high dividend paying stock such as a reit etf that returns 6% a year this sounds like a great return currently as everyone who responded to my original post keep pointing out.

Lets even ignore reality and put aside the fact this is just a guy in the basement paying you whatever he wants and could disappear tomorrow and it doesnt even have a legal binding contract holding the person liable or backed by a us-based llc. Lets assume this is legit triple A rated corp that will not disappear, and freidcat is the most honorable man in the world who returns 100% of the profit to the share holders.

Even with those assumptions if you just look at the term structure, there is a static pool of hash power which generates btc and they are distributed to the share holders. If the difficulty increases as it has, the payout becomes less & less. Then the argument becomes new hardware will be added to counter that, so where do you guys think the $$ for the new hardware will come from? friedcat is not going to pay for those hardware out of his own pocket just so you can maintain your payout, only way to pay the new hardware will be from the dividend which means all share holder will take a hit to maintain their future income, rinse and repeat as difficulty continues to rise. It's a zero sum game without a winner aka ponzi, as the cash flow (or in this case btc flow will always be negative)

This is not rocket science, it's no different than mining on your own but forced to pay a dividend each week to your brother who gave you the money to buy the hardware initially...as difficulty continue to raise.

The bottom line is, the share holders are betting friedcat will be able to hold this up for at least 17 months to breakeven, then however much longer this operation lasts will be profit. Noone knows exactly how much income freidcat is actually getting, i am hoping he's getting significantly more income per share than the dividend paid, so he can maintain this 0.02 payout without much effort as difficulty continue to increase.  

Truly a game of musical chairs, and the last one left standing is the ...? Smiley


You are totally uninformed about ASICMINER. The company (friedcat/Bitfountain/ASICMINER) has already invested heavily in next generation ASICs. They have been extremely open about how much has been and will be spent on developing and deploying next gen devices, and what their expected hashrate will be.

Either you are just trying to spread FUD, our can't tell a well-run and extremely transparent business from a ponzi scheme... either way that's almost ignore button territory.
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June 17, 2013, 10:20:29 PM
 #59

They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming, AM's got 200 Th/s incoming taking it total to 250 Th/s, Avalon will have 250 Th/s, BitFury has 200 Th/s incoming and KnC has 200 Th/s incoming from the 500 pre-orders. That's about 1300 Th/s between them and AM will only have 250 Th/s of that. That's 19.23%. By the end of the year, AM will account for about 10-15% of the network share.

You are absolutely right... as long as we assume every other player meets their targets and AM decides to not make any more hardware after their current batch arrives.  Good luck with your assumptions.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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June 17, 2013, 11:51:08 PM
 #60


They haven't got enough hashing power to maintain 30%. BFL hash about 400 Th/s incoming...

Sure they do...two weeks, right?

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