Why are people buying asic mining shares? are they insane?

[Mabsark]

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...

BFL 5 GH/s = $274
18 Mh/s per USD
1.8 Gh/s per BTC @ 100 USD/BTC

1 AM share costs more than 2.74 BTC at the moment and the exchange rate is at 100 USD/BTC. Assuming that AM was at 2.74 BTC per share, then 1 share would need to provide 5 Gh/s in order to offer the same value as a 5 Gh/s BFL. At 5 Gh/s per share, AM would need a hashrate of 5 Gh/s/share * 400, 000 shares = 2,000 Th/s.

People claiming that AM continuously adding hashing power is a reason why share prices are currently undervalued need to take a serious look at the numbers. With a share price of 2.74 BTC, AM needs a hash rate of 2,000 Th/s in order to be competitive with a 5 Gh/s BFL. Their initial wafer order was for 50 Th/s. The current wafer order is for 200 TH/s in two parts. These should be coming online over the next couple of months. That's a maximum of 250 Th/s.

With the rate at which BFL is dispatching back orders, they should be shipping from the shelf by the time AM bring that 250 Th/s online. Going by this site's numbers, BFL have about 400 Th/s to bring online.

Avalon's 3 batches should be online by then as well, which is another 100 Th/s. Avalon chips should be shipping by then as well, so we'll see a number of new mining systems based on them. That's another 150 Th/s. 100 Th/s should come online in July and August from 100TH and 50 Th/s should come online from Metabank in August and September. In September and October, KnC should also be bringing 200 Th/s online.

The next gen chips from Avalon and AM are due in October and Yifu said said that Avalon would be using 55 nm. The BitFury chips used by 100TH and Metabank are also 55 nm and I'd assume AM will also be 55 nm. At this point, most of the hashing power will be coming from BFL products, and Avalon and AM having a similar amount at around 250 Th/s. BitFury and KnC should also have similar amounts at around 200 Th/s.

AM needs 2,000 Th/s to be competitive with a 5 Gh/s BFL, to be competitive with a Metabank BitFury 120, we have the following:

Metabank BitFury 120
120 Gh/s
2160 USD
55.556 Mh/s per USD
5.556 Gh/s per BTC

ASICMINER
6,500 Th/s
400,000 shares
16.25 Gh/s per share
2.93 BTC per share
5.556 Gh/s per BTC

It truly boggles my mind how anyone could believe that ASICMINER is undervalued.

You forgot to account for the fact that ASICMINER sells hardware as well.

I'm not sure how much hashing power ASICMINER had on the market when they went live, but I'd be interested to know. If anyone has this information, please post it up.

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

[1715190640]

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[ThickAsThieves]

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

Why is this obvious?

What you are saying is that the market leader in hardware sales is less likely to be competitive in future sales than newcomers?

[Voodah]

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

Why is this obvious?

What you are saying is that the market leader in hardware sales is less likely to be competitive in future sales than newcomers?

I love my poor man's TAT.ASICMINER 

[Melbustus]

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...

BFL 5 GH/s = $274
18 Mh/s per USD
1.8 Gh/s per BTC @ 100 USD/BTC

1 AM share costs more than 2.74 BTC at the moment and the exchange rate is at 100 USD/BTC. Assuming that AM was at 2.74 BTC per share, then 1 share would need to provide 5 Gh/s in order to offer the same value as a 5 Gh/s BFL. At 5 Gh/s per share, AM would need a hashrate of 5 Gh/s/share * 400, 000 shares = 2,000 Th/s.

People claiming that AM continuously adding hashing power is a reason why share prices are currently undervalued need to take a serious look at the numbers. With a share price of 2.74 BTC, AM needs a hash rate of 2,000 Th/s in order to be competitive with a 5 Gh/s BFL. Their initial wafer order was for 50 Th/s. The current wafer order is for 200 TH/s in two parts. These should be coming online over the next couple of months. That's a maximum of 250 Th/s.

With the rate at which BFL is dispatching back orders, they should be shipping from the shelf by the time AM bring that 250 Th/s online. Going by this site's numbers, BFL have about 400 Th/s to bring online.

Avalon's 3 batches should be online by then as well, which is another 100 Th/s. Avalon chips should be shipping by then as well, so we'll see a number of new mining systems based on them. That's another 150 Th/s. 100 Th/s should come online in July and August from 100TH and 50 Th/s should come online from Metabank in August and September. In September and October, KnC should also be bringing 200 Th/s online.

The next gen chips from Avalon and AM are due in October and Yifu said said that Avalon would be using 55 nm. The BitFury chips used by 100TH and Metabank are also 55 nm and I'd assume AM will also be 55 nm. At this point, most of the hashing power will be coming from BFL products, and Avalon and AM having a similar amount at around 250 Th/s. BitFury and KnC should also have similar amounts at around 200 Th/s.

AM needs 2,000 Th/s to be competitive with a 5 Gh/s BFL, to be competitive with a Metabank BitFury 120, we have the following:

Metabank BitFury 120
120 Gh/s
2160 USD
55.556 Mh/s per USD
5.556 Gh/s per BTC

ASICMINER
6,500 Th/s
400,000 shares
16.25 Gh/s per share
2.93 BTC per share
5.556 Gh/s per BTC

It truly boggles my mind how anyone could believe that ASICMINER is undervalued.

IMO, ASICMiner's model is to build hashrate until they hit 30% of the network or so, and then sell hardware. As more hardware gets deployed, they can then deploy more hashpower to their farm in order to maintain their total share of the network. To me, it looks like they can continue this for quite a while, even assuming a 10x or greater boost in difficultly over the next 6-12months.

Yes, prices for their hardware will have to come down whenever the other guys get around to shipping in volume, but the point is that they should be able to reliably maintain a significant percentage of total network hash from their farm and hardware-sales combined. If other guys are shipping tons of cheap ASIC gear, then ASICMiner just focuses on scaling the farm... It's a nice model, and they've already figured out quite successfully how to operate at scale, so I'm confident in their ability to execute for the foreseeable future.

[Lorren]

I love my poor man's TAT.ASICMINER 

Me too.  As they keep on growing, one day I'll be able to get a whole share with it.

[Mabsark]

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

Why is this obvious?

What you are saying is that the market leader in hardware sales is less likely to be competitive in future sales than newcomers?

Because compared to BFL they offer extremely poor value (Mh/s per BTC). Why pay 1.99 BTC for 336 Mh/s, when you can buy 5 Gh/s for 3 BTC? Why buy 10 Gh/s for 50 BTC when you can get 50 Gh/s for 25 BTC?

Whatever happens, you're looking at reduced prices due to competition, leading to a decrease in income from hardware sales. The fact that their is competition will mean that the competition will capture network share from AM, making it harder for them to capture 30% of the network even if they wanted to. AM have purchased 50 TH/s already and have 200 TH/s incoming over the next few months. That's 250 Th/s maximum. Avalon also have about 250 Th/s from chips and the 3 batches, whereas BFL have almost 400 Th/s incoming according to that unofficial pre-order list.

With the competition set to match or beat AM's hashing power, they're not going to be selling as much hardware or their network share will slip further behind. The hardware they do sell will have to be sold for competitive prices. Both of those factors will reduce the dividends from selling hardware.

[Mabsark]

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...

BFL 5 GH/s = $274
18 Mh/s per USD
1.8 Gh/s per BTC @ 100 USD/BTC

1 AM share costs more than 2.74 BTC at the moment and the exchange rate is at 100 USD/BTC. Assuming that AM was at 2.74 BTC per share, then 1 share would need to provide 5 Gh/s in order to offer the same value as a 5 Gh/s BFL. At 5 Gh/s per share, AM would need a hashrate of 5 Gh/s/share * 400, 000 shares = 2,000 Th/s.

People claiming that AM continuously adding hashing power is a reason why share prices are currently undervalued need to take a serious look at the numbers. With a share price of 2.74 BTC, AM needs a hash rate of 2,000 Th/s in order to be competitive with a 5 Gh/s BFL. Their initial wafer order was for 50 Th/s. The current wafer order is for 200 TH/s in two parts. These should be coming online over the next couple of months. That's a maximum of 250 Th/s.

With the rate at which BFL is dispatching back orders, they should be shipping from the shelf by the time AM bring that 250 Th/s online. Going by this site's numbers, BFL have about 400 Th/s to bring online.

Avalon's 3 batches should be online by then as well, which is another 100 Th/s. Avalon chips should be shipping by then as well, so we'll see a number of new mining systems based on them. That's another 150 Th/s. 100 Th/s should come online in July and August from 100TH and 50 Th/s should come online from Metabank in August and September. In September and October, KnC should also be bringing 200 Th/s online.

The next gen chips from Avalon and AM are due in October and Yifu said said that Avalon would be using 55 nm. The BitFury chips used by 100TH and Metabank are also 55 nm and I'd assume AM will also be 55 nm. At this point, most of the hashing power will be coming from BFL products, and Avalon and AM having a similar amount at around 250 Th/s. BitFury and KnC should also have similar amounts at around 200 Th/s.

AM needs 2,000 Th/s to be competitive with a 5 Gh/s BFL, to be competitive with a Metabank BitFury 120, we have the following:

Metabank BitFury 120
120 Gh/s
2160 USD
55.556 Mh/s per USD
5.556 Gh/s per BTC

ASICMINER
6,500 Th/s
400,000 shares
16.25 Gh/s per share
2.93 BTC per share
5.556 Gh/s per BTC

It truly boggles my mind how anyone could believe that ASICMINER is undervalued.

IMO, ASICMiner's model is to build hashrate until they hit 30% of the network or so, and then sell hardware. As more hardware gets deployed, they can then deploy more hashpower to their farm in order to maintain their total share of the network. To me, it looks like they can continue this for quite a while, even assuming a 10x or greater boost in difficultly over the next 6-12months.

Yes, prices for their hardware will have to come down whenever the other guys get around to shipping in volume, but the point is that they should be able to reliably maintain a significant percentage of total network hash from their farm and hardware-sales combined. If other guys are shipping tons of cheap ASIC gear, then ASICMiner just focuses on scaling the farm... It's a nice model, and they've already figured out quite successfully how to operate at scale, so I'm confident in their ability to execute for the foreseeable future.

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.

[CanadianGuy]

Mabsark knows all the numbers before they happen!  Incredible! 

[Eric Muyser]

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.

[Eric Muyser]

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

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*

[MPOE-PR]

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...

Yeah well, people like to belong in a crowd more than anything else. A few hundred bucks is a small price to pay.

[nubbins]

Yeah well, people like to belong in a crowd more than anything else. A few hundred bucks is a small price to pay.

Pretty early in the day to be drinking.

That said, I can't help but feel that BTC3 shares should come with a free pair of fireproof gloves.

[tinus42]

Because compared to BFL they offer extremely poor value (Mh/s per BTC). Why pay 1.99 BTC for 336 Mh/s, when you can buy 5 Gh/s for 3 BTC? Why buy 10 Gh/s for 50 BTC when you can get 50 Gh/s for 25 BTC?

You forget that if you buy a Block Eruptor today you get 336 Mh/s in three days. If you order a Jalapeno today you will likely get it at the end of the year or next year.

336 Mh/s next week will make you more money than 5 Gh/s next year with increased difficulty.

The only people who get their Jalapeno's now are people who ordered last year.

ASICMINER can charge what they charge because they have no serious competition NOW for new customers!

[tinus42]

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...

Yeah well, people like to belong in a crowd more than anything else. A few hundred bucks is a small price to pay.

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

[lunarboy]

hard to imagine i know ..... but not everyone here has the technical ability or cheap enough electricity to support the network. Perhaps another way to help strengthen it, would be to invest in trustworthy mining companies doing just that???

[Mabsark]

Mabsark knows all the numbers before they happen!  Incredible! 

That's because those numbers are common knowledge.

[Mabsark]

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?

[Mabsark]

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

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.

[ThickAsThieves]

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.

[ThickAsThieves]

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

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.