ASICMINER Speculation Thread

[Lohoris]

I have been thinking a bit about bitcoin investments, and about AM in particular. I think there is a common misconception that fails to take into account the Observer Effect.

Suppose I decide to purchase a 50Gh/s miner from BFL today. Most people would base this decision in large part by when they expected to receive it. Once ordered, they are in a great hurry for it to arrive, trying to get it up and running before the difficulty gets insane. The problem is, from a certain perspective, it matters less when they get it than they think. The reason is, there are already thousands of people ahead of them in the queue. The very fact that their miner arrives means that all of these others have been delivered, guaranteeing the very difficulty increases they are racing against. They were doomed before they ever made the purchase. Of course, there are other factors, such as the possibility of other companies delivering additional hash. Getting your hash on line before theirs is certainly advantageous. But If I were to bring online a hashing power equivalent to the current global hash tomorrow, I would effectively double the difficulty, devaluing the very hashes I want to profit from.

For companies in the business of hashing (or at least the prospect of hashing someday) the Observer Effect if ignored can dash any potential they may have of surviving. As I noted in a previous post if one would add up the projected hash totals of all of the mining outfits on BTC-TC, it would equal more than 200% of the global hash. Most of these outfits will fail miserably to obtain their projected percentages of global hash, and they most certainly will drive the difficulty through the roof, making it even harder for themselves to attain the percentages they desire. They are all in effect eating their tails.

It has been almost axiomatic that early adopters pay the development costs. The first guy who bought a cell phone paid thousands and thousands, today they can be had for free. A successful venture in the bitcoin mining space must certainly avoid this. It was easy initially, when there was no real competition, and AM was able to claim a large chunk of hash for himself and his shareholders. The profits available just from being the hash bully were easily able to recoup development costs. Once other players arrived, FC shifted strategies, and sold large hash in small packages to the public in general, and as usual the early adopters shouldered the weight of development costs. Just look at those who paid 1.99 btc per USB a scant few months ago. If FC was a fool, that added global hash distributed across the world would have beaten down his share of global mining hash. But it did not. It did not because he held more in reserve in anticipation of the Observer Effect. I think it is safe to believe that FC accounts for this, and accounts for it quite well.

When I see other groups projecting target percentages of 20% or 30% of the global hash, I have to wonder if these projections are even remotely based upon the inclusion of their own hash's contribution to the difficulty. Perhaps they just see an infinite number of chips pouring off assembly lines into their farms, never realizing that every chip they produce devalues the one before it. They are constantly in the process of making their own equipment worthless. I am looking forward to seeing how FC perseveres in this new environment where the "first mover" power factors less.  

This is a really great post.
I wanted to quote a specific part, but then I wanted to quote some more, and some more, and some more, so I just gave up and quoted it all.
It is a great post because while it says obvious things, it manages to say them very clearly, and easily shows them up for anyone who happened not to notice them.

[1714702296]

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[1714702296]

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[Lohoris]

That is a nice chart. It does indeed look like they are keeping up. But I can't help but be reminded of the tragedy of the commons. Everyone is rushing to cut down the forest as fast as they can before someone else comes along and cuts it down. Eventually you run out of trees. Now, I know we will not in our lifetime run out of trees (bitcoins to mine), but we may well get to the point that it is no longer profitable for anyone anywhere to make, sell, or buy ASICs. There are two things that can prevent this: increased adoption leading to higher transaction fees in blocks, and increased value of BTC (which would essentially go hand in hand). I look forward to seeing how ASIC development and economic growth struggle to keep an equilibrium. If it works, it will prove once again that free markets actually work efficiently.

Consider that in the forest it may become unprofitable to make saws, even as the price of firewood goes through the ceiling.

Well, I don't see it as a problem, nor as a real tragedy of the commons.
(it's just a waste of material and electricity and hard work, this does bother me)

The mining market will auto-regulate: if there are too many miners, rational miners will be able to just give up and stop, i.e. rational investors will notice and sell their shares.

[freedomno1]

I have been thinking a bit about bitcoin investments, and about AM in particular. I think there is a common misconception that fails to take into account the Observer Effect.

Suppose I decide to purchase a 50Gh/s miner from BFL today. Most people would base this decision in large part by when they expected to receive it. Once ordered, they are in a great hurry for it to arrive, trying to get it up and running before the difficulty gets insane. The problem is, from a certain perspective, it matters less when they get it than they think. The reason is, there are already thousands of people ahead of them in the queue. The very fact that their miner arrives means that all of these others have been delivered, guaranteeing the very difficulty increases they are racing against. They were doomed before they ever made the purchase. Of course, there are other factors, such as the possibility of other companies delivering additional hash. Getting your hash on line before theirs is certainly advantageous. But If I were to bring online a hashing power equivalent to the current global hash tomorrow, I would effectively double the difficulty, devaluing the very hashes I want to profit from.

For companies in the business of hashing (or at least the prospect of hashing someday) the Observer Effect if ignored can dash any potential they may have of surviving. As I noted in a previous post if one would add up the projected hash totals of all of the mining outfits on BTC-TC, it would equal more than 200% of the global hash. Most of these outfits will fail miserably to obtain their projected percentages of global hash, and they most certainly will drive the difficulty through the roof, making it even harder for themselves to attain the percentages they desire. They are all in effect eating their tails.

It has been almost axiomatic that early adopters pay the development costs. The first guy who bought a cell phone paid thousands and thousands, today they can be had for free. A successful venture in the bitcoin mining space must certainly avoid this. It was easy initially, when there was no real competition, and AM was able to claim a large chunk of hash for himself and his shareholders. The profits available just from being the hash bully were easily able to recoup development costs. Once other players arrived, FC shifted strategies, and sold large hash in small packages to the public in general, and as usual the early adopters shouldered the weight of development costs. Just look at those who paid 1.99 btc per USB a scant few months ago. If FC was a fool, that added global hash distributed across the world would have beaten down his share of global mining hash. But it did not. It did not because he held more in reserve in anticipation of the Observer Effect. I think it is safe to believe that FC accounts for this, and accounts for it quite well.

When I see other groups projecting target percentages of 20% or 30% of the global hash, I have to wonder if these projections are even remotely based upon the inclusion of their own hash's contribution to the difficulty. Perhaps they just see an infinite number of chips pouring off assembly lines into their farms, never realizing that every chip they produce devalues the one before it. They are constantly in the process of making their own equipment worthless. I am looking forward to seeing how FC perseveres in this new environment where the "first mover" power factors less.  

Worth quoting again it is very accurate

[mechs]

Slight correction in the works.

Will be more than slight - we will visit 3 before 5 (as I said earlier).  There is no support under this stock.  Even a little "less than positive" news and this will nosedive.  A lot of weak hands here - underwater speculator and those sitting on profits who will panic sell.  Under 3, this will be a buying opportunity and that may occur as an intra-day low soon.  Keeping my coins on the sidelines to get in during the inevitable bloodbath.

[velacreations]

Slight correction in the works.

Will be more than slight - we will visit 3 before 5 (as I said earlier).  There is no support under this stock.  Even a little "less than positive" news and this will nosedive.  A lot of weak hands here - underwater speculator and those sitting on profits who will panic sell.  Under 3, this will be a buying opportunity and that may occur as an intra-day low soon.  Keeping my coins on the sidelines to get in during the inevitable bloodbath.

there's no support posted on buy orders, but even look at this last dip, buy orders came out of the woodworks to try and get AM sub-3.8.  The support is there, it just isn't posted.  Meanwhile, sell orders at 3.89 are filling...

just watching for the past several days, I have seen big orders placed on both sides of the ledger and then disappear when the market approached.  I don't think it's all just "weak hands", here.

[freedomno1]

A lot of IPOs releasing in the last couple weeks has been making it very hard to speculate

[dhenson]

A lot of IPOs releasing in the last couple weeks has been making it very hard to speculate

We're in for a few ho hum IPO's and 6 weeks of doldrums before shit starts hitting the fan.

If ever there was a safe time to take a break from bitcoin and go enjoy a beach somewhere, it's now.

[mechs]

Friedcat needs to exceed expectations tomorrow to really give this stock any hope of breaking out of this downward trend.  All these mining IPOs may just be hype, but with people sitting on a lot of profits, many will be eager to lock some in in any sign that AM may have some real competition.

[freedomno1]

A lot of IPOs releasing in the last couple weeks has been making it very hard to speculate

We're in for a few ho hum IPO's and 6 weeks of doldrums before shit starts hitting the fan.

If ever there was a safe time to take a break from bitcoin and go enjoy a beach somewhere, it's now.

He-he true but then again bitcoin is always interesting so much can happen in 6 weeks here
Although leaving it in a just dice or Coinlenders CD would help for the summer break
Convenient earnings when your gone lol.

[mechs]

A lot of IPOs releasing in the last couple weeks has been making it very hard to speculate

We're in for a few ho hum IPO's and 6 weeks of doldrums before shit starts hitting the fan.

If ever there was a safe time to take a break from bitcoin and go enjoy a beach somewhere, it's now.

He-he true but then again bitcoin is always interesting so much can happen in 6 weeks here
Although leaving it in a just dice or Coinlenders CD would help for the summer break
Convenient earnings when your gone lol.

Neither exactly safe:
1. Just-Dice: you literally gambling your money with a 1% edge!  A little variance can make for large losses.  And then there is always the counter-party risk (though I do trust dooglus personally)

2. Coinlender CD: 25% APR, really seems too good to be true.  Pirateat40 redux anyone?  Even if he is well intentioned, at those generous rates, a couple wrong bets and he may not have the funds to even pay back the principal.  Significant counterparty risk

Nothing wrong with a paper wallet in a safe:)

[freedomno1]

A lot of IPOs releasing in the last couple weeks has been making it very hard to speculate

We're in for a few ho hum IPO's and 6 weeks of doldrums before shit starts hitting the fan.

If ever there was a safe time to take a break from bitcoin and go enjoy a beach somewhere, it's now.

He-he true but then again bitcoin is always interesting so much can happen in 6 weeks here
Although leaving it in a just dice or Coinlenders CD would help for the summer break
Convenient earnings when your gone lol.

Neither exactly safe:
1. Just-Dice: you literally gambling your money with a 1% edge!  A little variance can make for large losses.  And then there is always the counter-party risk (though I do trust dooglus personally)

2. Coinlender CD: 25% APR, really seems too good to be true.  Pirateat40 redux anyone?  Even if he is well intentioned, at those generous rates, a couple wrong bets and he may not have the funds to even pay back the principal.  Significant counterparty risk

Nothing wrong with a paper wallet in a safe:)

Indeed just seems a bit better than earning nothing for a few weeks
Then again its 100% Safer in the paper wallet in a safe XD

(Only weakness the 5 dollar method rope and a weapon lol vs the guy mugging you and you're reply but its stuck in a CD it cannot be redeemed yet )

[herzmeister]

“A ship is safe in harbor, but that's not what ships are for.” ---William G.T. Shedd

[Progressive]

Dividend prediction: 0.01937 (from http://www.asicminercharts.com/live/)

[elefter]

Dividend prediction: 0.01937 (from http://www.asicminercharts.com/live/)

We don't know if they started renting their hashpower, if that's the case the dividend prediction obviously lacks this information.

Divident perdiction has been there for a few days now, i expect somthing extra to that from sales

[ianp]

Please Read

It's that time again! Time for a new small shareholder poll:

https://docs.google.com/forms/d/15Ws1XzJeynK_vsKiQ9NaufQfLZOSKsRfsSgqMLTdIRs

As with the previous polls, we will leave the poll open for about a week. Once people have had sufficient time to vote, we will compile the results and post them here.

ThickAsThieves will then submit the top three questions to Friedcat with the hopes that he will answer them.

If you have any questions regarding this poll, please contact ThickAsThieves or myself. If you have a question that you would like included in future polls, please let us know that as well.

Thanks!

[velacreations]

Friedcat needs to exceed expectations tomorrow to really give this stock any hope of breaking out of this downward trend.  All these mining IPOs may just be hype, but with people sitting on a lot of profits, many will be eager to lock some in in any sign that AM may have some real competition.

all it takes is one piece of news to change the downtrend: blades for sale.  As soon as that is announced, expect all of those IPOs to drop significantly (even more than now)

[velacreations]

DIVIDEND PREDICTION

.023 btc/share

[Franktank]

The relentless onslaught of new mining companies continue:

CoinLab backs Alydian, a new U.S. based Mining Company
http://coinlab.com/news/coinlab-incubates-new-bitcoin-businesses

[Rival]

“The Alydian team has worked diligently over the past year and we are excited to be the first in this industry to offer multi-terahash-speed turnkey mining systems available for delivery this month,” said Vessenes.

Sounds like a bigger unicorn has been imagined into existence. I wonder where these magic beans... I mean CHIPS are coming from?

[velacreations]

The relentless onslaught of new mining companies continue:

CoinLab backs Alydian, a new U.S. based Mining Company
http://coinlab.com/news/coinlab-incubates-new-bitcoin-businesses

Any details on where their hardware is coming from?  Maybe this is part of FC's hardware lease program...