ASICMINER Speculation Thread

[velacreations]

For those too lazy to actually do such basic math, using the current share price of 0.32 BTC and dividends of 0.00081605 gives 393 weeks before recovering that 0.32 BTC, which is 7.5 years.

it's not recovering the .32btc, it's doubling the .32 btc in that time.  100% return.  You still have the share.

no one is expecting the dividend to remain constant, that's why the share price is increasing.

[Mabsark]

For those too lazy to actually do such basic math, using the current share price of 0.32 BTC and dividends of 0.00081605 gives 393 weeks before recovering that 0.32 BTC, which is 7.5 years.

it's not recovering the .32btc, it's doubling the .32 btc in that time.  100% return.  You still have the share.

no one is expecting the dividend to remain constant, that's why the share price is increasing.

The share price increasing is simply idiotic. Divs are going to decrease substantially before the new chips are in use. As I stated earlier:

If we then plug in the numbers for AM's proposed batch size of 2-20 Ph/s and assume that this is put together by 14th May, using genesis block again gives the network hash rate to be 263.8 Ph/s. This gives the following:

* 2 Ph/s would represent 0.76% of the network, which is worth 383.04 BTC per round and 0.0009576 BTC per round per share.
* 20 Ph/s would represent 7.58% of the network, which is worth 3820.32 BTC per round or 0.0095508 BTC per round per share

Divs are not going back to previous levels and will start to drop again soon after.

Even if we used constant divs from 0.01 BTC per round per share and a share price of 0.32 BTC, it would take 32 rounds to make 100% profit (since you like that terminology better). That's rounds not weeks. There's not a chance AM is going to use all the chips for their mines and the majority of them will be for sale. What that means is that the first few weeks of divs may be higher than expected but will then fall dramatically.

If you use a share price of 0.32 BTC, a mining income of 0.01 BTC per round and a 20% increase in difficulty per round, is it even possible to make 100% profit?

[Rival]

All of these numbers being thrown around are all guesses, estimations, and possibilities, except for one: 400,000 shares. People seem to pay little attention to this number because it appears irrelevant. I tend to think it is one of the most important. Everyone seems so focused on dividends and share price. That is understandable I suppose, because it lets you make simplistic valuation judgments. Judgments which are for the most part useless.

I don't see people looking at Google and trying to decide if they should purchase shares based upon current prices and dividends. When they decide to buy Apple shares, it is not because they will get their share price back in 238 years. They are buying a part of a company, and that company includes assets far more complicated than an ability to pay dividends.

5 years from now ASICminer could be Google, or Intel, or whatever player in the space you want to imagine. Own 1/400,000 of Google or Apple or Intel and tell me how you feel about your portfolio, especially if you bought that position for $200. Or you can tell your grandkids how you sold it for $200 because it would take 5 years of dividends to get your initial investment back. They will likely beat you to death and bury you in the backyard.

Shares in ASICminer are shares in the future. If you believe in bitcoin, surely you must have a feeling for what that future will entail. 20 years ago, most of the largest internet companies of today did not even exist yet. 20 years from now, the global behemoths may grow from the seeds of ASICminer today. This is the promise of ASICminer. A chance to own a part of the future before hardly anyone else has heard of it. To me, the risk/reward is obscene. Imagine ASICminer a 100 billion dollar company and see your shares valued at $250,000 each. As I see it, worrying about current dividend payouts is almost trivial.

[dmcdad]

Fh8ZsgcYh0VQVwFwMay, using genesis block again gives the network hash rate to be 263.8 Ph/s. This gives the following:

* 2 Ph/s would represent 0.76% of the network, which is worth 383.04 BTC per round and 0.0009576 BTC per round per share.
* 20 Ph/s would represent 7.58% of the network, which is worth 3820.32 BTC per round or 0.0095508 BTC per round per share

The 2P to 20P range is just for the FIRST batch of gen 3 deployment. There will be other batches as well. What is important isn't deployment size or nm mask size, but rather this:

Power consumption target estimation is <0.2W per G on low power mode and <0.2$ per G on wafer cost.

If one thinks that those numbers will be competitive with what other companies are producing in a few months, then AM will have a good slice of the mining pie (either through mining, sales, or franchising) and will have a value much higher than 0.3 BTC / share.

[Equilux]

All of these numbers being thrown around are all guesses, estimations, and possibilities, except for one: 400,000 shares. People seem to pay little attention to this number because it appears irrelevant. I tend to think it is one of the most important. Everyone seems so focused on dividends and share price. That is understandable I suppose, because it lets you make simplistic valuation judgments. Judgments which are for the most part useless.

I don't see people looking at Google and trying to decide if they should purchase shares based upon current prices and dividends. When they decide to buy Apple shares, it is not because they will get their share price back in 238 years. They are buying a part of a company, and that company includes assets far more complicated than an ability to pay dividends.

5 years from now ASICminer could be Google, or Intel, or whatever player in the space you want to imagine. Own 1/400,000 of Google or Apple or Intel and tell me how you feel about your portfolio, especially if you bought that position for $200. Or you can tell your grandkids how you sold it for $200 because it would take 5 years of dividends to get your initial investment back. They will likely beat you to death and bury you in the backyard.

Shares in ASICminer are shares in the future. If you believe in bitcoin, surely you must have a feeling for what that future will entail. 20 years ago, most of the largest internet companies of today did not even exist yet. 20 years from now, the global behemoths may grow from the seeds of ASICminer today. This is the promise of ASICminer. A chance to own a part of the future before hardly anyone else has heard of it. To me, the risk/reward is obscene. Imagine ASICminer a 100 billion dollar company and see your shares valued at $250,000 each. As I see it, worrying about current dividend payouts is almost trivial.

Thanks for sharing this point of view

[Mabsark]

Fh8ZsgcYh0VQVwFwMay, using genesis block again gives the network hash rate to be 263.8 Ph/s. This gives the following:

* 2 Ph/s would represent 0.76% of the network, which is worth 383.04 BTC per round and 0.0009576 BTC per round per share.
* 20 Ph/s would represent 7.58% of the network, which is worth 3820.32 BTC per round or 0.0095508 BTC per round per share

The 2P to 20P range is just for the FIRST batch of gen 3 deployment. There will be other batches as well. What is important isn't deployment size or nm mask size, but rather this:

There's a limit to how fast they can produce new miners, and that's clearly going to be less than all the rest of the competition together, which means a decrease in network share. There's simply too much competition to be able to maintain their hash rate.

Power consumption target estimation is <0.2W per G on low power mode and <0.2$ per G on wafer cost.

If one thinks that those numbers will be competitive with what other companies are producing in a few months, then AM will have a good slice of the mining pie (either through mining, sales, or franchising) and will have a value much higher than 0.3 BTC / share.

If you think AM will be worth more than 0.3 BTC, show the maths which leads you to believe that. Just because you want it to worth more than 0.3 BTC, that doesn't mean it will be.

Unless you want to wait years to make a profit from your investment, AM is a bad investment at 0.3 BTC. Waiting years in the hope of making a profit from mining is simply crazy in this climate. Do you think anyone would buy a miner if they thought it would 10 years to get their money back?

[dmcdad]

Years? If AM pulls through with <0.2W per G and <0.2$ per G on wafer cost in the next few months (and if that is competitive with other companies, which I think it will be) then share price will be over 0.5 BTC in months, not years. You seem to be viewing AM as a pure mining dividend play, which it isn't. AM != cex.io.

[Mabsark]

Years? If AM pulls through with <0.2W per G and <0.2$ per G on wafer cost in the next few months (and if that is competitive with other companies, which I think it will be) then share price will be over 0.5 BTC in months, not years.

What maths lead you to believe that?

You seem to be viewing AM as a pure mining dividend play, which it isn't. AM != cex.io.

No, I just understand that AM cannot compete against everyone else combined. The overall result of that is a declining network share, regardless of the fact that the hash rate might actually be increasing.

[dmcdad]

There will be over 1.3 million BTC mined over the 12 month period. Actually more since blocks will be found on average every 8 to 9 minutes instead of every 10 minutes. Consumer mining companies thus far have been able to sell hardware at a higher profit than self mining (more profit in selling shovels, etc.), but profit margins will be decreasing. So let's leave 1.3 million BTC as the profit amount.

If AM produces <0.2W per G and <0.2$ per G on wafer cost then what share of the 1.3 million BTC pie do you think they will get? Multiply that percentage by 1.3 mil BTC / 400,000 and you get your dividend amount from AM. Say AM captures 5% of the mining profits, that will be 0.1625 BTC, or a 54% total dividend at a share price of 0.30 BTC. If they capture 12% of the mining profits, then that is a 130% dividend.

Can AM really capture 5%+ of the profit over a 12 month period? Maybe, maybe not. But I think if their gen 3 showing meets their goals then they will have the correct trajectory to, at least for the first few months, capture higher than that. No way the share price is going to stay around 0.3 BTC if that happens.

[CMMPro]

Do you really think 268PH is reasonable by May?
Doesn't sound reasonable to me based on manufacturers delivering hardware.

We will also be beyond "Prosumer" level devices by that time and into "commercial" or "industrial" designs and power requirements. The number of hobbyist customers will be much less and the number of businesses/industrial miners will grow.

It's one thing to mine at a small loss as a hobbyist, but I don't believe business models will not allow for this loss leading behaviour on such a large scale. Large capital investments in more and more powerful hardware demands annual returns, not losses.

 

[Mabsark]

There will be over 1.3 million BTC mined over the 12 month period. Actually more since blocks will be found on average every 8 to 9 minutes instead of every 10 minutes. Consumer mining companies thus far have been able to sell hardware at a higher profit than self mining (more profit in selling shovels, etc.), but profit margins will be decreasing. So let's leave 1.3 million BTC as the profit amount.

If AM produces <0.2W per G and <0.2$ per G on wafer cost then what share of the 1.3 million BTC pie do you think they will get? Multiply that percentage by 1.3 mil BTC / 400,000 and you get your dividend amount from AM. Say AM captures 5% of the mining profits, that will be 0.1625 BTC, or a 54% total dividend at a share price of 0.30 BTC. If they capture 12% of the mining profits, then that is a 130% dividend.

Can AM really capture 5%+ of the profit over a 12 month period? Maybe, maybe not. But I think if their gen 3 showing meets their goals then they will have the correct trajectory to, at least for the first few months, capture higher than that. No way the share price is going to stay around 0.3 BTC if that happens.

The mistake you are making is that you are assuming that they can maintain network share. That's completely unrealistic for the reasons mentioned previously. Just like AM couldn't maintain network share with gen 1, neither will they be able to so with their next gen chips for the same reason. The difference this time is that the competition is far greater, meaning less profit for AM and less divs for shareholders.

Let's say AM got 10% of the network after using all their chips and that the difficulty is increasing 20% per round. Let's also say that it takes 3 months before AM have a new batch of miners which take it back up to 10%. What will AM's share of the network be after 3 months, just before the new miners come online?

[dmcdad]

I don't think gen3 will be able to maintain a constant network share, but neither does it have to. I do think that gen3 will put AM on the trajectory to own 5%+ (perhaps much more) of the mining profit pool for the foreseeable future. Foreseeable being several months, which is all that matters -- after that we all need crystal balls in regards to gen4+ hardware.

Time will tell. You seem quite surprised at the recent AM price increase and are looking for explanations / reasons, but you want to dismiss them all. Do you really think that if, in a few months, AM can sell 20P of miners in a few week period (for just the first deployment of gen3) the stock price is going to be around 0.3 BTC as all those dividends come flowing in every week?

[Mabsark]

Do you really think 268PH is reasonable by May?
Doesn't sound reasonable to me based on manufacturers delivering hardware.

We will also be beyond "Prosumer" level devices by that time and into "commercial" or "industrial" designs and power requirements. The number of hobbyist customers will be much less and the number of businesses/industrial miners will grow.

It's one thing to mine at a small loss as a hobbyist, but I don't believe business models will not allow for this loss leading behaviour on such a large scale. Large capital investments in more and more powerful hardware demands annual returns, not losses.

It honestly wouldn't surprise me if the hash rate was that high.

[Mabsark]

I don't think gen3 will be able to maintain a constant network share, but neither does it have to. I do think that gen3 will put AM on the trajectory to own 5%+ (perhaps much more) of the mining profit pool for the foreseeable future. Foreseeable being several months, which is all that matters -- after that we all need crystal balls in regards to gen4+ hardware.

I repeat:

Let's say AM got 10% of the network after using all their chips and that the difficulty is increasing 20% per round. Let's also say that it takes 3 months before AM have a new batch of miners which take it back up to 10%. What will AM's share of the network be after 3 months, just before the new miners come online?

Time will tell. You seem quite surprised at the recent AM price increase and are looking for explanations / reasons, but you want to dismiss them all. Do you really think that if, in a few months, AM can sell 20P of miners in a few week period (for just the first deployment of gen3) the stock price is going to be around 0.3 BTC as all those dividends come flowing in every week?

If AM sold 20 Ph/s of chips, what would they mine with? You don't seem to understand that they have a finite amount of hardware which needs to be split between mining and sales. So, in your scenario, they sell 20 Ph/s and gives are great for the first few weeks. Then the sales money is all distributed and the next divs are from mining alone, which would be on gen 1 chips because all the gen 3 chips were sold. As I pointed out earlier in the thread:

Looking at the genesis block, the network hash rate will be 132.6 Ph/s on 14th April. If AM had 100 Th/s at that time then:

* AM would have 0.1 * 100 / 132.6 = 0.075% of the network hash rate.
* With 50,400 BTC mined per round, AM would get 37.8 BTC per round.
* With 37.8 BTC mined per round by AM, that would equate to 0.0000945 BTC per round per share

What do you think the share price would fall to when the divs took a massive nosedive to about 0.000005 BTC and continued to decline at the rate of network growth?

[dmcdad]

Why in the world would AM sell 20P (first batch) and then stop manufacturing/selling additional batches? Do you think gen3 AM is going to only be profitable for a single batch or something, or you think it is going to take them several months to cook up another batch?

Note AM is still selling gen1 cubes at a profit, albeit a small and decreasing one.

Also note I don't care what AM share of the network is. I don't care if they don't self mine at all. I care that they maximize profit.

[Mabsark]

Why in the world would AM sell 20P (first batch) and then stop manufacturing/selling additional batches? Do you think gen3 AM is going to only be profitable for a single batch or something, or you think it is going to take them several months to cook up another batch?

Note AM is still selling gen1 cubes at a profit, albeit a small and decreasing one.

Also note I don't care what AM share of the network is. I don't care if they don't self mine at all. I care that they maximize profit.

You brought up the selling of 20 Ph/s. I just explained what would happen if they did that. Also, you ignored the important part of my post:

Let's say AM got 10% of the network after using all their chips and that the difficulty is increasing 20% per round. Let's also say that it takes 3 months before AM have a new batch of miners which take it back up to 10%. What will AM's share of the network be after 3 months, just before the new miners come online?

The reason you should answer this question is because it will show you how the divs will decrease between batches under those circumstances and it will answer your questions from the first paragraph.

[dmcdad]

I ignored it because, as I said, I don't care what AM's share of the network is. I care what AM's share of the mining profit pool is. Trust me, I fully understand the nature of increased difficulty and how that impacts mining profits.

I think gen3 will (based on its specs) set them on the trajectory for owning 5%+ of that pool for a foreseeable amount of time (again, foreseeable for me is several months). If you agree with that, then that equates to a 54% annual dividend rate. I don't care if that dividend comes from AM selling chips/miners in batches or if it comes over a 12 month period of self mining. If AM shows that it is on a trajectory to get 5% or more of that mining profits for a reasonable amount of time, then it is way undervalued. You don't think they will apparently, even with gen3, which is fine. In a few months we'll see what happens.

[jimmothy]

Years? If AM pulls through with <0.2W per G and <0.2$ per G on wafer cost in the next few months (and if that is competitive with other companies, which I think it will be) then share price will be over 0.5 BTC in months, not years.

What maths lead you to believe that?

You seem to be viewing AM as a pure mining dividend play, which it isn't. AM != cex.io.

No, I just understand that AM cannot compete against everyone else combined. The overall result of that is a declining network share, regardless of the fact that the hash rate might actually be increasing.

Why do you come to this thread so often with bullshit math and false assumptions attempting to create fud? I can understand now why you have a yellow ignore button.

For anyone who is interested in a serious evaluation ignore mabsark and do your own calculations. Mine led me to believe that if AM can achieve 10%, as was the previous goal, each share would be worth at least 1btc a piece at 30% apr.

[Mabsark]

I ignored it because, as I said, I don't care what AM's share of the network is. I care what AM's share of the mining profit pool is. Trust me, I fully understand the nature of increased difficulty and how that impacts mining profits.

I think gen3 will (based on its specs) set them on the trajectory for owning 5%+ of that pool for a foreseeable amount of time (again, foreseeable for me is several months). If you agree with that, then that equates to a 54% annual dividend rate. I don't care if that dividend comes from AM selling chips/miners in batches or if it comes over a 12 month period of self mining. If AM shows that it is on a trajectory to get 5% or more of that mining profits for a reasonable amount of time, then it is way undervalued. You don't think they will apparently, even with gen3, which is fine. In a few months we'll see what happens.

Let say the network hash rate was 250 PH/s and AM controlled 5% of the network, netting around 2,520 BTC per round. That 5% would represent 12.5 Th/s. If the network hash rate increases by 20% that round, that would take the network hash rate to 300 Th/s. In order for AM to maintain their network share, AM would need to add 2.5 Ph/s by the end of that round. In order to maintain their hash rate, the following hash power would need to be brought online by the end of each round:

Round 1 = 2.5 Ph/s
Round 2 = 3 Ph/s
Round 3 = 3.6 Ph/s
Round 4 = 4.32 Ph/s
Round 5 = 5.184 Ph/s
Round 6 = 6.2208 Ph/s

If they got 20 Ph/s, 12.5 Th/s would be needed to control 5% of the network, leaving 7 Ph/s for sales and maintaining the network share until a new batch of chips arrived.

Do I agree that AM can maintain 5% for several months? Based on the available information and the maths it produces, no I don't. Do you?

[dmcdad]

Do I agree that AM can maintain 5% for several months?

As I've said several times now, I do NOT care about AM hash share. I care about how much of the BTC mining profit share AM has. Do I think they will have 5% of that? No, based on the specs of their gen3 and past track record of actually getting hardware to market, I think they will have more than 5%.