ASICMINER Speculation Thread

[velacreations]

I'd like to discuss the share price of AM on this thread.  Is it going up? down? sideways? 

Discuss PTs directs, 1/100ths, and anything else related to AM.

Just for the record, I love AM, and I am a shareholder.  I am holding for the long term, but speculation is interesting to me.  All of this is just my opinion based on information and/or patterns I see.  I could be wrong, and I'm happy to be wrong, it doesn't matter to my overall valuation of AM.

I will get this started:

June 16: I expect a correction of share price down to 2.7.  With the recent stop of blade sales, combined with lower USB sales, dividend will be considerably lower this week (expect less than .025), and I believe some people will sell off.  On top of that, the demand that pushed the price to 3 btc this week is getting weak, and the price is currently slipping sub 2.9.

With the downward pressure, I expect the price to slip, and then probably grow slowly over the next 2-3 weeks, which is a good thing.  When dividends bounce back up in mid July, we'll see another bump in share price.

Discuss...

[velacreations]

When the next 200th comes online we will see 3.5 easy.

When do you expect that to happen?  I doubt we'll see that before August, but who knows.

The thing is, it seems like they are trying to stay at around 20% of the network, so even with the 200TH, mining revenue won't be increasing.

So, how much are the shares really worth when they are receiving around .015 dividend each week?

[shawshankinmate37927]

When the next 200th comes online we will see 3.5 easy.

That could be a few weeks from now, at the rate we're going :

http://blockchain.info/charts/hash-rate?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=


Edit:  I'm adding a list of ASICMiner related shortcuts to this post just for the sake of convenience:

 - https://btct.co/security/ASICMINER-PT
 - http://www.coinflow.co/chart/ASICMINER-PT
 - http://runeks.dk/bitcoin/
 - http://www.asicminercharts.com/
 - http://blockchain.info/pools
 - https://docs.google.com/spreadsheet/ccc?key=0AtqphFCP56ordGVCakJxSU90MlB4MlBkZENya25pS2c
 - https://bitcointalk.org/index.php?action=profile;u=49840;sa=showPosts
 - https://bitcointalk.org/index.php?action=profile;u=151548;sa=showPosts

[stripykitteh]

It appears that this week AM is producing consistently a 50% higher return from mining. Source:

http://runeks.dk/bitcoin/

It is likely that they are pushing stock-on-hand into the mine rather than trying to sell it (obv new blades coming in a few weeks).

Anyway, last week AM mined 0.0132BTC per share, so I'm tipping about 0.02 per share from that this week. Take away something for expenses, add a little bit of hardware sales that may have cleared during the week and ~0.023-0.025 is looking likely.

I think the share price will probably head back to the 2.5BTC range for a while, which I am OK with. It's still yielding 1% a week which is an excellent return for the nearest thing Bitcoin has to a blue-chip stock.

[FNG]

So, how much are the shares really worth when they are receiving around .015 dividend each week?

I'd say at a share price where you consistently yield 25% AM is reasonably priced if not a bit undervalued. That yield still has moderately high risk priced in

[velacreations]

I like http://www.asicminercharts.com/

3 things I notice:

1. We were at 20 TH/s on 5/9.  We hit a peak of 37 TH on 6/13.  So, it took us a month to almost double our hash rate..  If that rate can be maintained (I don't know if that is reasonable), then we can expect about 80 TH on 7/13, 160 TH in mid August.

2. Mining revenue is steady around .015/share, and hasn't changed much since mid-May.

3. We are staying right around 20% of the network, and I don't expect that to change much in the future, so mining revenue will probably be fairly constant at .015 for the foreseeable future.


I agree that prices will drop, but I don't know if it will hit 2.5.  I think 2.7 is reasonable for this week, and that's an appropriate price for where AM is currently.  If we get new hardware, 2nd generation, or a giant uptick in USB sales, then it is undervalued.

[shawshankinmate37927]

3. We are staying right around 20% of the network, and I don't expect that to change much in the future, so mining revenue will probably be fairly constant at .015 for the foreseeable future.

This will be the key to ASICMiner holding it's value.  Maintaining 20% of the network hash rate while it's rising in a parabolic fashion.

[elefter]

So, how much are the shares really worth when they are receiving around .015 dividend each week?

I'd say at a share price where you consistently yield 25% AM is reasonably priced if not a bit undervalued. That yield still has moderately high risk priced in

i think a 25% yield is where things will settle too..

[Mabsark]

I like http://www.asicminercharts.com/

3 things I notice:

1. We were at 20 TH/s on 5/9.  We hit a peak of 37 TH on 6/13.  So, it took us a month to almost double our hash rate..  If that rate can be maintained (I don't know if that is reasonable), then we can expect about 80 TH on 7/13, 160 TH in mid August.

You can't assume that they can just double the rate at which they bring hashing power online. Going from 20 Th/s to 40 Th/s in a month just shows that they can bring 20 Th/s online in a month. Were those devices already assembled? The Blades do about 10 Gh/s so that's about 100 Blades per Th/s. In order to go from 80 Th/s to 160 Th/s in a month, about 266 Blades would have to be brought online every day.

[velacreations]

I like http://www.asicminercharts.com/

3 things I notice:

1. We were at 20 TH/s on 5/9.  We hit a peak of 37 TH on 6/13.  So, it took us a month to almost double our hash rate..  If that rate can be maintained (I don't know if that is reasonable), then we can expect about 80 TH on 7/13, 160 TH in mid August.

You can't assume that they can just double the rate at which they bring hashing power online. Going from 20 Th/s to 40 Th/s in a month just shows that they can bring 20 Th/s online in a month. Were those devices already assembled? The Blades do about 10 Gh/s so that's about 100 Blades per Th/s. In order to go from 80 Th/s to 160 Th/s in a month, about 266 Blades would have to be brought online every day.

yeah, I agree with you, I'm just saying that's the best they can probably do. 

I don't expect them to keep that rate, which means that mining dividends will be decreasing.

[bitfair]

I'd like to discuss the share price of AM on this thread.  Is it going up? down? sideways? 

No idea what the current quote is, but let's make a short back-of-the-envelope calculation based on what is currently known:

1. 200 TH/s arriving soon (July?): assume the order is already paid in full, and that it is only Blades, i.e. 20 000 Blade units. Assume half will be sold and half will be used for mining. Sales price will be lower than earlier, let's assume 25 BTC per Blade. And let's assume that each blade will earn the same amount mining over the next year, so 25 BTC/Blade * 20 000 Blades = 500 000 BTC, or 1.25 BTC per share in revenue over the next year from this order only!

2. More hashing power based on current-gen tech could easily be ordered, costing 10k USD per TH/s. Assume two more 200 TH/s orders over the next year, each earning a revenue half of the preceding order, so 0.625 BTC and 0.3125 BTC (per share) respectively.

3. Next-generation technology: assume AM can squeeze the same amount of revenue over the next year from next-gen tech as they will with current-gen tech. 1.25+0.625+0.3125 BTC

One-year revenue forecast per share: 4.375 BTC per share.

Costs: R&D, production and operations - no idea! 1 BTC per share?

So based on these horribly vague and unreliable assumptions, I see dividends of 3.375 BTC per share over the next 12 months. Assuming performance halfs every 12 months (competition, market saturation, etc.): dividends of approx. 6.3 BTC per share over the next 4 years.

Based on plenty of assumptions, I estimate a fair value above 6.3 BTC per share.

This appears pretty reasonable in my opinion: would mean company value is about 2.5 million BTC or approximately 25% of the remaining BTC to be issued. It can easily be imagined that 25% of the remaining BTC will be mined using AM hardware, and if the hardware is sold at a price close to the break-even price it means 25% of the remaining BTC to be issued will fall in the hands of AM.

My speculated fair value: 6.3 BTC per share.

[velacreations]

My speculated fair value: 6.3 BTC per share.

wow, that's a whole lot of optimism!

They won't be getting the same value for the blades as they were before, mainly because of competitors, and lowering ROI.

Also, mining revenue (as we have just discussed) will probably be decreasing.  It doesn't matter that they have 200TH, because 200 TH in 2 months is not the same as 200TH today. Instead, think of it as a % of the total hash rate.  If they can keep 20%, then we are looking at consistent .015/share per week.

[Franktank]

My speculated fair value: 6.3 BTC per share.

wow, that's a whole lot of optimism!

They won't be getting the same value for the blades as they were before, mainly because of competitors, and lowering ROI.

Also, mining revenue (as we have just discussed) will probably be decreasing.  It doesn't matter that they have 200TH, because 200 TH in 2 months is not the same as 200TH today. Instead, think of it as a % of the total hash rate.  If they can keep 20%, then we are looking at consistent .015/share per week.

This is under the assumption that there are no plans to expand beyond the announced 262 TH/s. Do you think friedcat and the rest of the folks at BitFountain are saying "We've mined enough coins, we'll just let ASICMiner fade away now"? Once there is enough network hashrate online, I'm sure shareholders will be hearing more about further expansion plans....

[bitfair]

My speculated fair value: 6.3 BTC per share.

wow, that's a whole lot of optimism!

They won't be getting the same value for the blades as they were before, mainly because of competitors, and lowering ROI.

Also, mining revenue (as we have just discussed) will probably be decreasing.  It doesn't matter that they have 200TH, because 200 TH in 2 months is not the same as 200TH today. Instead, think of it as a % of the total hash rate.  If they can keep 20%, then we are looking at consistent .015/share per week.

Optimism has worked out pretty well so far.

The estimate takes into account decreasing mining revenue, but may be on the optimistic side.

Let's do another one. First assume that selling hardware and mining generate the same revenue, then assume that AM hardware keeps mining 25% of the network hash rate - because of the first assumption it doesn't matter whether it is friedcat and friends that are hashing it or someone who bought AM hardware, revenue for AM is assumed to be the same in both cases. Say there's 5 million BTC to be mined over the next four years, then it works out to approx. 3.1 BTC per share.

Looking at the competitive landscape, can AM churn out 25% of hashing hardware? Well, they have already manufactured hardware for 46% of the current network hash rate. They have an established production line, great cash flow, no debt, undelivered orders already paid, and a production cost that (I'm pretty sure) outcompetes all the other companies. I am confident they can manufacture at least 25% of all hashing hardware for an extended period of time, possibly significantly higher than 25% in the short term.

So let's say - conservatively 3.1 BTC per share.

[velacreations]

This is under the assumption that there are no plans to expand beyond the announced 262 TH/s. Do you think friedcat and the rest of the folks at BitFountain are saying "We've mined enough coins, we'll just let ASICMiner fade away now"? Once there is enough network hashrate online, I'm sure shareholders will be hearing more about further expansion plans....

No, I don't think they will be expanding beyond the 262 TH in gen 1.  I believe the plan is to get that online by the time gen 2 is ready to go (Nov?)

[velacreations]

Let's do another one. First assume that selling hardware and mining generate the same revenue, then assume that AM hardware keeps mining 25% of the network hash rate - because of the first assumption it doesn't matter whether it is friedcat and friends that are hashing it or someone who bought AM hardware, revenue for AM is assumed to be the same in both cases. Say there's 5 million BTC to be mined over the next four years, then it works out to approx. 3.1 BTC per share.

They are not at 25% now, and I think it is a mistake to assume they will gain much in terms of network percentage.

edit: ok, I see what you are saying, if you assume hardware+mining = 25%

Looking at the competitive landscape, can AM churn out 25% of hashing hardware? Well, they have already manufactured hardware for 46% of the current network hash rate.

yes, they did that without any competitors, which will not last forever.  By the time they get the full 262TH online, there will be at least another competitor producing.  That means that maintaining that 25% will become harder, more expensive, and less profitable.

[bitfair]

No, I don't think they will be expanding beyond the 262 TH in gen 1.  I believe the plan is to get that online by the time gen 2 is ready to go (Nov?)

According to some more calculations I did, gen 1 hardware continues to be profitable in operation until network hash rate reaches 29 peta-hashes per second, regarding the initial investment as a sunk cost - meaning that gen 1 hardware will remain profitable for a very long time still (unless BTCUSD drops dramatically). It is likely cheaper to produce gen 1 hardware than gen 2 hardware, so devices can be sold more cheaply and undercut the prices of competitors - and given that the devices will remain profitable for a long time still, I believe there will still be plenty of demand if the price is right. In my opinion, gen 1 is not ready to be retired after this 200 TH order is delivered. In fact, it may be just getting started.

Gen 2 will be an important step, and I am happy to see development happen right now because it takes time to design and plan. But it may actually not be lucrative for miners to buy, taking into account USD/GH and operational costs of gen 1, until network hash rate rises to double-digit peta-hash.

In the end, I don't know the production costs of Gen 2, but they play an important role in the dynamics of the situation.

Hopefully there will be other competitors soon, but I still believe AM can retain a 25% market share (mining+sales).

Edit: Does not constitute investment advice, all statements about the future are uncertain.

[velacreations]

ok, for the extremely short term, what happens today when the difficulty increases?  We see that the AM hasrate has dropped considerably over the last day or so, will they be able to ramp up to meet difficulty?

[velacreations]

In the end, I don't know the production costs of Gen 2, but they play an important role in the dynamics of the situation.

that's an important thing to consider.  We haven't paid for Gen 2, yet, so some of that extra profit from Gen 1 will have to pay for Gen 2, eventually.

[velacreations]

Edit: Does not constitute investment advice, all statements about the future are uncertain.

we're just talking and guessing. If people accept this as advice for anything, that's their problem.