ASICMINER Speculation Thread

[Vycid]

One: because people will pay more per terahash while the difficulty is low. That's kind of obvious: your potential return is a lot higher per terahash while the difficulty is low, so therefore AM can charge a lot more. That effect is quickly subsiding, as evidenced by AM's prices.

Two: there is no serious competition yet. Beyond the organic competition anticipated from Avalon, BFL, KncMiner etc getting their shit together, at this point the sales volume of miners is large enough for an established mid-size electronics manufacturer to mosey on over here and embarrass AM price-wise.

Three: electricity cost. Believe it or not, the location of AM (Guangdong province, China) is not the cheapest place for electricity. Don't quote this figure, but I believe it comes out to about $0.06/kWh. As competition ramps up, money getting in on a piece of that 26% APR will launch huge farms in places like Washington state or Siberia where the price is $0.01/kWh - and they will do so by licensing the BitFury chip, for example, not by buying expensive AM hardware. AM will have trouble competing.

All 3 of your points are counteracted by simply being the fastest to release the latest tech miners in bulk.

The real risk is if miners stop buying on the whole, like if bitcoin becomes worth $20 or such.

You think that chip die shrinks are going to maintain the current ratio between BTC spent per miner and coins per month mined? I'm afraid not: the move from GPU to ASIC produced the biggest one-time profit opportunity for mining we will ever see short of quantum computing. And it isn't as if the other ASIC companies aren't working on their own next-gen chips.

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[Vycid]

This is a bubble.

...

Cost of manufacturing heavily outweighs cost of electricity, especially as they move to nextgen. They have proven they can do this very successfully anyway. So Bitfury came up with a working chip. So what? Avalon and BFL have working chips. Where are they? Not shipping at a rate high enough to compete, as you've said, AM has a monopoly, but it's for a reason.

You have a substancial amount of puts, and you have 3 months to convince people it's a bubble and try and pop it to reep the benefits of your efforts.


Saying it's just us who say it's not a bubble, that is right on par with value (OUR OPINION OF ACCEPTABLE RISK) with ulterior motives is bullshit serving your own motives.

That's absolutely true, and you should weight what I say accordingly.

But based on both technical indicators and fundamental valuation, this is (to me) unmistakably a bubble. When a bad dividend week comes in, we'll see who is right.

[SOSLOVE868]

This is a bubble.

...

Again....Does Bitfury trade on reliable exchanges ??as Bitfunder or BTCT...
If not , what makes you think OUR investors will move our fund to other place ,this equal to extra risk ....

[Draino]

One: because people will pay more per terahash while the difficulty is low. That's kind of obvious: your potential return is a lot higher per terahash while the difficulty is low, so therefore AM can charge a lot more. That effect is quickly subsiding, as evidenced by AM's prices.

Two: there is no serious competition yet. Beyond the organic competition anticipated from Avalon, BFL, KncMiner etc getting their shit together, at this point the sales volume of miners is large enough for an established mid-size electronics manufacturer to mosey on over here and embarrass AM price-wise.

Three: electricity cost. Believe it or not, the location of AM (Guangdong province, China) is not the cheapest place for electricity. Don't quote this figure, but I believe it comes out to about $0.06/kWh. As competition ramps up, money getting in on a piece of that 26% APR will launch huge farms in places like Washington state or Siberia where the price is $0.01/kWh - and they will do so by licensing the BitFury chip, for example, not by buying expensive AM hardware. AM will have trouble competing.

All 3 of your points are counteracted by simply being the fastest to release the latest tech miners in bulk.

The real risk is if miners stop buying on the whole, like if bitcoin becomes worth $20 or such.

You think that chip die shrinks are going to maintain the current ratio between BTC spent per miner and coins per month mined? I'm afraid not: the move from GPU to ASIC produced the biggest one-time profit opportunity for mining we will ever see short of quantum computing. And it isn't as if the other ASIC companies aren't working on their own next-gen chips.

Call me crazy, but even if they are working on next gen chips, who's to say they won't mine the shit out of those and ship just before they're not profitable, as was done this generation?

At least AM realized this was the only logical scenario, embraced it, and created an everybody-wins situation.  The others were naive and realized what must be done once they started acting rationally, or were evil right from the start.  There's no reason to think this cycle won't repeat each generation.  I think AM is a solid investment for some time to come, and the other company's mining hardware is a solid rape-scenario for the customers (as long as the producers continue acting rationally, and mine the shit out of their hardware before shipping).

[Vycid]

It's probably better to consider price per network hash %, rather than price per gigahash/terahash/etc. when it comes to evaluating mining equipment available for purchase today.

Doing this more or less normalizes the cost for a given time.

My point is that it doesn't. A month or two ago, a couple of AM blades might have been 1% of the network, yeah? Now you'd need many, many blades to get 1% of the network.

Do you think that the manufacturing cost is the same? (It isn't). Do you think that the electricity cost is the same? (It isn't.)

As competition ramps up - i.e., the hashrate - the marginal profit per % hashrate will drop precipitously. AM will feel that, both in terms of mining profit and hardware profit (people will simply pay less per TH, which is how manufacturing cost is determined).

[nubbins]

That's absolutely true, and you should weight what I say accordingly.

Emphasis mine! This is good advice in general, and I fear that a lot of people are not in the habit of doing this. 

[Rival]

The suggestion that AM is in a bubble begs us to define exactly what a bubble actually is. I prefer this definition:

"A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs."

We know there was (and still is) a surge in prices. This is a matter of record and irrefutable. But this alone does not make a bubble.

The first question an investor must ask is whether or not the surge is warranted by fundamentals. This aspect has been hotly debated since before we at 2.0, and I expect can only be answered for any given timeframe or value in retrospect. Some people believe 5.0 is not warranted. Heck, if you scratch around enough you can still find people who think 2.0 is unwarranted. One thing is certain: there is nowhere near enough information about AM financial structure to even begin to do a proper analysis. The truth is that we really don't know the fundamentals, so we do not know if it warranted... period.

There has not been a drastic drop in prices. This is also a matter of record.

I would suggest that the recent volume of sales could well be considered massive. The volume of shares at auctions for direct shares has increased substantially recently, however, they did nothing but temporarily stabilize the prices. Likewise, volumes on the exchanges have accelerated as well, but once again, there are still plenty of buyers driving the prices even higher.

If we did not see the increased volumes of sales I might suspect a bubble forming as the trade was being pushed up because of a thinning of the market. But the number of liquid shares appears to be increasing without driving the price down. This is not a sign of a bubble, but rather, of an undervalued asset.

[Vycid]

This is a bubble.

...

Again....Does Bitfury trade on reliable exchanges ??as Bitfunder or BTCT...
If not , what makes you think OUR investors will move our fund to other place ,this equal to extra risk ....

Are you kidding? Neither Bitfunder nor BTCT is a reliable exchange.

You guys are aware that AM used to trade on GLBSE...?

There is currently no such thing as a reliable Bitcoin exchange, and there won't be until some serious money comes in to do underwriting.

[elefter]

You can only have a bubble if ppl pay an ever increasing price for the same good as with the housing bubble and the bitcoin bubble...
this is not the case with AM cause its share price is increasing to reflect the ever increasing value of the company and of the dividends as it is normal.
If AM goes bad the value will drop if they do well the value will raise and that is normal and not a bubble...
If i see ever declining divs  or AM doing bad and the price going up then i will start worrying

[TsuyokuNaritai]

based on both technical indicators and fundamental valuation, this is (to me) unmistakably a bubble. When a bad dividend week comes in, we'll see who is right.

We already have seen how right your technical indicators and fundamental valuation are.

I've done some statistics with the rate of difficulty increase and the anticipated hashrate increase. They're overvalued.

(I DON'T think they're gonna fail, but I think the odds of being below 1.7BTC before September are worth up to a 0.1BTC premium.)

[elefter]

The suggestion that AM is in a bubble begs us to define exactly what a bubble actually is. I prefer this definition:

"A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs."

We know there was (and still is) a surge in prices. This is a matter of record and irrefutable. But this alone does not make a bubble.

The first question an investor must ask is whether or not the surge is warranted by fundamentals. This aspect has been hotly debated since before we at 2.0, and I expect can only be answered for any given timeframe or value in retrospect. Some people believe 5.0 is not warranted. Heck, if you scratch around enough you can still find people who think 2.0 is unwarranted. One thing is certain: there is nowhere near enough information about AM financial structure to even begin to do a proper analysis. The truth is that we really don't know the fundamentals, so we do not know if it warranted... period.

There has not been a drastic drop in prices. This is also a matter of record.

I would suggest that the recent volume of sales could well be considered massive. The volume of shares at auctions for direct shares has increased substantially recently, however, they did nothing but temporarily stabilize the prices. Likewise, volumes on the exchanges have accelerated as well, but once again, there are still plenty of buyers driving the prices even higher.

If we did not see the increased volumes of sales I might suspect a bubble forming as the trade was being pushed up because of a thinning of the market. But the number of liquid shares appears to be increasing without driving the price down. This is not a sign of a bubble, but rather, of an undervalued asset.

What he said

[Vycid]

The suggestion that AM is in a bubble begs us to define exactly what a bubble actually is. I prefer this definition:

"A surge in equity prices, often more than warranted by the fundamentals and usually in a particular sector, followed by a drastic drop in prices as a massive selloff occurs."

We know there was (and still is) a surge in prices. This is a matter of record and irrefutable. But this alone does not make a bubble.

The first question an investor must ask is whether or not the surge is warranted by fundamentals. This aspect has been hotly debated since before we at 2.0, and I expect can only be answered for any given timeframe or value in retrospect. Some people believe 5.0 is not warranted. Heck, if you scratch around enough you can still find people who think 2.0 is unwarranted. One thing is certain: there is nowhere near enough information about AM financial structure to even begin to do a proper analysis. The truth is that we really don't know the fundamentals, so we do not know if it warranted... period.

There has not been a drastic drop in prices. This is also a matter of record.

I would suggest that the recent volume of sales could well be considered massive. The volume of shares at auctions for direct shares has increased substantially recently, however, they did nothing but temporarily stabilize the prices. Likewise, volumes on the exchanges have accelerated as well, but once again, there are still plenty of buyers driving the prices even higher.

If we did not see the increased volumes of sales I might suspect a bubble forming as the trade was being pushed up because of a thinning of the market. But the number of liquid shares appears to be increasing without driving the price down. This is not a sign of a bubble, but rather, of an undervalued asset.

The bolded bit is a significant reason I'm sure this is a bubble. No short selling, so the downside can't be expressed, and no way to accurately value for the upside. So all of the momentum is based on pure optimism.

But I'm not basing my evaluation on AM financial structure. I'm basing my analysis on what must happen to the AM dividend (which seems to be the justification for the current valuation) as a result of

- increased hardware competition
- shrinking marginal profit due to higher hardware cost and higher electricity cost per % network hashrate
- decreased hardware sales prices reflecting lower % network hashrate per unit

[Vycid]

based on both technical indicators and fundamental valuation, this is (to me) unmistakably a bubble. When a bad dividend week comes in, we'll see who is right.

We already have seen how right your technical indicators and fundamental valuation are.

I've done some statistics with the rate of difficulty increase and the anticipated hashrate increase. They're overvalued.

(I DON'T think they're gonna fail, but I think the odds of being below 1.7BTC before September are worth up to a 0.1BTC premium.)

Like I said, we'll see after a bad dividend week. I'm not always right about the market, or I'd be a billionaire; but I'm pretty comfortable with the amount of money risked to the amount of money I could stand to make on a crash.

[deltanine]

This is a bubble.

...

Again....Does Bitfury trade on reliable exchanges ??as Bitfunder or BTCT...
If not , what makes you think OUR investors will move our fund to other place ,this equal to extra risk ....

Are you kidding? Neither Bitfunder nor BTCT is a reliable exchange.

You guys are aware that AM used to trade on GLBSE...?

There is currently no such thing as a reliable Bitcoin exchange, and there won't be until some serious money comes in to do underwriting.

So what?  This didn't stop you from buying puts on one of these "unreliable" exchanges.

[empoweoqwj]

I can see the price going down slightly after a bad dividend week. That's expected. But that is entirely different from a price crash.

You think everyone is going to panic if there is an average week or two? Dreamland.

[empoweoqwj]

This is a bubble.

...

Again....Does Bitfury trade on reliable exchanges ??as Bitfunder or BTCT...
If not , what makes you think OUR investors will move our fund to other place ,this equal to extra risk ....

Are you kidding? Neither Bitfunder nor BTCT is a reliable exchange.

You guys are aware that AM used to trade on GLBSE...?

There is currently no such thing as a reliable Bitcoin exchange, and there won't be until some serious money comes in to do underwriting.

So what?  This didn't stop you from buying puts on one of these "unreliable" exchanges.

Nice

Sad that someone who has sold out is now trying to FUD his way to profit. Thankfully we have the ignore button available if he waffles on too much about impending doom 

[stripykitteh]

Eh, I don't mind contrary opinions. At least Vycid's arguments are rational.

[ianp]

It's probably better to consider price per network hash %, rather than price per gigahash/terahash/etc. when it comes to evaluating mining equipment available for purchase today.

Doing this more or less normalizes the cost for a given time.

My point is that it doesn't. A month or two ago, a couple of AM blades might have been 1% of the network, yeah? Now you'd need many, many blades to get 1% of the network.

Do you think that the manufacturing cost is the same? (It isn't). Do you think that the electricity cost is the same? (It isn't.)

As competition ramps up - i.e., the hashrate - the marginal profit per % hashrate will drop precipitously. AM will feel that, both in terms of mining profit and hardware profit (people will simply pay less per TH, which is how manufacturing cost is determined).

But you're failing to factor in the comparison of ASICMINER versus what is on the market, available for purchase, *today*.

I think my argument holds up quite well when you factor that in.

[Vycid]

Eh, I don't mind contrary opinions. At least Vycid's arguments are rational.

Thanks... honestly and truly, I am not trying to FUD people into selling. These are my real opinions at this price level; I hope it's clear there's actual logic behind them. If you disagree, that's fine, but the response has seemed a little groupthink-y to me.

It's probably better to consider price per network hash %, rather than price per gigahash/terahash/etc. when it comes to evaluating mining equipment available for purchase today.

Doing this more or less normalizes the cost for a given time.

My point is that it doesn't. A month or two ago, a couple of AM blades might have been 1% of the network, yeah? Now you'd need many, many blades to get 1% of the network.

Do you think that the manufacturing cost is the same? (It isn't). Do you think that the electricity cost is the same? (It isn't.)

As competition ramps up - i.e., the hashrate - the marginal profit per % hashrate will drop precipitously. AM will feel that, both in terms of mining profit and hardware profit (people will simply pay less per TH, which is how manufacturing cost is determined).

But you're failing to factor in the comparison of ASICMINER versus what is on the market, available for purchase, *today*.

I think my argument holds up quite well when you factor that in.

Today, absolutely, yes. My horizon is further out, and that is why I have refused to buy any puts for less than ~90d. The market is forward-looking.

[chkgk]

http://blockchain.info/address/1HtUGfbDcMzTeHWx2Dbgnhc6kYnj1Hp24i
Here. We. go.