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Author Topic: ASICMINER is a play on BTC/FIAT value  (Read 1204 times)
mechs
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June 24, 2013, 04:51:58 AM
 #1

I see the biggest risk to ASICMINER being the value of BTC/FIAT and the ability overall to get BTC converted to fiat via exchanges which are coming under pressure.  That is because its ability to maintain a payout is very much depedent on maintaining its percentage of the total hashrate.  This requires continous conversion of BTC earned to FIAT to be used to purchase the equipment to make these ASIC miners.

If the value of BTC drops significantly, more BTC will be needed to pay for the same increase in hashing power meaning a divident drop.  Also, if it becomes more difficult to convert BTC to fiat due to the exchange issues with withdrawing FIAT, then hashing power will drop from lack of new asic equipment and so will the dividend.

The ROI assuming a constant dividend on ASICMiner justifies a significantly higher share price if the BTC/FIAT ratio remains stable and these issues of converting BTC to FIAT do not worsen. 
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June 24, 2013, 05:03:18 AM
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One thing a lot of people seem to forget is that the formula "hashing power = profit" is not correct.

We call it mining because it is like gold mining, but there is a big difference--the total amount of value to be mined is predetermined and constant. If you are mining, you are receiving a certain percent of the total profit (roughly) dependent on how much hashing power you have.

People keep saying "when asics come out and flood the market, there will be a huge surplus of bitcoins" but that is not true. There will be the exact same amount of bitcoins being produced, but the people who have the asics will be getting a bigger piece of the pie, while the number of bitcoins going to non-asics people will be reduced. If mining is no longer profitable for people who aren't using asics and they decide to stop, then the asics people will get an even bigger piece.

So, your statement "hashing power will drop from lack of new asic equipment and so will the dividend" is not quite accurate. If you have an asic and can't afford to upgrade, but everyone else stops mining, then there will be more bitcoins left for you and your dividend will actually increase.

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June 24, 2013, 05:05:46 AM
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One thing a lot of people seem to forget is that the formula "hashing power = profit" is not correct.

We call it mining because it is like gold mining, but there is a big difference--the total amount of value to be mined is predetermined and constant. If you are mining, you are receiving a certain percent of the total profit (roughly) dependent on how much hashing power you have.

People keep saying "when asics come out and flood the market, there will be a huge surplus of bitcoins" but that is not true. There will be the exact same amount of bitcoins being produced, but the people who have the asics will be getting a bigger piece of the pie, while the number of bitcoins going to non-asics people will be reduced. If mining is no longer profitable for people who aren't using asics and they decide to stop, then the asics people will get an even bigger piece.

So, your statement "hashing power will drop from lack of new asic equipment and so will the dividend" is not quite accurate. If you have an asic and can't afford to upgrade, but everyone else stops mining, then there will be more bitcoins left for you and your dividend will actually increase.

I've tried explaining this many times on another account, but this is one huge concept that people fail to understand..

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June 24, 2013, 05:06:58 AM
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One thing a lot of people seem to forget is that the formula "hashing power = profit" is not correct.

We call it mining because it is like gold mining, but there is a big difference--the total amount of value to be mined is predetermined and constant. If you are mining, you are receiving a certain percent of the total profit (roughly) dependent on how much hashing power you have.

People keep saying "when asics come out and flood the market, there will be a huge surplus of bitcoins" but that is not true. There will be the exact same amount of bitcoins being produced, but the people who have the asics will be getting a bigger piece of the pie, while the number of bitcoins going to non-asics people will be reduced. If mining is no longer profitable for people who aren't using asics and they decide to stop, then the asics people will get an even bigger piece.

So, your statement "hashing power will drop from lack of new asic equipment and so will the dividend" is not quite accurate. If you have an asic and can't afford to upgrade, but everyone else stops mining, then there will be more bitcoins left for you and your dividend will actually increase.

Yeah I agree. In the case where Bitcoins are worth less USD, it will cost  ASICMINER more BTC to produce equipment, pay for staff, electricity, whatever is paid for in FIAT. However, that is true of every other mining operation on the planet isn't it?
mechs
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June 24, 2013, 10:22:26 PM
 #5

The key to ASICMINER maintaining its divident is for it to be able to maintain its current percentage (about 20%) of the total hashpower of the network.  This will require continuous addition of miners, more efficiency of these new miners and the pricing power of bitcoins to obtain this equipment to stay the same.  BTC has dropped from 130s to under 100 USD in the last week.  This is a negative for ASICMINER if this trend does not reverse or at least stabalize.
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June 25, 2013, 12:17:07 AM
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What I'm interested to see is if BTC takes off to 500 or 1000, if people will find AM overvalued at that point and/or want to cash out since the FIAT is more juicy.

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June 25, 2013, 05:14:17 AM
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From my personal experience with bitcoins, I believe once btc rises to 500/1000, many share owners will become greedy and look for the NEXT big target. 2k? 5k? 10k?

There are already potential millionaires from early AM investors, yet i'm sure many are still holding onto their current shares... Heck I'm sure Friedcat and his team could retire now and most likely never need to work again in their lives if they cashed out now.
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June 25, 2013, 05:29:37 AM
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From my personal experience with bitcoins, I believe once btc rises to 500/1000, many share owners will become greedy and look for the NEXT big target. 2k? 5k? 10k?

There are already potential millionaires from early AM investors, yet i'm sure many are still holding onto their current shares... Heck I'm sure Friedcat and his team could retire now and most likely never need to work again in their lives if they cashed out now.

THis! If it makes it to $1000 I think there would be no stopping it at that point.
lixiaolai
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June 25, 2013, 05:57:31 AM
 #9

I see the biggest risk to ASICMINER being the value of BTC/FIAT and the ability overall to get BTC converted to fiat via exchanges which are coming under pressure.  That is because its ability to maintain a payout is very much depedent on maintaining its percentage of the total hashrate.  This requires continous conversion of BTC earned to FIAT to be used to purchase the equipment to make these ASIC miners.

If the value of BTC drops significantly, more BTC will be needed to pay for the same increase in hashing power meaning a divident drop.  Also, if it becomes more difficult to convert BTC to fiat due to the exchange issues with withdrawing FIAT, then hashing power will drop from lack of new asic equipment and so will the dividend.

The ROI assuming a constant dividend on ASICMiner justifies a significantly higher share price if the BTC/FIAT ratio remains stable and these issues of converting BTC to FIAT do not worsen. 

You depend too much on FIAT money, and this is the only reason that you can reach such a conclusion.

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June 25, 2013, 06:00:36 AM
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one day it will be maybe not necessary to change btc to fiat and maybe one day those with fiats will desperately try to change their collapsing fiats for btc, or gold, silver or any other limited and not possible to print assets. So, we have to be patient and find ways to live with btc without trying to change them for fiats

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