The Bear Argumemt for ASICMINER

[ryantw]

Let the Gox USD "Hiatus" dust settle and remember where the BTC price was 2 weeks ago.

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[furuknap]

Perhaps it's time for my "Why I sold out of ASICMiner" article...

.b

[ThickAsThieves]

Perhaps it's time for my "Why I sold out of ASICMiner" article...

.b

Will you publish it just as AM hits 5 again? 

[furuknap]

Perhaps it's time for my "Why I sold out of ASICMiner" article...

.b

Will you publish it just as AM hits 5 again? 

I'm investing on value, not price, as you very well know :-)

.b

[RationalSpeculator]

So, I bought some Asicminer direct shares for 3BTC, in less than a week they went to almost 5BTC and I sold them.  A 60% profit in a week would just seem piggish to let ride.  Looking at ASICMINER's meteoric rise, especially in the last month, it really is priced for an optimistic scenario.  However, I see several significant negative catalysts which can cause a sharp fall - panic selling in an illiquid market:

1. The tumbling Fiat/BTC ratio impedes ASICMINER's ability to buy new hardware to maintain its total % of the total network hashrate.  In the last 6 weeks we have gone from $130s to $70s. At some point, the relationship between the Fiat/BTC ration and ASICMINE Share price will rubber band back in place if the Fiat/BTC price does not significantly recover.

2. The technological "first mover advantage" of ASICMINER has very front-loaded benefits.  No doubt, early ASICMINER investors between both dividends and the exponential share price rise have been very much enriched.  However, now other ASIC suppliers are finally starting to ship significant numbers of ASIC units, many with significant performance advantages to ASICMINER's proprietary hardware.  ASICMINER is a technology company and you are basically betting they will continue to innovate and stay technologically ahead of the competition if they are to maintain their network hashrate percentage.  KNCMiner, Terrahash, Avalon and even some of the BFL units are superior.  And new more efficient ASIC chips are coming all the time with plenty of eager buyers as the bitcoin awareness raises outside the crypto-libertarian geek world.

3. Everyone wants to compare this to P/E of a Nasdaq listed technology company where a P/E of 15-25 for a fast growing company is reasonable.  However, their is absolutely no regulatory oversight and the risks inherent in investing with ASICMINER are based totally on the trust one places in Bitfoundation and its leadership.  They have shown themselves thus far to be trustworthy (though for the paranoid, that is how the long con works), but the lack or oversight and accountability means this will always trade at a significant discount to a listed company.

I would not short this company outright since it definitely has momentum on its side and friedcat has continuously met and exceeded all expectations.  Still, this stock is due for a pullback and it will be vicious.  Buying some puts to play the volatility may be a good risk/benefit play.  My bet, we will see 3.5BTC/share before we see 6.5BTC/share.

Great call Mechs!

The btc price now being $135 and AsicMiner being 1.5 btc, do you think it is a good buy now?

I'm thinking the best moment is likely when btc mining collapses in general, just like the price did. I'm thinking this should happen the next few months somewhere when competition destroys profit margins of old technology and when btc exchange rate drop, destroys profit margins of many asics too. They will have to go offline and hashing power will considerable drop for few months or stagnate.

The best moment to buy is after these few months of drop or stagnation of hashing power has happened since hashing power per definition goes up again after that, meaning profits are again being made. The big question will be ofcourse, has hashing power bottomed out already or will it fall deeper? But for sure, since hashing power did not even start dropping or stagnating yet, now is not the time to invest in mining.

Appreciate your feedback.

[mechs]

So, I bought some Asicminer direct shares for 3BTC, in less than a week they went to almost 5BTC and I sold them.  A 60% profit in a week would just seem piggish to let ride.  Looking at ASICMINER's meteoric rise, especially in the last month, it really is priced for an optimistic scenario.  However, I see several significant negative catalysts which can cause a sharp fall - panic selling in an illiquid market:

1. The tumbling Fiat/BTC ratio impedes ASICMINER's ability to buy new hardware to maintain its total % of the total network hashrate.  In the last 6 weeks we have gone from $130s to $70s. At some point, the relationship between the Fiat/BTC ration and ASICMINE Share price will rubber band back in place if the Fiat/BTC price does not significantly recover.

2. The technological "first mover advantage" of ASICMINER has very front-loaded benefits.  No doubt, early ASICMINER investors between both dividends and the exponential share price rise have been very much enriched.  However, now other ASIC suppliers are finally starting to ship significant numbers of ASIC units, many with significant performance advantages to ASICMINER's proprietary hardware.  ASICMINER is a technology company and you are basically betting they will continue to innovate and stay technologically ahead of the competition if they are to maintain their network hashrate percentage.  KNCMiner, Terrahash, Avalon and even some of the BFL units are superior.  And new more efficient ASIC chips are coming all the time with plenty of eager buyers as the bitcoin awareness raises outside the crypto-libertarian geek world.

3. Everyone wants to compare this to P/E of a Nasdaq listed technology company where a P/E of 15-25 for a fast growing company is reasonable.  However, their is absolutely no regulatory oversight and the risks inherent in investing with ASICMINER are based totally on the trust one places in Bitfoundation and its leadership.  They have shown themselves thus far to be trustworthy (though for the paranoid, that is how the long con works), but the lack or oversight and accountability means this will always trade at a significant discount to a listed company.

I would not short this company outright since it definitely has momentum on its side and friedcat has continuously met and exceeded all expectations.  Still, this stock is due for a pullback and it will be vicious.  Buying some puts to play the volatility may be a good risk/benefit play.  My bet, we will see 3.5BTC/share before we see 6.5BTC/share.

Great call Mechs!

The btc price now being $135 and AsicMiner being 1.5 btc, do you think it is a good buy now?

I'm thinking the best moment is likely when btc mining collapses in general, just like the price did. I'm thinking this should happen the next few months somewhere when competition destroys profit margins of old technology and when btc exchange rate drop, destroys profit margins of many asics too. They will have to go offline and hashing power will considerable drop for few months or stagnate.

The best moment to buy is after these few months of drop or stagnation of hashing power has happened since hashing power per definition goes up again after that, meaning profits are again being made. The big question will be ofcourse, has hashing power bottomed out already or will it fall deeper? But for sure, since hashing power did not even start dropping or stagnating yet, now is not the time to invest in mining.

Appreciate your feedback.

I think at 1.5BTC ASICMiner is fairly valued considering all the unknowns.  At this point, it is all about how fast they can get out gen 2, in what #s and how well it performs. With not too much info coming from FC (which is not unusual for him), it really is a question of your "faith" in FC at this point to be able to deliver.  We do know they lost the first mover advantage though since Bitfury is now mining with Gen 2 (though they mining with the hardware, currently little to none sold) and have 17% of the network hash under their private mining pool ghash.io.  Seems like Bitfury may be the new asicminer except they are a completely private entity.

I think this will drift down to 1.2-1.3BTC with a couple more poor dividends and continued silence from management just on weaker handed speculators continuing to get shook out.  If you are thinking of buying, I would definitely hold off since we will see somewhat lower prices before any catalysts likely appear.  This will jump up at some point, on some positive news from FC, so for the trader at least, a dead cat bounce is likely in store and I would not short it.  Still, for a long-term buy?  No, I personally think FC has falled too far behind now that more professional competition has arrived. It not just BFL & Avalon anymore which are both now largely irrelevant.  It is more professional operations such as cointerra, hashfast, KNCMiner and Bitfury that is the new competitors to look at, and they are much stiffer competition to deal with.  Friedcat is very much a hobbyist by comparison.

[RationalSpeculator]

I think at 1.5BTC ASICMiner is fairly valued considering all the unknowns.  At this point, it is all about how fast they can get out gen 2, in what #s and how well it performs. With not too much info coming from FC (which is not unusual for him), it really is a question of your "faith" in FC at this point to be able to deliver.  We do know they lost the first mover advantage though since Bitfury is now mining with Gen 2 (though they mining with the hardware, currently little to none sold) and have 17% of the network hash under their private mining pool ghash.io.  Seems like Bitfury may be the new asicminer except they are a completely private entity.

I think this will drift down to 1.2-1.3BTC with a couple more poor dividends and continued silence from management just on weaker handed speculators continuing to get shook out.  If you are thinking of buying, I would definitely hold off since we will see somewhat lower prices before any catalysts likely appear.  This will jump up at some point, on some positive news from FC, so for the trader at least, a dead cat bounce is likely in store and I would not short it.  Still, for a long-term buy?  No, I personally think FC has falled too far behind now that more professional competition has arrived. It not just BFL & Avalon anymore which are both now largely irrelevant.  It is more professional operations such as cointerra, hashfast, KNCMiner and Bitfury that is the new competitors to look at, and they are much stiffer competition to deal with.  Friedcat is very much a hobbyist by comparison.

Thanks so much mechs! That was really helpful for me.

[furuknap]

I think at 1.5BTC ASICMiner is fairly valued considering all the unknowns. 

Disregarding today's turmoil, I agree. I've always invested based on value, not people's willingness to pay. I sold my AM shares at around 1.8 in April or May because I couldn't see a fundamental value beyond that point. I could have ridden it higher based on people not knowing how to properly value an asset, but I still see ~1.5 as a reasonable valuation of AM.

.b

[Nancarrow]

So, I bought some Asicminer direct shares for 3BTC, in less than a week they went to almost 5BTC and I sold them. 

Bastard. 

[mechs]

So, I bought some Asicminer direct shares for 3BTC, in less than a week they went to almost 5BTC and I sold them. 

Bastard. 

That was 99% luck - I was just chasing the momentum. That could have just as easily gone the other way.

[Rival]

When traders make money, it is because they are clever, a genius, or simply brilliant. But never because they were just lucky.


When they lose money, it is because they are unlucky, got screwed, or got cheated. But never because they were just stupid.

[mechs]

When traders make money, it is because they are clever, a genius, or simply brilliant. But never because they were just lucky.


When they lose money, it is because they are unlucky, got screwed, or got cheated. But never because they were just stupid.

Investing is half luck and half good research
Trading/Speculating is 90% luck. To think otherwise is just another's gamblers fallacy.  I thought it was overpriced at 3 but it had so much momentum and euphoria on the board I rode it to 5.  If I decided to hold a week long, would have been selling back under 3.

[BitCsByBit]

Sorry to dig up this one, but it is very interesting to see how some arguments turned out.

I'm sure there were a lot of people that were blinded by greed.

With AM shares down to 0.7 or so, I don't see any major improvements until Feb '14 when they new generation is scheduled for. It is very hard to believe that AM managed to miscalculate what the future will bring and that they lost all the advantage they had, and now have to play catch up.