Bitcoin securities

[gambit1]

Hi all

I'm just making a post about mining shares. I realise that there is an area for this; marketplace/securities. However, most of the content in that area goes over my head and it tends to be discussing specific mining stocks whereas my post is more general.

Does anyone have a good way to asses the "value" of mining stocks. With regular equities price/earnings is an important attribute but what are the important attributes for mining stocks?

Anybody have success with mining stocks? What is your experience of them?

[1714182051]

1714182051

[1714182051]

1714182051

[statdude]

Sure!
Plug them in here:

http://www.coinish.com/calc/

With that you can calculate share value for break-even based on variety of difficulty increases.

Amazingly, mining stocks are so beaten up right now they might even be a good investment (don't quote me)?

Check it out and let me know what you find out.

[statdude]

Personally, I think the best values on the bitcoin market are the big dogs SD and AM and then BTCQuick. Unfortunately all are vulnerable to competition.

[gambit1]

"SD and AM and then BTCQuick." Not sure what these are. AM is AMP-PT right?

I've been beaten up a bit with mining stocks and am thinking about leaving them alone. I don't really know that much about mining.

[Exocyst]

Personally, I think the best values on the bitcoin market are the big dogs SD and AM and then BTCQuick. Unfortunately all are vulnerable to competition.

The barriers to entry for mining operations are becoming lower; however, competition is a good indication that a business is doing something worth imitating—I caution you, though, past success is not always a good indicator of how well a business will respond to competition. A mining operation that outperforms its mining share target is able to then sell hardware to competitors, thus reducing its share of mining profits to the targeted level but also raising new revenues through hardware sales. ASICMINER is a good example of a company well-poised to take on new competitors. ASICMINER holds hashing power in reserve while also setting a lower than capacity mining share target. This allows ASICMINER to create an enhanced barrier to entry for other large mining operations by: (1) increasing the mining difficulty by providing hardware to solo miners, (2) holding power in reserve to see off the efforts of burgeoning new challengers, and (3) developing but holding new technology in reserve to maintain high resale prices for its older technology (which could easily be devalued by immediate roll-out of newer, faster technology).

ASICMINER is at the top of the pile, but its share price carries a high premium. I don't think ASICMINER profits or value are likely to increase wildly because of the strategic principles I outlined—however, it still remains the bitcoin blue chip security because of its high dividends to share price ratio which competes with even Coinlenders excessive +25%APR on Deposits.

[gambit1]

Thanks, very helpful.

So do you think I'll eventually get my money (coins) back with asic-pt through dividends?

[Rannasha]

Thanks, very helpful.

So do you think I'll eventually get my money (coins) back with asic-pt through dividends?

That's the million dollar (or BTC) question.

ASICMiner currently pays dividends around 0.5% of share price per week, which means it'll take 4 years to get the money back from dividends. On the other hand, if the company keeps doing okay, the resale price of the shares won't go to zero, so you won't need to regain all your investment with dividends.

What price is right for ASICMiner (or other stocks) is extremely hard to say.

[gambit1]

Thanks Rannasha

I think the companies shares will eventually go to zero because all the coins will be mined. That could be in as little as 10 years as I understand it.

That is a drawback compared to regualar equities. Google could be around in 20 years. None of those mining companies will.

[ArcticWolf]

Actually the projected time for all coins to be mined out is approximately 130(ish) years.

[Streets 2.0]

Thanks Rannasha

I think the companies shares will eventually go to zero because all the coins will be mined. That could be in as little as 10 years as I understand it.

That is a drawback compared to regualar equities. Google could be around in 20 years. None of those mining companies will.

This is not the way to look at it when you consider transaction fees.  When you understand mining at its whole, check back

[Streets 2.0]

Thanks Rannasha

I think the companies shares will eventually go to zero because all the coins will be mined. That could be in as little as 10 years as I understand it.

That is a drawback compared to regualar equities. Google could be around in 20 years. None of those mining companies will.

This is not the way to look at it when you consider transaction fees.  When you understand mining at its whole, check back

Sorry double post

[Exocyst]

Thanks, very helpful.

So do you think I'll eventually get my money (coins) back with asic-pt through dividends?

That is a less important question than it would be if you we're buying a mining bond (a certain amount of hashing power)—with ASICMINER, buying shares means you believe that they will continue meet their mining targets and distribute high dividends (>25% APR dividend/share price). If they meet their targets, then the shares should hold their value and you will have earned substantial dividends. If targets are not net, shares may lose value, and you would have been better off investing in a Coinlenders CD, which—barring Coinlenders defaulting—would return your initial investment plus 25% APR yield.

[gambit1]

Interesting and informaive.

You described coinlenders returns as excessive in a previous post. Do you mean you think they are unsustainable>

[Exocyst]

Interesting and informaive.

You described coinlenders returns as excessive in a previous post. Do you mean you think they are unsustainable>

No, I didn't mean unsustainable—Coinlenders adjusts the yield on their deposits and their fixed term CDs based on expected income. I just meant 25% APR is an unbelievable return on investment in real world banking investments.

[🏰 TradeFortress 🏰]

Actually, if you take a look here, http://en.wikipedia.org/wiki/List_of_countries_by_central_bank_interest_rates you'll see that many inflation ridden countries have very high central bank interest rates.

Yields are greater in BTC because of the risk in investments - you can't dispute that it is risker to invest in BTC. Some of the risks are about Bitcoin itself, as well as the regulatory barriers. BTCUSD can also be very unpredictable. Sure, you might get 25% more BTC in a year, but what if BTCUSD halves doing that year? The instability adds a premium for those who want real returns.

Not the mention the CP risk - I minimize CP risk for CoinLenders by doing everything myself, but all PTs carry a CP risk of the PT issuer, AND the exchange.

[gambit1]

I bought some more mining shares then. And may god have mercy on my soul. 

[MikeMark]

I bought some more mining shares then. And may god have mercy on my soul. 

Recommend you read this thread:

https://bitcointalk.org/index.php?topic=212021.0

It covers some important topics and details various points of view.

Caveat Emptor! 

-MikeMark

[thy]

Actually the projected time for all coins to be mined out is approximately 130(ish) years.

The official time is that the coins should be all mined out around 2140, but as the hashrate for a majority of time will be higher than the avg rate the previous 14 days or the difficulty will be raising most of the time, therefore there will be a slight overproduction of coins. 2016 blocks will be produced faster than every 14 days on avg so it will probably take quite a bit less than 27 years to produce all the remaining coins, so maby sometime between 2035-2037 or so there will be no more coins to mine.

[🏰 TradeFortress 🏰]

Actually the projected time for all coins to be mined out is approximately 130(ish) years.

The official time is that the coins should be all mined out around 2140, but as the hashrate for a majority of time will be higher than the avg rate the previous 14 days or the difficulty will be raising most of the time, therefore there will be a slight overproduction of coins. 2016 blocks will be produced faster than every 14 days on avg so it will probably take quite a bit less than 27 years to produce all the remaining coins, so maby sometime between 2035-2037 or so there will be no more coins to mine.

That will not happen. It might be maybe 1-3 years before, with the current difficulty adjustment it would not be practical for all the coins to be mined 8x faster?

[thy]

Actually the projected time for all coins to be mined out is approximately 130(ish) years.

The official time is that the coins should be all mined out around 2140, but as the hashrate for a majority of time will be higher than the avg rate the previous 14 days or the difficulty will be raising most of the time, therefore there will be a slight overproduction of coins. 2016 blocks will be produced faster than every 14 days on avg so it will probably take quite a bit less than 27 years to produce all the remaining coins, so maby sometime between 2035-2037 or so there will be no more coins to mine.

That will not happen. It might be maybe 1-3 years before, with the current difficulty adjustment it would not be practical for all the coins to be mined 8x faster?

Oups, saw my misstake, i thought coins was supposed to run out in 2040 not 2140....
lets say sometime between 2118 and 2129 then instead, thats quite some time to keep mining coins then, not that people will produce any significant amounts of new coins the last years there thou...