[Havelock] Bitcoin Difficulty Derivative (BDD)

[twentyseventy]

Round 3, Period 9, Day 3 Report - June 11, 2016

Balance Post Divs: BTC 19.63414122

Total Units: 291

NAV/U: BTC 0.06747127

Round 3, Period 9, Day 4 Report - June 12, 2016

Balance Post Divs: BTC 19.51369596

Total Units: 292

NAV/U: BTC 0.06682772

Round 3, Period 9, Day 5 Report - June 13, 2016

Balance Post Divs: BTC 19.39197272

Total Units: 293

NAV/U: BTC 0.06618420

[twentyseventy]

Round 3, Period 9, Day 6 Report - June 14, 2016

Balance Post Divs: BTC 19.20539756

Total Units: 293

NAV/U: BTC 0.06554743

[twentyseventy]

Round 3, Period 9, Day 7 Report - June 15, 2016

Balance Post Divs: BTC 19.01750838

Total Units: 293

NAV/U: BTC 0.06490617

[twentyseventy]

Round 3, Period 9, Day 8 Report - June 16, 2016

Balance Post Divs: BTC 18.82961920

Total Units: 293

NAV/U: BTC 0.06426491

[Sylv88]

hi,

this might be a stupid question, but what happens to B.mine when Block halving occurs? or is it expected that this round will be over before the block halving event?

[twentyseventy]

Round 3, Period 9, Day 9 Report - June 17, 2016

Balance Post Divs: BTC 18.64173002

Total Units: 293

NAV/U: BTC 0.06362365

Round 3, Period 9, Day 10 Report - June 18, 2016

Balance Post Divs: BTC 18.45384084

Total Units: 293

NAV/U: BTC 0.06298239

Round 3, Period 9, Day 11 Report - June 19, 2016

Balance Post Divs: BTC 18.26595166

Total Units: 293

NAV/U: BTC 0.06234113

Round 3, Period 9, Day 12 Report - June 20, 2016

Balance Post Divs: BTC 19.81017782

Total Units: 322

NAV/U: BTC 0.06152229

[twentyseventy]

hi,

this might be a stupid question, but what happens to B.mine when Block halving occurs? or is it expected that this round will be over before the block halving event?

Not a stupid question! I've actually been meaning to make a post about this - thank you for asking.

The MINE daily payout is determined by the following formula:
B.MINE Hash Rate * Block Reward * 86400 * ((65535 / 2^48 )/Difficulty)

Up until now, the Block Reward has been 25 BTC per block; this will be halving to 12.5 BTC per block, so the MINE payout will decrease by half!

However - this does not mean that MINE is necessarily worth half of its current value. See below for why.

At the estimated next difficulty to be set tomorrow (appx 209,538,114,804), the MINE payout per day will be just about dead on .0006 BTC. The halving is happening in about 19 days, so there will be one more difficulty change before then, but we'll just assume that difficulty is going to stay at that level for simplicity's sake.

At the current NAV/U, 0.06152229, this gives us just over 102 days of dividend at that MINE payout per day (.06152229 / .0006 = 102.53). Assuming that the difficulty stays around the same point, that gives us 102-19 days = 83 days of MINE dividend days left on the day of Halving.

At this point, the MINE payout per day will be halved, which will automatically give us double the amount of days left! Here's the math:

On the estimated halving date, the NAV/U will be .05012229. Pre-halving, this is .0512229 / .0006 = 83.53 days of MINE payouts left at .0006 per Day. With the payout being halved to .0003 per day, this give us .05012229 / .0003 = 167.08 days of MINE payouts left!

The threshhold for SELL to receive a dividend requires that there be in excess of 180 Days of Dividends at the difficulty change, so there would still need to be decrease in difficulty for that to happen.

This is why MINE isn't necessarily worth half of its current value when the halving occurs - assuming that difficulty keeps doing what it's been doing for a while now (which is NOT guaranteed), decreasing or increasing slowly, then MINE would still pay out all of the NAV/U value, albeit at a slower pace.

TL;DR: The MINE payout, since it's determined in part by the block reward, will be halved at the Halving. However, this just means that MINE will pay out at a slower rate, not that it's value is halved.

[twentyseventy]

Round 3, Period 9 End Report - June 9, 2016

Previous Units              289
EXCH Sold                   34
Less Buybacks              0
New Total Units        323

Previous Balance          20.11086199
Gross Sales of EXCH      2.21269689

Less Fees                    0.00885079
Less Dividends              2.45153698
Less Buybacks              0
Less Mgmt Fee              0.12331207
Net Balance            19.73985904

End of Period NAV/U     0.06111411

New Difficulty                  209,453,158,595
New Daily Dividend         0.00060026
New Reserve per Unit        0.10804680

NAV/U less New Reserve = 0.06111411 - 0.10804680 = -0.04693269

SELL Dividend                 0 (Because there are less than 180 days of dividends on hand)

Days of Dividends On Hand   101.81

[twentyseventy]

Round 3, Period 10, Day 0 Report - June 20, 2016

Balance Post Divs: BTC 19.73502698

Total Units: 323

NAV/U: BTC 0.06109915

[twentyseventy]

Round 3, Period 10, Day 1 Report - June 22, 2016

Balance Post Divs: BTC 19.66215939

Total Units: 325

NAV/U: BTC 0.06049895

[twentyseventy]

Round 3, Period 10, Day 2 Report - June 23, 2016

Balance Post Divs: BTC 19.82650560

Total Units: 331

NAV/U: BTC 0.05989880

[twentyseventy]

Round 3, Period 10, Day 3 Report - June 24, 2016

Balance Post Divs: BTC 20.75461570

Total Units: 350

NAV/U: BTC 0.05929890

[twentyseventy]

Round 3, Period 10, Day 4 Report - June 25, 2016

Balance Post Divs: BTC 20.72049276

Total Units: 353

NAV/U: BTC 0.05869827

[twentyseventy]

Round 3, Period 10, Day 5 Report - June 26, 2016

Balance Post Divs: BTC 20.56644095

Total Units: 354

NAV/U: BTC 0.05809729

Round 3, Period 10, Day 6 Report - June 27, 2016

Balance Post Divs: BTC 20.46820035

Total Units: 356

NAV/U: BTC 0.05749494

[abramelin582]

Just crunching some numbers let me know what you guys think.

Mining with an antminer S9 vs buying B.Exch:

Antminer hashrate is 12.93 Th/s, one B.mine contract is equal to .25Th/s, so one B.mine contract is equal to 1/51.72. The S9 cost 3.05 Btc; if you divide that by 51.72 you get .05897. So that would be the bitmain equivalent cost of .25Th/s, only you don't need to buy a psu, pay pool fees, or pay the electricity cost to run the miner.
   Currently you can buy the B.exch contract for .05945 which gives you one B.mine contract and one B.sell contract meaning you are paying .00048  premium for the B.sell contract and getting the B.mine contract for a discount to bitmain when you consider the cost of electricity and set up.
    It looks as though when the block reward halving comes the fund will have just about 180 days of mining dividend in it (the threshold for the sell dividend payout). So any new purchases of the B.exch should result in a payout for the B.sell holders. Each purchase of B.exch will add .05945 to the fund if you divide that by 358 (contracts outstanding) you get a .000166 divided payout for each share of B.sell you own if difficulty stays the same. If this raises then the payout will be higher.
    In closing it looks to me that if you want to earn BTC from mining then you are better off buying B.exch then buying an antminer S9, it's cheaper when you consider pool fees and electricity, and comes with a built in hedge in case the difficulty rises.

    

[twentyseventy]

Round 3, Period 10, Day 7 Report - June 28, 2016

Balance Post Divs: BTC 20.42619733

Total Units: 359

NAV/U: BTC 0.05689748

[twentyseventy]

Just crunching some numbers let me know what you guys think.

Mining with an antminer S9 vs buying B.Exch:

Antminer hashrate is 12.93 Th/s, one B.mine contract is equal to .25Th/s, so one B.mine contract is equal to 1/51.72. The S9 cost 3.05 Btc; if you divide that by 51.72 you get .05897. So that would be the bitmain equivalent cost of .25Th/s, only you don't need to buy a psu, pay pool fees, or pay the electricity cost to run the miner.
   Currently you can buy the B.exch contract for .05945 which gives you one B.mine contract and one B.sell contract meaning you are paying .00048  premium for the B.sell contract and getting the B.mine contract for a discount to bitmain when you consider the cost of electricity and set up.
    It looks as though when the block reward halving comes the fund will have just about 180 days of mining dividend in it (the threshold for the sell dividend payout). So any new purchases of the B.exch should result in a payout for the B.sell holders. Each purchase of B.exch will add .05945 to the fund if you divide that by 358 (contracts outstanding) you get a .000166 divided payout for each share of B.sell you own if difficulty stays the same. If this raises then the payout will be higher.
    In closing it looks to me that if you want to earn BTC from mining then you are better off buying B.exch then buying an antminer S9, it's cheaper when you consider pool fees and electricity, and comes with a built in hedge in case the difficulty rises.

    

First off, Buying EXCH and holding it will result in a loss - you're paying a 3% premium over NAV/U, so you'll come out behind if you just sit on it. You need to choose to hold either MINE or SELL and sell the other (or simply just buy one or the other outright).

If you look at my halving calculations above, you'll see that there will likely be no divided because there will still be less than 180 days of dividends. Also, you're assuming that each purchase of EXCH doesn't up the total number of contracts, which it does - you can't just divide .05945 by the current number of contracts - it adds to the number of contracts.

[abramelin582]

When I run a Bitcoin mining profitability calculator on the s9 at my electricity cost with a conservative 6.5% difficulty increase it tells me that it will never earn a roi. It looks as though with the current volume on b.exch, holding b.mine should earn a roi before the fund depletes. Since one share of b.exch cost about the same as buying a comparable h/s from antminer and comes with a built in hedge incase the difficulty skyrockets, it looks to be a better option. I'm not proposing that somehow buying b.exch will make you rich with a risk free investment, I'm just saying it looks like a better option than buying a antminer s9 at their current cost and at a lower cost of entry. I could invest over 3 btc for an antminer that will never earn a roi or I can put up .06 btc and hope for a return from the fund.

[twentyseventy]

When I run a Bitcoin mining profitability calculator on the s9 at my electricity cost with a conservative 6.5% difficulty increase it tells me that it will never earn a roi. It looks as though with the current volume on b.exch, holding b.mine should earn a roi before the fund depletes. Since one share of b.exch cost about the same as buying a comparable h/s from antminer and comes with a built in hedge incase the difficulty skyrockets, it looks to be a better option. I'm not proposing that somehow buying b.exch will make you rich with a risk free investment, I'm just saying it looks like a better option than buying a antminer s9 at their current cost and at a lower cost of entry. I could invest over 3 btc for an antminer that will never earn a roi or I can put up .06 btc and hope for a return from the fund.

This statement means that you do not understand this fund. Purchasing and holding B.EXCH (which is just one MINE and one SELL) will net you zero profit. You need to hold MINE or SELL and sell the one that you don't want. MINE could net you a profit, or SELL could (depending on the difficulty), but holding EXCH never will.

Don't purchase MINE or SELL above the NAV/U and don't purchase and hold EXCH - you will have no profit from this.

[twentyseventy]

Round 3, Period 10, Day 8 Report - June 29, 2016

Balance Post Divs: BTC 20.26698641

Total Units: 360

NAV/U: BTC 0.05629718