0.19 J/GH - CoinBau looks for investors in German mining technology

[Hermann1337]

really nice to see something like this coming from germany! Hope this will rise bitcoin awareness in our country

[Chris_Sabian]

just want to make sure i understand this right.  you are looking for a min of $10k investment now for hardware not fully built yet, and you will start paying an unknown amount of dividend in 3 years?

is my understanding correct?  

In principal yes, your understanding is correct. However, our projections expect about 33% of return on your investment in year 3. Additionally, you have the shares of the company which have an additional and much higher value than you payed for them in case of success and which you can sell, too.

BR,
Markus

I hope that you understand that in BitcoinLand, everything moves extremely fast.  The difficulty of the network has increased by almost 1000x with the price up 5x in the last year. 

In 3 years, who knows what the difficulty and price will be. 

Sorry if you are a legit company looking for real investors, but noone here will invest in something with a payout in 3 years.

[FUR11]

Is it possible for you to give us a forecast of the hashrate/difficulty you expect over the coming year(s), in order to gauge whether your estimates are realistic? Have they disclosed such an estimate by now?

[Markus, CoinBau]

Hello,

we have not disclosed detailed information about our expectations of the hashrate development in we will do so only under NDA since these are business related internal information.
However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation. And we expect to break the 1000 PH/s wall within the next 18 months.

BR
Markus

[FUR11]

Hello,

we have not disclosed detailed information about our expectations of the hashrate development in we will do so only under NDA since these are business related internal information.
However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation. And we expect to break the 1000 PH/s wall within the next 18 months.

BR
Markus

Phew... careful! I guess the most modest predictions will lead us to a 1000 PH/s hash rate in 9 months. I think you've run the numbers, but just to illustrate:

Code:

FinalHashrate = CurrentHashrate*((MultiplierIncreasePerDifficulty^2.5)^Months)

Given an increase of 10% (1.1x) we'd be at:
835 PH/s after 6 months. And 1707 PH/s after 9 months!!! In 18 months we'd have a whooping 14'578 PH/s (14 times 1000 PH/s!!!)

Let's just say we're more in the lines of a 15% (1.15x) increase:
1627 PH/s after 6 months, 4642 PH/s after 9 months!!! and 107'753 PH/s after 18 months (107 times 1000 PH/s!!!)

I don't want to run all the numbers for a continuing 20% increase (like we saw at least with every increase in late 2013) - it's scary, 3000 PH/s after a mere 6 months. Don't mean to scare you, just wanted to make sure you did think that through. Even miners with an academic degree often get punched in the guts by an exponential increase of the difficulty. Feel free to contact me if you've any further questions!

[brontosaurus]

Hello,

we have not disclosed detailed information about our expectations of the hashrate development in we will do so only under NDA since these are business related internal information.
However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation. And we expect to break the 1000 PH/s wall within the next 18 months.

BR
Markus

Markus,

I don't mean to be rude but asking for an NDA to be signed is .... crazy. No one on this planet can forecast what the hashrate will be or how the BTC value will behave and I'm not sure why you would not want to give out the information. If you want people to consider investing you have to give them the data on which you have made your predictions. otherwise how can they make an objective decision about whether your plan is realistic or not? The more you withhold this data, the more predictions people will make and that is not going to help you one bit.

What I can tell you with a fair degree of certainty is that the 1000PH barrier will be broken long before 18 months from now. Don't know if you read about it but Bitfury recently secured $20m of investment and I'm guessing most of that will be going on building hashing capacity, probably based on their new chip and they'll be riding the profitability wave for at least 6 months before yours starts to get online and reinvesting it in the same manner. (as will others)

And of course you must not forget that according to their resident clown, Asicminer are going to 'crush' the competition, (I haven't stopped laughing about that comment since I read it) supposedly with 150PH per month deployed according to another one of their disciples. There's not much sign of that yet but you can expect that a lot of their chips will find their way into the system along with ones from all the other vendors.

[Chris_Sabian]

I think that OP and the company clearly do not understand bitcoin / bitcoinland. 

Asking for a NDA for predicted hashrates, dividends after 3 years, huge investment in capital with limited sources to back it up, means a huge 'NO' for me.

Move along.

[RoadStress]

However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation.

I have to warn you that you might be wrong here. I am expecting the hash rate development over the point of power cost-bitcoins produced equilibrium. In the future I see mining operations running on red and paying more for power than the bitcoins produced, but earning from other services. So don't be so sure that hashrate deployment will stop so soon.

[intron]

However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation.

I have to warn you that you might be wrong here. I am expecting the hash rate development over the point of power cost-bitcoins produced equilibrium. In the future I see mining operations running on red and paying more for power than the bitcoins produced, but earning from other services. So don't be so sure that hashrate deployment will stop so soon.

I second that.

[brontosaurus]

However, we can state this: we expect an ongoing development of the hash rate until the point where the mining hardware cannot mine efficiently even for pretty low energy costs including a deprecation.

I have to warn you that you might be wrong here. I am expecting the hash rate development over the point of power cost-bitcoins produced equilibrium. In the future I see mining operations running on red and paying more for power than the bitcoins produced, but earning from other services. So don't be so sure that hashrate deployment will stop so soon.

Spot on, because if miners stop mining then no one gets their transactions verified. Yesterday over 3.3 million bitcoins were sent, if you assume that people will be willing to pay 0.1% of the transaction value then assuming that this value of transactions stays the same, at power parity miners would be effectively competing for 3,300 per day, roughly $1.6m as opposed to the current mining reward of about $1.8m.

Still a lot to play for though I don't know how the 0.1% would/could be shared out. And I don't think many would object to paying 0.1%, would they?

[runeks]

Here's my opinion: 10% per year (30% after 3 years) isn't bad, but no one knows how much the investment will return. When a prospectus says the goal is 10%/yr, I assume it's more likely to be 5%/yr. Ie. I would like some margin of error for their claim, and at 5%/yr it's way too risky (I'd rather buy Intel or Berkshire Hathaway stock, which have roughly the same year-on-year return).

Intel has proven that it can get a 5-10% return per year on capital: http://ycharts.com/companies/INTC/pe_ratio

This company is simply claiming it can get 10%/year.

I'd much rather invest in an established company with a 5%/yr return than a new, unknown company who claims 10%/yr returns.

[ensurance982]

Here's my opinion: 10% per year (30% after 3 years) isn't bad, but no one knows how much the investment will return. When a prospectus says the goal is 10%/yr, I assume it's more likely to be 5%/yr. Ie. I would like some margin of error for their claim, and at 5%/yr it's way too risky (I'd rather buy Intel or Berkshire Hathaway stock, which have roughly the same year-on-year return).

Intel has proven that it can get a 5-10% return per year on capital: http://ycharts.com/companies/INTC/pe_ratio

This company is simply claiming it can get 10%/year.

I'd much rather invest in an established company with a 5%/yr return than a new, unknown company who claims 10%/yr returns.

Yes, exactly. I'm also quite puzzled that those people don't seem to show up in this thread anymore. Maybe they've realized their numbers are off? I think this isn't exactly confidence-building in my opinion. Also, FUR11 is right with his estimates about the increase in hash rate!

[Markus, CoinBau]

Hello all,

@ensurance982: we did not post the last week because we were very busy keeping contact to interested investors. But we are still here and it seems it is time to respond.

There have been heavy discussions about the hasrate development. Fur111 predicts a hashrate development of up to 107'753 PH/s n 18 months. Do you know what this means? Let' summarize it in numbers:
- the prize per GH/s is now 0.87$ at the cheapes seller. But let's assume it goes down to 0.5$ per GH/s. Bringing 100'000 PH/s into the market would require 50 billion USD investment in the Bitcoin mining market. A market which currently brings 650 million USD per year. Bitfury raised 'only' 20 million USD. So, where do you find an investor who spends 50 billion USD which he will never see again? It is impossible for a market to grow exponentially without end, at some point it must end, the question is where. About this point we can discuss but not in such an unrealistic manner as 100'000 PH/s.
- the point of fees for mining is a legal one raising the hash rate above the limit we expect. BUT: we would benefit from this in the same way as all other miners would, too. So, this would have no negative influence on the investment.


The investment:
The

Here's my opinion: 10% per year (30% after 3 years) isn't bad, but no one knows how much the investment will return. When a prospectus says the goal is 10%/yr, I assume it's more likely to be 5%/yr. Ie. I would like some margin of error for their claim, and at 5%/yr it's way too risky (I'd rather buy Intel or Berkshire Hathaway stock, which have roughly the same year-on-year return).

Intel has proven that it can get a 5-10% return per year on capital: http://ycharts.com/companies/INTC/pe_ratio

This company is simply claiming it can get 10%/year.

I'd much rather invest in an established company with a 5%/yr return than a new, unknown company who claims 10%/yr returns.

This is a quite simple look, you have forgotten a number of things:
1. this is the dividend after 3 years. But one year later you have another 30 % dividend payout, and one year later again. So, over 5 years you get roughly 20% per year as dividend becoming better with every year.
2. you ingore the share value. With a turnover of 50 million USD and a profit of 20 million USD after 3 years the company is worth much much more than the initial value. So your real return rate is the rise in the share value AND the dividend payout resulting in a much higher return rate after 3 years.

Best regards
Markus

[pascal257]

But let's assume it goes down to 0.5$ per GH/s (what is pretty close to the limit).

Could you elaborate on how you got to this number?

[jimmothy]

But let's assume it goes down to 0.5$ per GH/s (what is pretty close to the limit).

Could you elaborate on how you got to this number?

I'd also like to know how asicminer broke the theoretical limit on 40nm chips (currently offering ~$0.42/gh overclocked)

[cedivad]

I'd also like to know how asicminer broke the theoretical limit on 40nm chips (currently offering ~$0.42/gh overclocked)

LOL.

[RoadStress]

But let's assume it goes down to 0.5$ per GH/s (what is pretty close to the limit).

Could you elaborate on how you got to this number?

Maybe with the current technology...even if AM broke that limit. I still see a Markus who has no idea what he is talking about...which makes me sad.

[cedivad]

Thinking that AM is the only one that can sell hardware at less than 50c and still make a profit would be incredibly naive (especially since that you know the AM case already).

[ensurance982]

But let's assume it goes down to 0.5$ per GH/s (what is pretty close to the limit).

Could you elaborate on how you got to this number?

Maybe with the current technology...even if AM broke that limit. I still see a Markus who has no idea what he is talking about...which makes me sad.

Yeah, simply assuming companies like AM achieve that price with 40nm node sizes, imagine what they'll do with node sizes of 20nm or even 14nm, maybe below that some day... And of course further optimizations... I'm certain we will see single digit cent costs in 2015.

[RoadStress]

Thinking that AM is the only one that can sell hardware at less than 50c and still make a profit would be incredibly naive (especially since that you know the AM case already).

I wouldn't go that far. I don't think they are making a profit out of that cost. They need to get rid of the 40nm chips asap.