Gigamining / Teramining

[jamesg]

Hello!
I manage the BLUECHIP mutual fund on GLBSE. The fund owns 40 shares of GIGAMINING. What is the plan to stem the drastic loss that the share price is taking? I recommend buying back shares. I pray that the plan is not to let the share price keep dropping until it reaches 0. Are there any updates on the ASIC upgrade?

If the price of my stock were dropping this fast, I would be more proactive. I would give my investors more frequent updates to build confidence. I am kind of stuck at the moment. I don't want to dump the shares at a loss, but the lack of information makes it hard to make a decision. I recommend addressing this issue, and doing something to restore investor confidence, if possible. I read the earlier comments about not being willing to discuss personal finances. In my opinion, the bottom line is this: if your company is on the verge of failing, there can be no items that are not up for discussion unless you want the enterprise to fail. If GIGAMINING truly is a venerable enterprise (which I thought it was, that's why I invested in it) then DO SOMETHING. SAY SOMETHING. Don't just sit there and let it drop to zero.

A lot of the responses already cover most of your questions. When I read your post I sensed a level of panic, and I would like to add two things to be mindful of:

1. A sudden drop in share price is not definitively caused by disruptions to the business process. If a share price falls, the underlying backing will not just shrivel up and die. However, if an underlying backing hits trouble, it is quite likely that the share price will act accordingly.

2. With #1 said; If you subscribe to the ideas of value investing - think of a sudden drop in share price as an 'on sale' opportunity. If you bought a security @ .9 and it falls to .45 and the fundamentals are approximately the same, then the security should appear much more appealing. Many savvy investors will wait for such market occurrences and will gobble up as many cheap shares as they can.

Consider this quote: "Price is what you pay, value is what you get." -Warren Buffett

If you appreciate what I have said, I encourage you and anyone looking to gain an immense amount of knowledge about investing to acquire a copy of "Security Analysis." It was written by Ben Graham in 1934 and the book is still entirely applicable to the markets of today's modern society. The most recent version has a forward by Warren Buffett (one of Ben Grahams students) and commentary by some well respected minds within the economics community. I also recommend "The Intelligent Investor" which was written by Mr. Graham and covers much of the same material but in a less detailed and more easily understandable fashion. Even without any formal schooling in economics, the writings of Ben Graham can take someone a very long way.

*It should be noted, as gigavps said, that GIGAMINING is a bond for a fixed rate of hashing power. With a likely continual increase in difficulty, the ROI will likely decay accordingly. There is a long list of variables to consider before being able to determine what kind of value a share represents. Much of Graham's focus in his writings was on commons stocks and not bonds, as they are two different animals entirely.

Hi Factory,

Thank you for taking the time to reply. I enjoyed reading your post and will most definitely look into the books you recommended.

Best,
gigavps

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[tmfp143]

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[P4man]

Hi P4man,

Are you recommending that I shouldn't even offer an upgrade?

Thanks,
gigavps

Where did you read me saying anything like that? Ive commended you for it plenty times, but it doesnt change the fact that its almost certainly not going to be nearly enough to offset bond holder losses. Are you recommending people buy and hold your bonds at current market price?

[boonies4u]

I don't see why fixed Mhash/s bonds get so much shit. You get dividends on a regular basis. You get the choice of what to do with your dividends. If you don't realize that you need to reinvest, just as miners have to reinvest, to stay competitive, you're going to make less and less each difficulty adjustment.

The bonds themselves might be worth less by the time you wish to sell, but the dividends you've received over time (and hopefully reinvested in something) need to go in the calculation of how much value has been created/lost.

[jamesg]

Where did you read me saying anything like that? Ive commended you for it plenty times, but it doesnt change the fact that its almost certainly not going to be nearly enough to offset bond holder losses. Are you recommending people buy and hold your bonds at current market price?

Hi P4man,

 It seems to me that more often than not, you are nay saying mining bonds, pointing out the problems rather than the solutions. Are you recommending that others just buy and hold BTC? Are you recommending a reinvestment strategy?

I am simply asking what your recommended course is for potential readers. What do you see as the solution?

Best regards,
gigavps

[P4man]

Hi P4man,

 It seems to me that more often than not, you are nay saying mining bonds,

True,  Ive been saying this for 4 months.  Was I wrong? A quick glance at GLSBE suggests I was not.

pointing out the problems rather than the solutions.

If you dont buy them, there is no problem and no need for a solution. The only problem I guess is uneducated buyers paying too much, so I try to educate them (and borrow bonds from those who disbelief me).

Are you recommending that others just buy and hold BTC? Are you recommending a reinvestment strategy?

Compared to buying or holding fixed MH mining bonds, clearly buying or holding BTC is definitely the smarter choice. If you can short these bonds, even better. Will you lend me some of yours?

[jamesg]

Compared to buying or holding fixed MH mining bonds, clearly buying or holding BTC is definitely the smarter choice.

So, in essence, you are saying that mining bonds in general are a bad idea? If so, should I even offer a paid upgrade? Am I only furthering the detriment of possible holders of the bonds?

If you can short these bonds, even better. Will you lend me some of yours?

No.

[P4man]

So, in essence, you are saying that mining bonds in general are a bad idea?

Why do you keep posting strawman arguments Giga? Can you not read? English is my 3rd language, so perhaps I do not make myself clear? I have been saying for almost half a year they are terribly overpriced. Thats whats wrong with them.

If so, should I even offer a paid upgrade? Am I only furthering the detriment of possible holders of the bonds?

The ASIC switch is impossible to predict. If BFL is the first on the market and you get your gear before most others, the paid upgrade might be worth it. If not,  it will be money down the drain. Its not something I would want to bet on, and clearly, not something you want to bet on otherwise you would not securitise your asic revenue.

No.

Why not?

[conspirosphere.tk]

So, in essence, you are saying that mining bonds in general are a bad idea?

Fixed Mhs/s bonds are

If so, should I even offer a paid upgrade? Am I only furthering the detriment of possible holders of the bonds?

Maybe you could even consider a free continuous upgrade, given that Gigamining has not been the best paying mining bond around from some time.
Someone (like FPGAMINING) are moving towards a mixed reward (where a variable part of income get reinvested in capital upgrades -therefore increasing Mhs per bond- and part distributed as dividends). This kind of solution seems the best IMHO.

[sunnankar]

I have been saying for almost half a year they are terribly overpriced. Thats whats wrong with them.

If you think they are so terribly overpriced then why not borrow some and short them? At least put some money where your opinion is.

[P4man]

I have been saying for almost half a year they are terribly overpriced. Thats whats wrong with them.

If you think they are so terribly overpriced then why not borrow some and short them? At least put some money where your opinion is.

Ive been doing just that, and if you read what I wrote, Im still doing it: "

Im pretty sure they are still grossly overpriced today, so anyone who believes otherwise, lend me your bond, so I can short it. I will give you a nice bonus on your dividends if you let me borrow it for 3-6 months. PM me for details.

"

[conspirosphere.tk]

Im pretty sure they are still grossly overpriced today, so anyone who believes otherwise, lend me your bond, so I can short it. I will give you a nice bonus on your dividends if you let me borrow it for 3-6 months. PM me for details."

So one would get back his own bonds even more devalued after your 'cure'?
Thanks for another losing proposition.

[P4man]

Im pretty sure they are still grossly overpriced today, so anyone who believes otherwise, lend me your bond, so I can short it. I will give you a nice bonus on your dividends if you let me borrow it for 3-6 months. PM me for details."

So one would get back his own bonds even more devalued after your 'cure'?
Thanks for another losing proposition.

They  will get the bonds back and all dividends plus a bonus. Its clearly better than just keeping the bond. Should be a no brainer for anyone who thinks these bonds are reasonably priced.

[tmfp143]

t

[jamesg]

So my question is this, what is the psychological effect that is causing people to sell instead of buy? Gigamining pays outstaning dividends (though the yield is dropping slowly) so why aren't people snapping it up like candy? The price is based on demand, not on difficulty, correct?

Hi tmfp143,

Pirateat40 not paying back his lenders in a timely fashion is causing a shift of perception in the entire BTC economy. Those who once felt more secure purchasing assets or lending bitcoins are now becoming more paranoid and are wanting to keep those same bitcoins back in their possession. Bitcoins have also appreciated a great deal in price so I believe these things combined are leading to a credit squeeze. The result is people wanting to sell their Gigamining bonds, even at a loss, to secure the funds in their wallet.

I do believe this is a temporary effect but it remains to be seen how long it will last or how deep it will be.

Best,
gigavps

[tmfp143]

t

[puffn]

So my question is this, what is the psychological effect that is causing people to sell instead of buy? Gigamining pays outstaning dividends (though the yield is dropping slowly) so why aren't people snapping it up like candy? The price is based on demand, not on difficulty, correct?

Hi tmfp143,

Pirateat40 not paying back his lenders in a timely fashion is causing a shift of perception in the entire BTC economy. Those who once felt more secure purchasing assets or lending bitcoins are now becoming more paranoid and are wanting to keep those same bitcoins back in their possession. Bitcoins have also appreciated a great deal in price so I believe these things combined are leading to a credit squeeze. The result is people wanting to sell their Gigamining bonds, even at a loss, to secure the funds in their wallet.

I do believe this is a temporary effect but it remains to be seen how long it will last or how deep it will be.

Best,
gigavps

Exchange rate goes up, hash rate goes up, difficulty goes up, earnings per mhash go down, and price goes down. Not exactly too hard to predict.

I think that a lot of people got used to seeing the high price of Gigamining for a while, and wouldn't sell for less even as demand at those prices fell. It is a clear economic phenomenon that people stick to price. Throw that in with people not wanting to realize a loss, and now being forced to to meet liquidity requirements.

Anyone who listened to that noise about Giga and pirate is crazy. I think YARR's backing needing to be liquidated had a lot to do with this drop too.

[sunnankar]

Are the Gigamining shares going to bounce back up in price? I just don't get it, unless I am missing something. I don't see any other security on GLBSE dropping so fast, that is the part that I don't understand. Is this all just continued effect from the Pirate40 scandal??

That was my first thought, but if Gigamining is a solid operation (which I believe it is), then its share price should recover, it should not continue plummeting. So my question is this, what is the psychological effect that is causing people to sell instead of buy? Gigamining pays outstaning dividends (though the yield is dropping slowly) so why aren't people snapping it up like candy? The price is based on demand, not on difficulty, correct?

The market, where able and willing buyers and sellers meet, will determine whether the price bounces back up or continues to fall.

Perhaps you have not done adequate due diligence as there are several reasons not discussed so far that could be causing the decline.

One reason is Gigavps has, with the buyback clause, a call option on bonds which acts like a short position. The lower the price goes the smaller his contingent liability. Consequently, there is tremendous financial incentive for him to drive the price down, even to worthless, and then execute the buyback clause to extinguish his liability.

Default is the failure to pay in full on time as agreed. A second reason is the market may be beginning to price in a default which would go to your premise of whether Gigamining is a solid operation.

I raised some questions to Gigavps previously about the financial condition of the GIGAMINING venture.

From his answers we are to understand there is (1) 160Gh/s mining on GPUMax at 114% PPS (Pirate's related pool which appears to have some problems). (2) The 160Gh/s has been paid for and so has the upgrade which has not been delivered, So there is counter-party and performance risk with BFL along with the ability to actually deliver the product as represented and on time. (3) We do not know Gigavps's expenses with running the mining equipment such as electricity, rent, insurance (if any), etc. (4) We do know that some funds 'from the gigamining offerings were used to fund [Gigavps's] BTCST account.

Since there are only 160Gh/s of equipment producing at about 182.4Gh/s at 100% PPS, additional expenses and 200Gh/s at 100% PPS liability we can deduce that Gigavps's mining production capacity is in deficit of about 18.6Gh/s to liability without accounting for electricity, rent, etc. Based on current difficulty and exchange rates this amounts to about $500+ of negative cash flow per week only taking into account the production deficit.

When asked how many bitcoins Gigavps has in his personal possession the response was 'I have spare coins to cover any short falls in the foreseeable future."

So the critical question is: How long can Gigavps continue to in full on time as agreed?

If the price rises then it indicates the market believes the 'foreseeable future' has a longer duration. As the price declines it indicates the market believes the 'foreseeable future' has a shorter duration.

The great thing about the market is those who correctly calculate profit and those who do not realize a loss.

I have no agreement, understanding or even communication with Gigavps about executing the buyback clause.

ANY BONDS TO BORROW?
Nevertheless, I am considering taking a short position of about 1,000 to 2,000 units in GIGAMINING. If anyone is willing to lend them then please PM me so we can work something out similar to ciuciu's short contract. I can easily provide sufficient collateral.

[jamesg]

So the critical question is: How long can Gigavps continue to in full on time as agreed?

Hi sunnankar,

I have stated this multiple times but I will state it again. I will continue to faithfully fulfill the terms of the contract.

As for the upcoming Teramining contract, I think there will be changes coming.

Best,
gigavps

[sunnankar]

I have stated this multiple times but I will state it again. I will continue to faithfully fulfill the terms of the contract.

As for the upcoming Teramining contract, I think there will be changes coming.

Of course.

Have any of the facts I recapped in the previous post materially changed, like Teramining terms?

ANY BONDS TO BORROW?
Nevertheless, I am considering taking a short position of about 1,000 to 2,000 units in GIGAMINING. If anyone is willing to lend them then please PM me so we can work something out similar to ciuciu's short contract. I can easily provide sufficient collateral via bitcoins to satisfy a margin requirement.