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Author Topic: Diablo Mining Company  (Read 87178 times)
DiabloD3
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July 30, 2012, 11:25:34 PM
 #301

Are you paying dividends or coupons?
Dividends are paid on profits, not revenue. To calculate profits, you cant keep ignoring the fact the bonds you hold are way under water particularly since AFAIK, those bonds are your company's only asset. You are essentially acting like the banks did before the housing bubble burst, paying dividends (and bonuses) based on profits that didnt exist because they didnt write off their toxic assets. You can keep doing that for a while, but eventually your investors will figure it out.

But what does "way under water" mean? Many of these I sold as GLBSE crashed just to buy others at a net mhash gain. As long as these bonds continue to pay out x mhash of dividends over y time period, they continue to be worth x mhash. Because they are no longer worth z BTC is a meaningless observation.

That'd be like saying the Kindle Fire sitting on my desk is under water because the Nexus 7 just came out for the same price. It still does exactly what it did before the Nexus 7 came out, the Nexus 7 coming out does not diminish the Kindle Fire in any way.

People are not buying DMC for the mining power: selling power back to the grid and leasing high density compute oriented rack space is far more profitable in the long run. I am 100% transparent with my investors. Every month I publish a list of our assets and their current market value. So, yes, my investors already did figure out whats going on: GLBSE crashing and making bonds cheaper only helps DMC in the long run.

Also, I think you need to look up the definition of "toxic asset": these assets will become toxic when they stop paying out as per contract. They are not toxic or even in trouble, it is a contract for x mhash, and I am continuing to get the x mhash as per the contract.

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July 31, 2012, 11:29:12 AM
 #302

Q 1: If you own a bond mining turd, you paid 1 BTC for, and it pays you 0.005 BTC per week, how much money did you make after 4 weeks if you sold the mining turd at 1 BTC? 
A 1: You earned 0.005x4=0.02 from divs and 0 from capital gain (minus trade commission) 
 
Now,
Q 2: If you own a mining turd, you paid 1 BTC for, and it pays you 0.005 BTC per week, but the bond price drops at the same rate, 0.005 BTC per week, how much money do you make in 4 weeks, if you sell your mining turd?
A 2: You earned  0.005x4=0.02 in 4 weeks, but you also have a capital loss of 0.005 per week for the same time period - hence your actual earnings are ≤ 0 . (minus trade commission)

Why do you want to own junk like that?

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
Sukrim
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July 31, 2012, 11:51:51 AM
 #303

You can earn 0.005 BTC per week for a longer time than the bond can loose 0.005 BTC per week on the market. At least that's the bet on going long on mining bonds as far as I understand it.

As long as Diablo doesn't actually sell (and why should he? He hasn't sold IPO shares in a long time...) the capital gain/loss is only on paper and not realized.

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P4man
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July 31, 2012, 12:11:12 PM
 #304

As long as Diablo doesn't actually sell (and why should he? He hasn't sold IPO shares in a long time...) the capital gain/loss is only on paper and not realized.

He is selling stocks in his company, not bonds. He should appropriately (de)value his company's assets instead of pretending to make profits. Yes its "only on paper" but his entire business only consists of such paper.   If you are going to keep these bonds off the books, afaik, DMC has a book value of zero.

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July 31, 2012, 12:17:58 PM
 #305

He will most likely tomorrow release an updated overview with all assets held, dividend earnings etc. and the current market value of these assets...

I'd love to see some more action towards actually getting the price up to the 1 BTC mark to get the real company started though - atm. it's not much more than a mining fund that pays out only half of the dividend... Diablo could have done location scouting in the mean time, post some nice pictures etc.

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DiabloD3
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July 31, 2012, 11:04:35 PM
 #306

Q 1: If you own a bond mining turd, you paid 1 BTC for, and it pays you 0.005 BTC per week, how much money did you make after 4 weeks if you sold the mining turd at 1 BTC? 
A 1: You earned 0.005x4=0.02 from divs and 0 from capital gain (minus trade commission) 
 
Now,
Q 2: If you own a mining turd, you paid 1 BTC for, and it pays you 0.005 BTC per week, but the bond price drops at the same rate, 0.005 BTC per week, how much money do you make in 4 weeks, if you sell your mining turd?
A 2: You earned  0.005x4=0.02 in 4 weeks, but you also have a capital loss of 0.005 per week for the same time period - hence your actual earnings are ≤ 0 . (minus trade commission)

Why do you want to own junk like that?

Why would I want to sell them? The only time I've sold them is to swap them for more mhash with another one (which I ended up basically doubling our mhash during the GLBSE crash). Owning the majority of mhash on GLBSE is conductive to the goals of DMC, even after the plan is completed.

Theres about 850 ghash out there on GLBSE, and last month's numbers put us at 11 and a half of it. If DMC owned half of that 850, I could finish the plan on the output of the bond/share dividends alone.

DiabloD3
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August 01, 2012, 01:19:12 AM
 #307

As long as Diablo doesn't actually sell (and why should he? He hasn't sold IPO shares in a long time...) the capital gain/loss is only on paper and not realized.

He is selling stocks in his company, not bonds. He should appropriately (de)value his company's assets instead of pretending to make profits. Yes its "only on paper" but his entire business only consists of such paper.   If you are going to keep these bonds off the books, afaik, DMC has a book value of zero.

Define "appropriately". Once a month I release a list of all of our assets and their current market value. Investors are free to use this information to make decisions about their investments. It can't get any more "on the books" than this.

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August 01, 2012, 06:48:58 AM
 #308

Define "appropriately". Once a month I release a list of all of our assets and their current market value. Investors are free to use this information to make decisions about their investments. It can't get any more "on the books" than this.

If you are going to pay out dividends every month, you should publish P&L statements every months, which should form the basis of a dividend payment decision anyway. Hint: not many companies think its wise to pay out any dividends at all when generating losses like you are, particularly not when the goal is incredulous growth.

As for not wanting to sell your bonds, they all have buy back clauses so the issuer can force you to to sell. The price at which they can do that is above market price, but would be a reasonable price to put in your books.

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August 01, 2012, 06:57:35 AM
 #309

Hint: not many companies think its wise to pay out any dividends at all when generating losses like you are, particularly not when the goal is incredulous growth.

Hint: A lot of companies exist for some time BEFORE handing out shares instead of being crowd funded and crowd owned.

Inflating the NAV by using the buyback prices instead of current market prices will also only help on paper - what counts are the dividends generated, as 50% of these go towards growing the fund and eventually(?) building the datacenter. I still think Diablo should focus on marketing the potential DC more than the current contingency plan with mining bonds.

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P4man
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August 01, 2012, 07:22:28 AM
 #310

Inflating the NAV by using the buyback prices instead of current market prices will also only help on paper - what counts are the dividends generated,

The price of these bonds reflects expected future earnings. If you are only going to look at yield, you should have bought greek debt.

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as 50% of these go towards growing the fund and eventually(?) building the datacenter. I still think Diablo should focus on marketing the potential DC more than the current contingency plan with mining bonds.

You actually still believe that? That he will build a datacenter? With what money, and what is he going to put in it?  Im not even sure he has more than 2 GPUs right now, and he stated will never buy BFL ASICs. Nor do I believe he would get the funds, who is going to buy more shares at $1 when he managed to burn 2/3 of his investors money in just a few months with nothing to show for it? Step back and think for a second.

DiabloD3
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August 01, 2012, 07:45:53 AM
 #311

Define "appropriately". Once a month I release a list of all of our assets and their current market value. Investors are free to use this information to make decisions about their investments. It can't get any more "on the books" than this.

If you are going to pay out dividends every month, you should publish P&L statements every months, which should form the basis of a dividend payment decision anyway. Hint: not many companies think its wise to pay out any dividends at all when generating losses like you are, particularly not when the goal is incredulous growth.

As for not wanting to sell your bonds, they all have buy back clauses so the issuer can force you to to sell. The price at which they can do that is above market price, but would be a reasonable price to put in your books.

The issuer can force me to sell through buyback, but that effectively removes those bonds off of GLBSE forever. They also cannot selectively target mine for buyback. If the market has 850 ghash, and 100 are recalled, all that does is shrink the market to 750 and make it easier for DMC to grow faster.

DiabloD3
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August 01, 2012, 07:47:46 AM
 #312

Hint: not many companies think its wise to pay out any dividends at all when generating losses like you are, particularly not when the goal is incredulous growth.

Hint: A lot of companies exist for some time BEFORE handing out shares instead of being crowd funded and crowd owned.

Inflating the NAV by using the buyback prices instead of current market prices will also only help on paper - what counts are the dividends generated, as 50% of these go towards growing the fund and eventually(?) building the datacenter. I still think Diablo should focus on marketing the potential DC more than the current contingency plan with mining bonds.

This.

Also, many tech startup companies operate at a loss (mostly through asset depreciation) for the first two years of their existence. What DMC is going through is not unusual.

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August 01, 2012, 08:08:27 AM
 #313

Can you post the DMC portfolio, with div's received, this time.
If your bookkeeping is in order, this is a simple task.

Cheers!

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BTW, Things in BTC bubble universes are getting ugly....
DiabloD3
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August 01, 2012, 08:09:11 AM
 #314

Inflating the NAV by using the buyback prices instead of current market prices will also only help on paper - what counts are the dividends generated,

The price of these bonds reflects expected future earnings. If you are only going to look at yield, you should have bought greek debt.

Quote
as 50% of these go towards growing the fund and eventually(?) building the datacenter. I still think Diablo should focus on marketing the potential DC more than the current contingency plan with mining bonds.

You actually still believe that? That he will build a datacenter? With what money, and what is he going to put in it?  Im not even sure he has more than 2 GPUs right now, and he stated will never buy BFL ASICs. Nor do I believe he would get the funds, who is going to buy more shares at $1 when he managed to burn 2/3 of his investors money in just a few months with nothing to show for it? Step back and think for a second.

If they don't think the data center is possible, then they shouldn't be investing. No, I don't mean "shouldn't be investing with DMC", I mean they shouldn't be investing at all. Bitcoin is an experimental currency with an experimental economy that has global reach, Diablo Mining Company has a rather straight forward and tame plan compared to what Bitcoin was invented to do, and Bitcoin succeeded in doing it, I think. We, the community, made it succeed.

Bitcoin itself carries much more risk than DMC does. If you're here using Bitcoin, if you're here and part of the community, then you've already decided for yourself that the risk is worth taking. I see no reason for anyone not to invest in DMC if they believe in Bitcoin.

We need a company that is grown out of the Bitcoin community, one that involves itself in real world things. Most of whats on the GLBSE is either mining companies, investment funds, or pass-through funds; there is not one single company on the GLBSE that is doing something like DMC, and there needs to be.

We need companies that do "boring things". Green energy production is not exciting to the average person. Warehoused computing is not exciting to the average person. Yet, both of these are billion dollar industries that employ hundreds of thousands of people worldwide if not millions.

We need companies that do these boring things and go out and tell people that they are proud to be Bitcoin Grown. I envision that Diablo Mining Company will be the first of many Bitcoin Grown companies. Companies like mine will be the emissaries to the big industries out there, and we will spread the word of Bitcoin to them.

When (not if) DMC succeeds, the price of Bitcoin could easily double as venture capitalists, small business owners, and startup founders flood into the market to become part of this economic revolution. The Bitcoin community made Bitcoin a success, and I think we can continue making Bitcoin a success over and over and over again. We can't stop now.

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August 01, 2012, 08:26:03 AM
 #315

People believing in the future of bitcoin can just buy bitcoins and eliminate the risk of you mismanaging their investment.

I happen to think mining is a dead end, but if anyone wants to invest in a mining company, there are a gazillion offerings out there already, with actual hardware and run by people with a proven track record. If you are going to convince new investors to buy your shares at 3x market price, you will have to do better than make a sales pitch for bitcoin.

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August 01, 2012, 10:12:30 AM
 #316

People believing in the future of bitcoin can just buy bitcoins and eliminate the risk of you mismanaging their investment.

I happen to think mining is a dead end, but if anyone wants to invest in a mining company, there are a gazillion offerings out there already, with actual hardware and run by people with a proven track record. If you are going to convince new investors to buy your shares at 3x market price, you will have to do better than make a sales pitch for bitcoin.

Thats the funny thing. I happen to think the same thing: mining is now a dead end, especially if BFL delivers what they promised, doubly so if they do it on time.

Before the BFL announcement, but after I announced DMC's IPO is now open, I realized that for a company named "Diablo Mining Company", its kind of funny that profits from mining will probably end up being 25% or less.

Using existing Spartan 6 hardware in rack mountable arrangements, a 51% attack on the current network could be done in 4 or 5 racks. Our data center could end up having enough room for 2 or 3 dozen racks... and racks geared for 25-30kw cooling per rack including the 5+ 20a 120v circuits you need to power that much hardware could easily go for $15-20k/mo each.

A dozen racks would be pulling in $180-240k/mo. If we mine 2TH of coin every month at today's difficulty and sell them for $10 that ends of being $300k/mo and the difficulty is only going to keep increasing. If BFL fails to deliver, difficulty still can double by this time next year, and if they do deliver, it may go up 100x by this time next year; but those dozen racks will keep pulling in $180k-240k/mo and we'll probably have two or three dozen racks.

Like I said, Diablo Mining Company is the first of its kind for the Bitcoin world: we'll be making money off of real things people pay actual dollars for, and this can only increase Bitcoin prices.

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August 01, 2012, 10:43:11 AM
 #317

...Using existing Spartan 6 hardware in rack mountable arrangements, a 51% attack on the current network could be done in 4 or 5 racks. Our data center could end up having enough room for 2 or 3 dozen racks... and racks geared for 25-30kw cooling per rack including the 5+ 20a 120v circuits you need to power that much hardware could easily go for $15-20k/mo each....


I am sure I did give you a way!!!! better price quote for a rack space with all those cooling and power requirements. Smiley   

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DiabloD3
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August 01, 2012, 10:55:05 AM
 #318

...Using existing Spartan 6 hardware in rack mountable arrangements, a 51% attack on the current network could be done in 4 or 5 racks. Our data center could end up having enough room for 2 or 3 dozen racks... and racks geared for 25-30kw cooling per rack including the 5+ 20a 120v circuits you need to power that much hardware could easily go for $15-20k/mo each....


I am sure I did give you a way!!!! better price quote for a rack space with all those cooling and power requirements. Smiley   

Yes, and if I ever need that in Europe I will be sure to take you up on that deal. However, it is still cheaper in the long run to do it my way for now: we can pipe power directly from the green energy farm to the DC off grid (without diminishing our capacity to power the DC using the grid or sell power from the farm on the grid).

Your deal still does not beat $0 (or negative if we're selling power to the grid more often than not), although I have to admit, its very nice, makes me wish I had a room full of blade servers that needed a new home.

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August 01, 2012, 11:49:24 AM
 #319


Using existing Spartan 6 hardware in rack mountable arrangements, a 51% attack on the current network could be done in 4 or 5 racks. Our data center could end up having enough room for 2 or 3 dozen racks... and racks geared for 25-30kw cooling per rack including the 5+ 20a 120v circuits you need to power that much hardware could easily go for $15-20k/mo each.

A dozen racks would be pulling in $180-240k/mo. If we mine 2TH of coin every month at today's difficulty and sell them for $10 that ends of being $300k/mo and the difficulty is only going to keep increasing. If BFL fails to deliver, difficulty still can double by this time next year, and if they do deliver, it may go up 100x by this time next year; but those dozen racks will keep pulling in $180k-240k/mo and we'll probably have two or three dozen racks.
Huh
What on earth are you saying? That your mining business would somehow not be impacted by a 100x difficulty increase, or that the plan is just to become a datacenter?  Seriously?

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August 01, 2012, 02:51:05 PM
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Using existing Spartan 6 hardware in rack mountable arrangements, a 51% attack on the current network could be done in 4 or 5 racks. Our data center could end up having enough room for 2 or 3 dozen racks... and racks geared for 25-30kw cooling per rack including the 5+ 20a 120v circuits you need to power that much hardware could easily go for $15-20k/mo each.

A dozen racks would be pulling in $180-240k/mo. If we mine 2TH of coin every month at today's difficulty and sell them for $10 that ends of being $300k/mo and the difficulty is only going to keep increasing. If BFL fails to deliver, difficulty still can double by this time next year, and if they do deliver, it may go up 100x by this time next year; but those dozen racks will keep pulling in $180k-240k/mo and we'll probably have two or three dozen racks.
Huh
What on earth are you saying? That your mining business would somehow not be impacted by a 100x difficulty increase, or that the plan is just to become a datacenter?  Seriously?


It will not be impacted. What I just did was disclose a flaw in the plan: the plan is much more profitable than I originally realized. Oops.

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