Weekly loss of N% guaranteed - Enjoy perpetual loss with fixed Mh/s mining turds

[FreeMoney]

This is crazy. If a fixed Mhash bond is worth so little don't buy it. What a dumb game to go around guessing who will randomly increase the Mhash and by how much. Do what you say, that's what matters.

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[EskimoBob]

Good news is, that some of the "bond" issuers have understood that this is like any other devaluation situation. Everything gets a new value and  20 is the constant used. Miner gets a 20x more powerful equipment for free, "bond"holders get a 20x bigger dividend for free and 10 Mh/s = todays 0.5 MH/s. Nobody in this example gets shafted. Except the ones who did not upgrade or who's "bond" issuer realized, that this is a once in a lifetime opportunity to turn the outstanding debt in to a 1/20 of what it's worth today. Only one who gets seriously fucked here, is the "bond" holder.

Nonsense. This is more like if I take a 1 BTC loan when 1 BTC=$10, clarify that it is BTC-denominated, the BTC price drops to $0.5 and then you'll expect me to pay back 20 BTC because that's worth the same $10.

You are also forgetting that only people who bought from BFL get a free upgrade. People who bought alternative FPGAs do not get anything, do they also need to increase their bond x20?

Did I really?

Fact is, that most (if not all) fixed Mh/s mining "bonds" aka turds, with no free plan for upgrade, have become the ultimate junk and will be worth next to nothing when those damn ASIC's hit the market. So far, I have not seen a single calculation that proves this to be wrong.
Those turd will lose money until the difficulty stops rising and drops dramatically. Depends, how high the difficulty has risen, there is a good chance, you will never get back your invested money.

I never said otherwise. I only said that's part of the risk investors are taking and for which they are ultimately responsible.

Thank you Rosenfeld for clearing this up and finally stating, that you have sold turds to your investors from day one.
Rosenfeld, you are the master of nonsense here. No, its more like utter bull shit and this applies to most of your posts, where you attempt to talk "white in to black" and so on.
Your counter example is also wrong - you took out the loan in Mh/s not in BTC and when Mh/s gets "globally devalued", you think you have right to ignore it and fuck your investors for extra profit. I am not here to stop you. I just hope people realize what a greedy fuck you actually are and stay clear form your next snake-oil deal. I guess this greed shit runs in your blood. LOL...
What I am saying, is this:  Some of the "bond" issuers have understood, that this is wrong and have done everything to set up a deal so no one gets hurt. You and some others), on the other hand, are abusing the situation and keep twisting it for your own profit. You are like a fkn war profiteer.

If you want, I can use bigger and friendlier letters to make sure you actually read, what I write.

[brendio]

This is crazy. If a fixed Mhash bond is worth so little don't buy it. What a dumb game to go around guessing who will randomly increase the Mhash and by how much. Do what you say, that's what matters.

This +1.

[Meni Rosenfeld]

I never said otherwise. I only said that's part of the risk investors are taking and for which they are ultimately responsible.

Thank you Rosenfeld for clearing this up and finally stating, that you have sold turds to your investors from day one.

Way to twist my words. On day one there was no ASIC on the horizon. Now the ASIC prospects seem promising, but there is still uncertainty if and when BFL will deliver; if it happens any time soon then yes, the value of deterministic mining bonds will greatly decrease.

By the way, back then even BFL's FPGA products were considered vaporware/scam by many. I took all the information available to me and estimated that they are in fact legitimate. Because of this I was able to offer bonds at a price that made use of their products' cost-effectiveness. After a long time (during which I still paid coupons!) they did indeed deliver (some, I'm still waiting for my second order). If they had not, I would have suffered a major loss and still be committed to my deterministic obligation. That was a risk I took, not the investors. I took a bet on BFL and won, and it's perfectly fair for me to profit from it. If we instead penalized people for making the right decisions we'd be in a lot of trouble.

Your counter example is also wrong - you took out the loan in Mh/s not in BTC and when Mh/s gets "globally devalued"...

I've used something called an "analogy".
If I take 1 BTC debt, I still owe 1 BTC even if the value of a BTC decreases.
If I take 1 MH/s debt, I still owe 1 MH/s even if the value of a MH/s decreases.

Your argument would have made some sense if there was indeed a global splitting of hashrate. But there's not, miners who bought equipment from one specific manufacturer will get an increase at some unspecified time which differs between them (and which they are unable to prove). Others are either stuck with what they have (other FPGAs) or sell their equipment at a loss (GPUs).

What I am saying, is this:  Some of the "bond" issuers have understood, that this is wrong and have done everything to set up a deal so no one gets hurt.

It is unfortunate that they think deterministic assets are wrong, and this indicates that the Bitcoin market lacks maturity and economic understanding.

Rosenfeld, you are the master of nonsense here. No, its more like utter bull shit and this applies to most of your posts, where you attempt to talk "white in to black" and so on.
, you think you have right to ignore it and fuck your investors for extra profit. I am not here to stop you. I just hope people realize what a greedy fuck you actually are and stay clear form your next snake-oil deal. I guess this greed shit runs in your blood. LOL...
 You and some others), on the other hand, are abusing the situation and keep twisting it for your own profit. You are like a fkn war profiteer.

Thank you, I've been waiting for the right time to unwatch this thread and add you to my ignore list (you're at the respectable 2nd place). Happy trolling.

If you want, I can use bigger and friendlier letters to make sure you actually read, what I write.

It's too late for me but for future reference if you want people to read what you write you should consider the following:
1. Only write about things you understand.
2. Present your argument in a clear, methodical way.
3. Avoid personal attacks and offensive terms.

[sarpar]

I just hope people realize what a greedy fuck you actually are and stay clear form your next snake-oil deal. I guess this greed shit runs in your blood. LOL...

Careful with the unfair latter statement!

But I also advise investors to read contracts carefully. Fair play is not to be expected with Meni Rosenfeld - you might get fucked already by design!

A true business venture worth to invest in creates a win-win situation for receiver and donor of the funds. In other words those issuing should be convinced to invest themselves in their asset if they had enough cash available. Not the case here. There is practically no risk for Rosenfeld with very high return (which is per se a contradiction). Rosenfeld sticking to his contract contrary to others shows that his venture didn't just unintentionally turn this way. Be warned there is nothing virtuous about sticking to deceitful contracts - true the price might stabilize when ASIC hit the market for a short time but already so low that it would make no sense not to buy them back. Subsequent technology shifts are also up to come with similar devastating effects (doesn't matter whether there are buy back programs or not).

[organofcorti]

I guess this greed shit runs in your blood. LOL...

EskimoBob? And here I had you pegged for a redneck.

[Sukrim]

What I am saying, is this:  Some of the "bond" issuers have understood, that this is wrong and have done everything to set up a deal so no one gets hurt. You and some others), on the other hand, are abusing the situation and keep twisting it for your own profit.

Which ones, actually? Please say the asset IDs on GLBSE...

Edit:
@sarpar: Just check when actually PUREMINING was started - Meni would be the last person to blame for selling overpriced bonds in the light of FPGAs and ASICs!

[brendio]

I just hope people realize what a greedy fuck you actually are and stay clear form your next snake-oil deal. I guess this greed shit runs in your blood. LOL...

Careful with the unfair latter statement!

But I also advise investors to read contracts carefully. Fair play is not to be expected with Meni Rosenfeld - you might get fucked already by design!

A true business venture worth to invest in creates a win-win situation for receiver and donor of the funds. In other words those issuing should be convinced to invest themselves in their asset if they had enough cash available. Not the case here. There is practically no risk for Rosenfeld with very high return (which is per se a contradiction). Rosenfeld sticking to his contract contrary to others shows that his venture didn't just unintentionally turn this way. Be warned there is nothing virtuous about sticking to deceitful contracts - true the price might stabilize when ASIC hit the market for a short time but already so low that it would make no sense not to buy them back. Subsequent technology shifts are also up to come with similar devastating effects (doesn't matter whether there are buy back programs or not).

Please detail what about the contract you think was deceitful.

And as Meni has posted in detail, they was major risk for him in issuing his securities. That risk paid off, but if it hadn't, he would still be bound to his obligations.

[BitcoinINV]

If you have any investment experience in the real world, especially in the fixed income instruments, you have probably noticed how the word "bond" is misused in this forum over and over again.

Bond is a very specific investment instrument. Fancy way to put it is -  bond is a negotiable certificate that acknowledges the indebtedness of the bond issuer to the holder. Other way to say it is: bond is a loan to bond issuer and who ever holds the bond, receives the payment form the issuer. It's like a IOU.
Another important feature of the bond is this: Issuer is obliged to pay interest (the coupon) to use and/or to repay the principal at a later date, termed maturity.
This means, that you do not only receive the regular coupon payments, but at date X, your bonds will be bought back by the issuer at predetermined price X.
 
Information about different types of bonds and notes is readily available all over the internet. I recommend you read it and make sure you understand the basic ideas of bonds and why people invest in bonds.  

Now, typical mining bonds issued via GLBSE are perpetual mining bonds with fixed Mh/s coupon. It is very important to understand, that there is NOTHING fixed about this type of coupon- Especially, when it comes to your earnings. When difficulty goes up, you earn less per Mh/s. When difficulty drops, you earn more per Mh/s.
I call them mining turds, because they are almost like Floating Rate Notes (FRN) aka floaters - hence the name "turd".  
  
Why are bonds good and turds bad?

Bonds are usually good for preserving your capital and earning you a fixed income from dividends. If you think about it, mining turds offer you none of the previously mentioned benefits. At the moment, dividends do not cover the depreciation of your invested capital. Sorry, but this applies to all the mining turds out there.

There have been some exceptions, where turd price has actually gone up temporarily. One of the example is the GIGAMINING. Vps managed to push his turd prices up temporarily. Last month he increased dividends by 10% (110% PPS) for few weeks. Lets be honest, this was just a ruse, to get you all worked up over nothing.  

Did I really make 2.3841% per week?

To understand, what you have actually lost/gained by investing to mining turds, look at the price you paid for you turd and how much have you earned form your dividends. If you sell your turd today, will your loss of of invested capital be offset by the continuously diminishing dividends?  

If one month ago you paid 0.30 for your "bond" and you have earned 0.038 BTC in dividends, did you actually made money?
You say "Yes!", I say "No!"
OK, lets look at the market price. Oops, as of today, your turd is worth only 0.145 BTC! Now, did you make money or did you actually lose ~40% of your investment in one month to "earn" 0.038.
If diff keeps going up or stays where it is now, you are not going to see your principal returned to you any time soon. As you know, turd issuer has no obligation to buy it back from you at the IPO price. How long will it take for a monthly dividend of 0.038 to earn you those 0.155 BTC, to cover the loss?  4 months if diff stays at or below the current level and price is not dropping another 40%. If it diff keeps rising and price keeps dropping, you are almost perpetually screwed.
 

Bonds, I'll or you can invest in

Only mining bonds (not a turd!), that make any sense to invest in, are the ones with a truly fixed or partially fixed coupon. Bonds with floating rate must have a part of the coupon fixed at % from IPO price (par) and a part of the coupon tied to a Y Mh/s or something similar.

"Mh/s only" turds are garbage and burn investors hard earned bitcoins, while buying turd issuer a room full of equipment at 0 risk.
Difficulty and market risks are all left to to you - turd holder.
 
 If you truly believe that difficulty is going to go trough a massive drop, then yes, you have a good chance of getting back the money you paid for the turd. Now, lets not forget, that the income from mining will be halved soon. No more 50 BTC blocks. Can you see, how this affects your income and turd price, dear turd holder?

The bond thing is true it is way overly misused on the GLBSE, when I first discovered the mighty world of Bitcoin and the Glsbe I looked at the company right up for all these so called "Bonds" and they looked more like shares the company reserved the right to buy back then bonds.

[racerguy]

How do you fail to understand mining bonds aren't "turds" when priced in $?  Using that logic I've been ripped off in every transaction from everyone in the last six months because anything priced in bitocins was 100% more expensive 6months ago compared to now.

[racerguy]

Also way to be a whiny bitch about something you're in no way compelled to buy for any reason.

[odolvlobo]

How do you fail to understand mining bonds aren't "turds" when priced in $?  Using that logic I've been ripped off in every transaction from everyone in the last six months because anything priced in bitocins was 100% more expensive 6months ago compared to now.

Mining bonds are turds, even when priced in $. Let's say you and I had 100 BTC ($450) 6 months ago. Then, you invest in a mining bond and I don't. Now, after 6 months, the value of the bond has dropped 50% to 50 BTC but has paid 26 BTC in interest. We both cash out our BTC at $11, and you have $836 and I have $1100. That bond is a turd even when priced in $ because if you did not invest in the bond, you would have more money (in both $ and BTC).

[odolvlobo]

Part 1
Despite my previous post, I disagree with EskimoBob on a few points. I think he is just trolling now, but I'm going to take the bait.

• The statement that bonds return the principal is not strictly true. According to Investopedia:
  

  Definition of 'Perpetual Bond'
  A bond with no maturity date. Perpetual bonds are not redeemable but pay a steady stream of interest forever. Some of the only notable perpetual bonds in existence are those that were issued by the British Treasury... http://www.investopedia.com/terms/p/perpetualbond.asp#ixzz23CwCJy7f

• Mh/s is not a depreciating asset. A depreciating asset loses value over time because it must eventually be replaced. While a mining company must replace its equipment (and therefore must depreciate it). It doesn't have to replace its Mh/s.
• A mining bond's varying dividend is not unusual. While most bonds have fixed coupon rates, some bonds (e.g. TIPS) do not. Furthermore, bond mutual funds pay varying dividends.

[nimda]

I just hope people realize what a greedy fuck you actually are and stay clear form your next snake-oil deal. I guess this greed shit runs in your blood. LOL...

Careful with the unfair latter statement!

But I also advise investors to read contracts carefully. Fair play is not to be expected with Meni Rosenfeld - you might get fucked already by design!

A true business venture worth to invest in creates a win-win situation for receiver and donor of the funds. In other words those issuing should be convinced to invest themselves in their asset if they had enough cash available. Not the case here. There is practically no risk for Rosenfeld with very high return (which is per se a contradiction). Rosenfeld sticking to his contract contrary to others shows that his venture didn't just unintentionally turn this way. Be warned there is nothing virtuous about sticking to deceitful contracts - true the price might stabilize when ASIC hit the market for a short time but already so low that it would make no sense not to buy them back. Subsequent technology shifts are also up to come with similar devastating effects (doesn't matter whether there are buy back programs or not).

Attacking Meni is not ok. It does not give you credibility or make your case any less false. Meni Rosenfeld is well respected as a contributor to Bitcoin itself, and frankly, you look like an idiot when you say otherwise.
Free market, supply and demand, invisible hand, fools and their money, caveat emptor, capitalism and competition, due diligence and all that. Fixed MH/s bonds are bonds denominated in MH/s. They have use cases from hedges to diversification to betting on a DDoS of mining pools. All I hear in this thread are people whining about their poor investment choices and blaming it on other people. If you're so smart, why don't you start shorting mining bonds? Alternatively, liquidate your turds () and place some nice low bids for them. Surely they are worth more than one week's dividend? Place your bids there. Again, supply and demand etc.

[odolvlobo]

Part 2
I think that EskimoBob's best points are these:

• The value of mining bonds are dropping faster than the dividends are being paid, therefore they are currently bad investments. The real question is, "why are the values of mining bonds dropping"?
  
  The answer is not that values are dropping because the dividends are falling. The dividend rate is falling because of the rising total hash rate, but since it is falling the same amount for all bonds, the values of the bonds should remain constant. The value of a perpetual bond is the coupon rate divided by the "discount" rate (times the principal), and the value should remain the same since both the coupon and discount rates are falling.
  
  The answer is supply and demand. The supply of mining bonds is increasing, and (more importantly) the demand for the bonds is decreasing.
  Demand is decreasing because:
  
  • Investors are flocking to pirate bonds and BTCST deposits, leaving less money to invest in mining bonds.
  • Investors are anticipating a huge increase in the hash rate once the ASIC rigs come online and miners that don't upgrade won't be able to compete.
  • Momentum -- investors are avoid mining bonds because the prices are falling, causing the prices to fall even more.

• In reality, "perpetual" mining bonds will not pay forever. It is more likely that the operator will close up shop one day and the investors will lose all their money because the equipment is worthless. The solution is for the operators to depreciate their equipment so that the sum of the equipment value and the cash from depreciation is constant, and agree to pay that value to bondholders if they cease operations.
  
  Operators that:
  
  • don't depreciate equipment and back the value of the bonds with equipment and cash from depreciation, or
  • take a cut of mining proceeds for upgrades without actually upgrading (or using it to back the bonds), or
  • simply don't back the value of the bonds
  are ripping off the bondholders (intentionally or not).

I have yet to see a mining company balance sheet or P&L. It's ok to mine for a hobby, but IMHO if you have a business with investors then it needs to be run as a legitimate business. Investors must insist on basic accounting and reporting if they really want to have a hope of making any money.

[cuz0882]

Mining bonds are turds, even when priced in $. Let's say you and I had 100 BTC ($4500) 6 months ago. Then, you invest in a mining bond and I don't. Now, after 6 months, the value of the bond has dropped 50% to 50 BTC but has paid 26 BTC in interest. We both cash out our BTC at $11, and you have $836 and I have $1100. That bond is a turd even when priced in $ because if you did not invest in the bond, you would have more money (in both $ and BTC).

That's not accurate at all. If you had purchased a bonds six months ago, it would be the same as purchasing mining equipment. Except your paying a initial fee for not operation it. The btc price of the bond is not important. Bonds and mining equipment have all paid out well so far. If you math is showing that miners are taking loses right now, your not doing it right.

[odolvlobo]

Mining bonds are turds, even when priced in $. Let's say you and I had 100 BTC ($450) 6 months ago. Then, you invest in a mining bond and I don't. Now, after 6 months, the value of the bond has dropped 50% to 50 BTC but has paid 26 BTC in interest. We both cash out our BTC at $11, and you have $836 and I have $1100. That bond is a turd even when priced in $ because if you did not invest in the bond, you would have more money (in both $ and BTC).

That's not accurate at all. If you had purchased a bonds six months ago, it would be the same as purchasing mining equipment. Except your paying a initial fee for not operation it. The btc price of the bond is not important. Bonds and mining equipment have all paid out well so far. If you math is showing that miners are taking loses right now, your not doing it right.

We are talking about the bonds, not the equipment. Maybe I wasn't clear. Let's use a real bond as an example. Let's say that we both had 100BTC ($650) in June. Then, you used your 100BTC to buy 333 shares of YABMC @ .30BTC/share, while I kept my 100BTC. Today, you sell your YABMC shares for .12BTC and you have only 53BTC (40BTC plus 13BTC from dividends). Converting back to $, you now have only $583, but I have $1100. In 2 months, that bond lost you 47% in BTC and 11% in $ and that is why it is a turd (according to EskimoBob).

Your HYDRO.BONDS bonds are similar (dropping from 2BTC to 1.5BTC, and not paying enough dividends to make up for the loss), but you are promising to upgrade to ASICs and boost the Mh/s per bond, and I think that makes your bonds a good deal right now.

[conspirosphere.tk]

On the other hand, lower prices are increasing the yield: at current price YABMC is paying >3% weekly.
At that rate, getting back the whole capital invested as dividends in a few months, before the halvening, while ASICS are still a pie in the sky, does not seems so unlikely to me.

[P4man]

On the other hand, lower prices are increasing the yield: at current price YABMC is paying >3% weekly.

3% per week for a few more months. Then its 1.5% even we would assume asics dont materialize and somehow difficulty would stop skyrocketing.  Even with zero growth and no asics, it would take a year for the bond to pay back its investment. Anyone buying equipment or bonds that takes a year to pay for itself at current difficulty, is.. well, gonna lose money over that year. A lot of it. Even as it is, difficulty is going up faster than 3% per week, and you aint seen nothing yet.

[cuz0882]

Mining bonds are turds, even when priced in $. Let's say you and I had 100 BTC ($450) 6 months ago. Then, you invest in a mining bond and I don't. Now, after 6 months, the value of the bond has dropped 50% to 50 BTC but has paid 26 BTC in interest. We both cash out our BTC at $11, and you have $836 and I have $1100. That bond is a turd even when priced in $ because if you did not invest in the bond, you would have more money (in both $ and BTC).

That's not accurate at all. If you had purchased a bonds six months ago, it would be the same as purchasing mining equipment. Except your paying a initial fee for not operation it. The btc price of the bond is not important. Bonds and mining equipment have all paid out well so far. If you math is showing that miners are taking loses right now, your not doing it right.

We are talking about the bonds, not the equipment. Maybe I wasn't clear. Let's use a real bond as an example. Let's say that we both had 100BTC ($650) in June. Then, you used your 100BTC to buy 333 shares of YABMC @ .30BTC/share, while I kept my 100BTC. Today, you sell your YABMC shares for .12BTC and you have only 53BTC (40BTC plus 13BTC from dividends). Converting back to $, you now have only $583, but I have $1100. In 2 months, that bond lost you 47% in BTC and 11% in $ and that is why it is a turd (according to EskimoBob).

Your HYDRO.BONDS bonds are similar (dropping from 2BTC to 1.5BTC, and not paying enough dividends to make up for the loss), but you are promising to upgrade to ASICs and boost the Mh/s per bond, and I think that makes your bonds a good deal right now.

You shouldn't compare bonds to investments in btc. If you just put your money in btc a month ago, you would have made a good return. Yet your risk factor was high. If you had purchased my bond when I started, and then sold it today. You would have the same amount of dollars + dividends earned. I'm selling the bonds for less btc now because btc is worth more. Your counting losses where there are none. If the btc drops in half, I will be charging twice the btc price for the bonds.