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

[cuz0882]

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.

Why would returns drop in half? When the block rewards drops to 25, are you expecting not a single person is going to stop mining with their gpu's? Difficulty is rising because payouts are increasing. Difficulty has not been keeping up with the price increases. You can see the increased returns per mhash on http://bitcoinx.com/charts/. If there is some kind of skyrocket at the end of the chart, its some kind of glitch today.

[1714975643]

1714975643

[P4man]

Why would returns drop in half? When the block rewards drops to 25, are you expecting not a single person is going to stop mining with their gpu's?

Oh, Im expecting  a few gpu's to be turned off, but only because of minirigs and asics being turned on. And no, I dont expect a single FPGA or Asic to be turned off, for the simple reason that electricity cost is only marginal compared to the investment. Even if some of those FPGAs will have no more hope to earn back their investment, keeping them running will at least reduce the loss for quite some time.

Difficulty is rising because payouts are increasing. Difficulty has not been keeping up with the price increases.

All the more reason to expect further increases in difficulty.  If you think difficulty will be lower in January than it is now, I will gladly take a bet.

[FreeMoney]

This thread really bothers me.

Lets bet on your false title.

You pick N, if the price of GIGA drops N% each of the next 4 weeks you win, else I win. I'll give you 2-1 odds.

[cuz0882]

Why would returns drop in half? When the block rewards drops to 25, are you expecting not a single person is going to stop mining with their gpu's?

Oh, Im expecting  a few gpu's to be turned off, but only because of minirigs and asics being turned on. And no, I dont expect a single FPGA or Asic to be turned off, for the simple reason that electricity cost is only marginal compared to the investment. Even if some of those FPGAs will have no more hope to earn back their investment, keeping them running will at least reduce the loss for quite some time.

Difficulty is rising because payouts are increasing. Difficulty has not been keeping up with the price increases.

All the more reason to expect further increases in difficulty.  If you think difficulty will be lower in January than it is now, I will gladly take a bet.

A lot of gpu's will be turned off because of reward drop. The difficulty should drop a decent amount unless ASIC's get delivered.

[P4man]

A lot of gpu's will be turned off because of reward drop. The difficulty should drop a decent amount unless ASIC's get delivered.

So you are betting that difficulty will actually go down over the next 12 months? Good luck with that. Not only is it a crazy bet, the rewards are  almost non existent should you somehow be right.

[organofcorti]

A lot of gpu's will be turned off because of reward drop. The difficulty should drop a decent amount unless ASIC's get delivered.

So you are betting that difficulty will actually go down over the next 12 months? Good luck with that. Not only is it a crazy bet, the rewards are  almost non existent should you somehow be right.

Shhh P4man!

cuz0882, I want to make a bet with you ....

But as far as the thread topic goes, who could not have known the pros and cons of mining bonds? Even if ASICs could not have been predicted, it is and always was clear that 1 Mhps would always vary in terms of both btc and usd. If you's bought mining rigs and paid for electricity, you'd be in just as much trouble. Bond purchasers should have worked out whether it would be cheaper to buy bonds or a mining rig. For me, it was cheaper to buy bonds given the price of electricity here. My strategy didn't work out as well as I'd liked - so what? At least I don't have a chunk of unsellable technology on my hands.

Does everyone just joyfully buy everything and hope for the best? Does no one do due diligence and develop a strategy to deal with future possibilities?

[conspirosphere.tk]

Can anyone pull out a formula to calculate the "proper" value of 1 Mhs PPS according the difficulty?

Ideally I'd like a sort of the mining calculatur by bitcoinx.com for mining bonds, to estimate depreciation and dividend earnings in a given period under different assumptions on the future difficulty.

[P4man]

Can anyone pull out a formula to calculate the "proper" value of 1 Mhs PPS according the difficulty?

1 MH/s =  ~1000000 / 2^32  shares per second
1 share = 50 / difficulty bitcoins (soon 25)

so 1MH/s = 1000000 * 50  / (2^32 * D) btc per second.
or 0.000000005314 btc per second
or 0.013773062 btc per month.

[MPOE-PR]

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.

I just wrote a piece elaborating on that. Hadn't seen your (very well thought out) post, smickles pointed it out tho.

[P4man]

Maybe Diablo's "$1 million" mining company turning in to a 1 millionth of a dollar mining company will open some people's eyes as to what can (and will) happen with these bonds:
 
https://glbse.com/asset/view/DMC

Now Im sure Diablo will purchase a few shares back himself to save face, but the simple fact is his shareholders (which really are mining bond holders since DMC only owns mining bonds) saw 99.5%. of their investment evaporate,  Oh well, 99.48% if you take past dividend payments in to account. Like I said, if you like high coupon payments, buy Greek debt, its far less risky.

[cuz0882]

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.

I just wrote a piece elaborating on that. Hadn't seen your (very well thought out) post, smickles pointed it out tho.

Your comparing purchasing btc to purchasing mining bonds... There is no way to know what bitcoin will be worth in the future. You should be comparing holding your money in dollars vs purchasing mining equipment or bonds. It's pretty clear that mining and bonds are paying out well. There are no capital investment loses right now on the bonds using singles or mini rigs. Even gpu's hold their value pretty well. I expect most gpu's have already paid for themselves.

[Bitcoin Oz]

The massive price dumps of these is the market deciding how much they suck 

Glad I have never owned any of them and never will.

[cuz0882]

The massive price dumps of these is the market deciding how much they suck  

Glad I have never owned any of them and never will.

What price dumps are you referring to? Mining and dividends have not been this profitable in 7 months.

[Bitcoin Oz]

The massive price dumps of these is the market deciding how much they suck  

Glad I have never owned any of them and never will.

What price dumps are you referring to? Mining and dividends have not been this profitable in 7 months.

You need to take into account the loss of principal over time. If you cant redeem a bond for what you paid you need to account for that loss in your calculations.

[P4man]

What price dumps are you referring to? Mining and dividends have not been this profitable in 7 months.

Lending to greece and spain was never this profitable either

[Bitcoin Oz]

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.

I just wrote a piece elaborating on that. Hadn't seen your (very well thought out) post, smickles pointed it out tho.

Your comparing purchasing btc to purchasing mining bonds... There is no way to know what bitcoin will be worth in the future. You should be comparing holding your money in dollars vs purchasing mining equipment or bonds. It's pretty clear that mining and bonds are paying out well. There are no capital investment loses right now on the bonds using singles or mini rigs. Even gpu's hold their value pretty well. I expect most gpu's have already paid for themselves.

Shares arent purchased with dollars. If gigavps was listed on the NYSE and you could buy and sell in USD then you might have a good argument 

[cuz0882]

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.

I just wrote a piece elaborating on that. Hadn't seen your (very well thought out) post, smickles pointed it out tho.

Your comparing purchasing btc to purchasing mining bonds... There is no way to know what bitcoin will be worth in the future. You should be comparing holding your money in dollars vs purchasing mining equipment or bonds. It's pretty clear that mining and bonds are paying out well. There are no capital investment loses right now on the bonds using singles or mini rigs. Even gpu's hold their value pretty well. I expect most gpu's have already paid for themselves.

Shares arent purchased with dollars. If gigavps was listed on the NYSE and you could buy and sell in USD then you might have a good argument 

You suggesting that I should charge a higher dollar amount to purchase and run a single for someone? Even though it still costs me the same dollar amount.. And if the price of btc drops to one dollar how would I purchase a single for a fraction of what butterfly charges.. When you purchase a bond, its used to purchase equipment for a set dollar amount. The bitcoins are not just sitting around fluctuation with the price.

[P4man]

If you are going to insist on looking at this from a $ perspective, then at least be consistent: you will not have realized a single dollar cent of profits before you sell your bond and sell the bitcoins. The latter is pretty profitable for now, at least for anyone not silly enough to have traded nice coins for worthless bonds, but the former is something you consistently ignore.

[cuz0882]

If you are going to insist on looking at this from a $ perspective, then at least be consistent: you will not have realized a single dollar cent of profits before you sell your bond and sell the bitcoins. The latter is pretty profitable for now, at least for anyone not silly enough to have traded nice coins for worthless bonds, but the former is something you consistently ignore.

I will try to explain it as simple as possible.

If you purchase 100 bonds while the btc price is $5.00.(50btc) The bond issuer turns around and buys, lets say a 5970. It costs him $500 dollars. He pays out 10% monthly in interested. After the first month, you decide to cash in your bond. But the price of btc doubled since last month. The issuer can sell that equipment for $500 dollars. Which is only half the number of bitcoins you paid. That 5970 didn't lose or gain value because of the btc price change. Now you only have 25btc+10%. If the price of bitcoin had dropped in half. That $500 dollars worth of equipment could have purchased 100 btc. You would have ended up with twice as many bitcoins+10%. Although the bond was traded in btc, your invested was not held in btc. So you didn't profit or lose any dollar amount because of the btc price changes. Unless your money is held in something with a fixed btc value. Your not going to gain or lose anything because of changes in btc price. So until a company starts selling mining equipment for a fixed btc amount regardless of its value, this is not going to change. Mining equipment will always be valued in dollars, and that's what bonds are invested in.

[P4man]

Cuz, I understand that very well. Im not saying bonds are per definition a bad idea, they are not.
But Im a miner. And unlike you,  and unlike most investors apparently,  I can see *why* miners are so keen to sell you bonds at those prices. It seems investors dont understand the mining market and dont understand the impact reward halving,  Moore's law, fpgas and in particular, asics will have. Thats why these bonds were ridiculously overpriced, and most still are today.
Ive been saying this for months, and I just showed you DMC as an example, I could have pointed to YABMC as well:
https://glbse.com/asset/view/YABMC

Or puremining, or other bonds that are not propped up by freebee asic upgrades.

If you want to hedge against a BTC price collapse, all you have to do is buy less BTC. But holding BTC at this point makes infinitely more sense than buying overpriced bonds.

Anyway, Ill repeat my offer: lend me your bonds for 6 months, and Ill pay you all dividends plus a negotiable bonus. If you feel so strongly about holding bonds, how could you possibly lose?