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

[conspirosphere.tk]

So why nobody launches a fund to short mining bonds?

[sarpar]

There's something about this whole situation that people simply aren't getting. The upgrade path offered by Giga et al isn't allowed by sprinkling magic powder on his equipment. It is making use of BFL's upgrade offer which is a once in a lifetime event brought about by a very specific circumstance. In the "real world", mining companies can't upgrade their equipment for free. If the company bought X GH/s of equipment with its IPO funds it is stuck with X GH/s of equipment. If there is anything that negatively impacts mining profitability, the company's profits and dividends will shrink accordingly, just like with a deterministic instrument.

The same issuer that is "protecting his investors" could just as well screw over his investors. IMHO it is much less risky to invest in a deterministic asset where the issuer has no influence at all on the returns - the investor can focus on global parameters such as difficulty and price instead of playing guessing games what the issuer will or will not do. You're entitled to a different opinion but please stop the trash-talk saying deterministic assets should be "filtered out".

I respect Giga's decision but it's taking us one step further from a true commodity market for hashrate, which would be to the benefit of all.

Wrong: If the operator doesn't run a scam he would be able to sell equipment in order to acquire new equipment with higher profitability. (if earnings on sale > price for new equipment with same GH/s) After that he could easily increase the MH/share. Doing not so is irrational and tells us that the operator either:
1. exchanges equipment for OWN profit by emitting additional shares
2. doesn't have equipment and runs a scam

[P4man]

2. doesn't have equipment and runs a scam

Why is it a scam as long as he sticks to his contractual obligations? What do you care how much, if any, mining power the issuer of the bond has? It has no impact on your yields or bond value.

[sarpar]

2. doesn't have equipment and runs a scam

Why is it a scam as long as he sticks to his contractual obligations? What do you care how much, if any, mining power the issuer of the bond has? It has no impact on your yields or bond value.

If more is traded than is actually mining it does affect me. Demand is covered by non existent supply and therefore prices fall.

Another concern:
Can you apply for mortgage without actually buying a house as long as you stick to your payment plan?
If you don't mine why do you mislead your investors by letting them think their investment is backed?

[P4man]

2. doesn't have equipment and runs a scam

Why is it a scam as long as he sticks to his contractual obligations? What do you care how much, if any, mining power the issuer of the bond has? It has no impact on your yields or bond value.

If more is traded than is actually mining it does affect me. Demand is covered by non existent supply and therefore prices fall.

Another concern:
Can you apply for mortgage without actually buying a house as long as you stick to your payment plan?
If you don't mine why do you mislead your investors by letting them think their investment is backed?

A bank has a claim on your house. You have zero claim on (say) GigaVPS' mining equipment. You might want to think twice about buying bonds on GLBSE from people that are not verified (in so far thats any help), but whether they own a large farm or not does nothing to protect your investment. If you fear he is going to scam you, he can do just as well with or without owning x TH. In fact, you might be better served buying bonds from someone who has no farm, but puts up bitcoins in escrow than someone owning a large farm that might break, get stolen or whatever.

As for synthetic bonds lowering the price; it shouldnt. If it does, then you paid too much for yours. The price should reflect expected future mining earnings, nothing else. I might offer 1 trillion terrahash in mining bonds, but unless Im crazy,  I wont sell them at a price I dont expect to make a profit; nor should you buy them at any other price. More "supply" (or demand for that matter),  in this case would only serve price discovery.

You could even go a step further and claim buying "real" mining bonds will lower your bond value, because that would result in more hashing power and therefore, higher difficulty. Synthetic bonds dont have this side effect .

[Meni Rosenfeld]

You're entitled to a different opinion but please stop the trash-talk saying deterministic assets should be "filtered out".

In the end, the market is always the judge, not my opinion, nor yours. There are good mining-related investments, and bad ones, and I know which is which because I have the hard numbers on all mining assets from my research. When I filter something out, I always do it because it has a negative expectation, not because I have a certain "gut feeling" about it. From what I can see, at the present time most (but not all) non-upgradable fixed-rate mining bonds have a negative expectation relative to holding bitcoins directly, although there are some notable exceptions to this guideline.

It's not personal, so don't take it that way. It's business.

Exactly, it's about the market. You can certainly say assets A, B and C are currently overvalued and are thus a bad investment. If you found a "rule of thumb" that these assets happen to be those with property X it's ok to say this as well. But it's unacceptable for you to say that PDMIs are inherently bad, which you did - and for that purpose it doesn't matter if you're harming my business, disparaging my invention, or just being wrong on the internet.

(even if its one thats not backed by any mining power, but thats largely irrelevant. I think Meni does it like this? )

I'm backed by hardware.

Wrong: If the operator doesn't run a scam he would be able to sell equipment in order to acquire new equipment with higher profitability. (if earnings on sale > price for new equipment with same GH/s) After that he could easily increase the MH/share. Doing not so is irrational and tells us that the operator either:
1. exchanges equipment for OWN profit by emitting additional shares
2. doesn't have equipment and runs a scam

This makes sense only in very specific circumstances. In general nobody will want to buy the equipment at a price which will make this profitable. This is viable if he's selling GPUs to gamers to get ASICs (also at some loss), but again this is a once in a lifetime event.

If more is traded than is actually mining it does affect me. Demand is covered by non existent supply and therefore prices fall.

Maybe but they have every right to affect you in this way.

Can you apply for mortgage without actually buying a house as long as you stick to your payment plan?

No, because then the bank has no way of knowing that you'll be willing and able to stick to your payment plan. But you can offer a car as collateral to get a loan for a purpose which has nothing to do with cars. Similarly, an issuer doesn't need mining hardware to be good on a mining asset, but he does need to be honest and responsible with his liabilities and assets (and could also offer unrelated assets as collateral if applicable).

If you don't mine why do you mislead your investors by letting them think their investment is backed?

Who said anything about misleading? If someone is offering a naked PDMI he should definitely make it very explicit.

As for synthetic bonds lowering the price; it shouldnt. If it does, then you paid too much for yours. The price should reflect expected future mining earnings, nothing else. I might offer 1 trillion terrahash in mining bonds, but unless Im crazy,  I wont sell them at a price I dont expect to make a profit; nor should you buy them at any other price. More "supply" (or demand for that matter),  in this case would only serve to find the right price.

That's extremely simplistic. It's a market and there are only so many people interested in the asset, and so much they can and will spend on it. Utility of money is sublinear and as you scale an investment the risk (which is quadratic) increases proportionally, requiring a higher expected profit (i.e., lower price) to compensate.

[cuz0882]

No, the amount of money earned  per mhash is up in general. 100/mhash earns about 54 cents a day right now. It was below 30 cents earlier this year.

You really have to keep bitcoin price out of it. Bonds are denominated in btc and pay out in btc. What btc does compared to fiat is irrelevant.  Otherwise I can offer you a negative interest rate on your BTC and you could still  "make money".
Difficulty is what matters:


People still buying bonds at current prices either have no clue, or they must expect the above trend to reverse pretty dramatically somehow, assume ASICs will never materialise and pretend reward halving will not happen.

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back. There is also no point in speculating on what will happen in the future. Make your own determination and invest accordingly. We only trade bonds in bitcoins, they are invested in equipment that holds a dollar value. People buying singles from butterfly are in the same boat as people buying bonds. Your basically just paying a initial fee for someone to purchase and run the equipment for you. Once you cash in your bitcoins for equipment or bonds you will no longer be effected by price changes in btc.

[ciuciu]

No, the amount of money earned  per mhash is up in general. 100/mhash earns about 54 cents a day right now. It was below 30 cents earlier this year.

You really have to keep bitcoin price out of it. Bonds are denominated in btc and pay out in btc. What btc does compared to fiat is irrelevant.  Otherwise I can offer you a negative interest rate on your BTC and you could still  "make money".
Difficulty is what matters:


People still buying bonds at current prices either have no clue, or they must expect the above trend to reverse pretty dramatically somehow, assume ASICs will never materialise and pretend reward halving will not happen.

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back. There is also no point in speculating on what will happen in the future. Make your own determination and invest accordingly. We only trade bonds in bitcoins, they are invested in equipment that holds a dollar value.

While I don't care about this dispute, everybody should do some calculations before investing, I personally invest in mining because I want more bitcoins, not dollars. Actually, I invest dollars to get as much bitcoins as I can.

[cuz0882]

No, the amount of money earned  per mhash is up in general. 100/mhash earns about 54 cents a day right now. It was below 30 cents earlier this year.

You really have to keep bitcoin price out of it. Bonds are denominated in btc and pay out in btc. What btc does compared to fiat is irrelevant.  Otherwise I can offer you a negative interest rate on your BTC and you could still  "make money".
Difficulty is what matters:


People still buying bonds at current prices either have no clue, or they must expect the above trend to reverse pretty dramatically somehow, assume ASICs will never materialise and pretend reward halving will not happen.

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back. There is also no point in speculating on what will happen in the future. Make your own determination and invest accordingly. We only trade bonds in bitcoins, they are invested in equipment that holds a dollar value.

While I don't care about this dispute, everybody should do some calculations before investing, I personally invest in mining because I want more bitcoins, not dollars. Actually, I invest dollars to get as much bitcoins as I can.

There is not really a way to calculate where the price of btc is going to go, or how many bitcoins your going to make. I see no reason to think you would end up with less, maybe if the value of bitcoin skyrockets. In which case, at least I will be happy.. You can always send some dollars my way if you got to many..

[ciuciu]

No, the amount of money earned  per mhash is up in general. 100/mhash earns about 54 cents a day right now. It was below 30 cents earlier this year.

You really have to keep bitcoin price out of it. Bonds are denominated in btc and pay out in btc. What btc does compared to fiat is irrelevant.  Otherwise I can offer you a negative interest rate on your BTC and you could still  "make money".
Difficulty is what matters:


People still buying bonds at current prices either have no clue, or they must expect the above trend to reverse pretty dramatically somehow, assume ASICs will never materialise and pretend reward halving will not happen.

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back. There is also no point in speculating on what will happen in the future. Make your own determination and invest accordingly. We only trade bonds in bitcoins, they are invested in equipment that holds a dollar value.

While I don't care about this dispute, everybody should do some calculations before investing, I personally invest in mining because I want more bitcoins, not dollars. Actually, I invest dollars to get as much bitcoins as I can.

There is not really a way to calculate where the price of btc is going to go, or how many bitcoins your going to make. I see no reason to think you would end up with less, maybe if the value of bitcoin skyrockets. In which case, at least I will be happy.. You can always send some dollars my way if you got to many..

You are trying too hard, you are becoming annoying, same as EskimoBob.

[P4man]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

People buying singles from butterfly are in the same boat as people buying bonds.

Here is the thing though: no one in their right minds would order a BFL single today if he didnt intend to trade it in for ASICs.
No one.

[rxw]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

+1

I think it's worth mentioning another difference between mining bonds backed by fictional and actual hardware- some people may invest with the hopes of helping to secure the network by increasing the total hashing power. Obviously that doesn't happen w/ fictional hardware

[cuz0882]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

People buying singles from butterfly are in the same boat as people buying bonds.

Here is the thing though: no one in their right minds would order a BFL single today if he didnt intend to trade it in for ASICs.
No one.

I was referring to bonds invested only butterfly equipment with SC upgrade plans. Your correct though.

[cuz0882]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

+1

I think it's worth mentioning another difference between mining bonds backed by fictional and actual hardware- some people may invest with the hopes of helping to secure the network by increasing the total hashing power. Obviously that doesn't happen w/ fictional hardware

I would hope none of the bonds are backed my fictional hardware. I know some bonds are being sold before equipment is ordered. If they intend on ordering, I don't see anything wrong with that. I may take pictures and post a link on my thread. I don't sell any bonds if I don't have the actual hashing power to back them up. I've only taken that approach to protect myself. It's possible butterfly may run out of old singles or take longer then expected to deliver them. Returns are almost 10% monthly on bonds right now, it would not take long to lose a large amount of money.

[FreeMoney]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

+1

I think it's worth mentioning another difference between mining bonds backed by fictional and actual hardware- some people may invest with the hopes of helping to secure the network by increasing the total hashing power. Obviously that doesn't happen w/ fictional hardware

I would hope none of the bonds are backed my fictional hardware. I know some bonds are being sold before equipment is ordered. If they intend on ordering, I don't see anything wrong with that. I may take pictures and post a link on my thread. I don't sell any bonds if I don't have the actual hashing power to back them up. I've only taken that approach to protect myself. It's possible butterfly may run out of old singles or take longer then expected to deliver them. Returns are almost 10% monthly on bonds right now, it would not take long to lose a large amount of money.

Do you have a problem with people who don't farm corn selling corn futures?

[cuz0882]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

+1

I think it's worth mentioning another difference between mining bonds backed by fictional and actual hardware- some people may invest with the hopes of helping to secure the network by increasing the total hashing power. Obviously that doesn't happen w/ fictional hardware

I would hope none of the bonds are backed my fictional hardware. I know some bonds are being sold before equipment is ordered. If they intend on ordering, I don't see anything wrong with that. I may take pictures and post a link on my thread. I don't sell any bonds if I don't have the actual hashing power to back them up. I've only taken that approach to protect myself. It's possible butterfly may run out of old singles or take longer then expected to deliver them. Returns are almost 10% monthly on bonds right now, it would not take long to lose a large amount of money.

Do you have a problem with people who don't farm corn selling corn futures?

Not that I know of, I've never looked into it. I would have a problem if I paid someone x amount of money to purchase a piece of land, and farm corn on it. Giving me a share of the corn each year. And instead of purchasing land, he just used the money to buy corn every year and pays me that way.

[P4man]

I was referring to bonds invested only butterfly equipment with SC upgrade plans. Your correct though.

BFL offers 100% refund on their fpgas if you "upgrade" to asics. Does your bond?
And mind, I think its bonkers to buy an FPGA today even if you want to trade it in. You can guess what that makes me think of buying perpetual mining bonds that cost even more.

[cuz0882]

I was referring to bonds invested only butterfly equipment with SC upgrade plans. Your correct though.

BFL offers 100% refund on their fpgas if you "upgrade" to asics. Does your bond?
And mind, I think its bonkers to buy an FPGA today even if you want to trade it in. You can guess what that makes me think of buying perpetual mining bonds that cost even more.

Upgrades will be free.

[P4man]

I was referring to bonds invested only butterfly equipment with SC upgrade plans. Your correct though.

BFL offers 100% refund on their fpgas if you "upgrade" to asics. Does your bond?
And mind, I think its bonkers to buy an FPGA today even if you want to trade it in. You can guess what that makes me think of buying perpetual mining bonds that cost even more.

Upgrades will be free.

Yeah, a 5x increase and afaik, thats only for gigamining.
But if you trade in the BFL hardware, you get a 20x increase in GH/$.

[sarpar]

The dollar amount is all that matters. I really don't care how many bitcoins I get back from my investments. I care about how much money I get back.

Then you should speculate on btc value instead of betting the wrong way on mining difficulty.

+1

I think it's worth mentioning another difference between mining bonds backed by fictional and actual hardware- some people may invest with the hopes of helping to secure the network by increasing the total hashing power. Obviously that doesn't happen w/ fictional hardware

I would hope none of the bonds are backed my fictional hardware. I know some bonds are being sold before equipment is ordered. If they intend on ordering, I don't see anything wrong with that. I may take pictures and post a link on my thread. I don't sell any bonds if I don't have the actual hashing power to back them up. I've only taken that approach to protect myself. It's possible butterfly may run out of old singles or take longer then expected to deliver them. Returns are almost 10% monthly on bonds right now, it would not take long to lose a large amount of money.

Do you have a problem with people who don't farm corn selling corn futures?

Yes I do,
As stated by others you have an additional emittent risk. Such risks (especially in an anonymous bitcoin world) don't come cheap.
So as a result an insurance to cover a non backed bond issuer would be more expensive than mining earnings - definitely that is not the investment i am looking for.
In traditional banking you carefully select futures by whom they are issued. Ratings and margin monitoring contrary to the bitcoin world helps you deciding - but still it is no easy task