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

[imsaguy]

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.

Wrong.  You can still sell a bfl single in 4 months time to someone else upgrading to ASIC.

[EskimoBob]

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/$.

So basically gigavps devalues your existing bonds by 4 times if you take the "free  upgrade" and if you pay .25 BTC extra (additional 25% from IPO price), you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.
If this is correct, then this must be the worst upgrade path ever proposed by any mining contract out there.

[conspirosphere.tk]

As for synthetic bonds lowering the price; it shouldnt. If it does, then you paid too much for yours

It was not the whole point of this thread?

[P4man]

So basically gigavps devalues your existing bonds by 4 times if you take the "free  upgrade" and if you pay .25 BTC extra (additional 25% from IPO price), you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.
If this is correct, then this must be the worst upgrade path ever proposed by any mining contract out there.

No, giga gives a free upgrade path, which he is under absolutely zero obligation to do. Most other bond issuers dont and wont.  If anything, I think Giga is being quite generous. Not that it will fundamentally change the fact that these bonds, even the upgraded ones will most likely turn out to be terrible investments. But you bought mining bonds not shares. You dont own the fpgas, you have no claim to the upgrade.  Giga owns it and only owes you coupon payments that are function of difficulty, no more, no less.  Those payments will become worthless as mining revenue per GH is about to vaporize, but thats not giga's fault and its not up to him to compensate anyone for their stupidity.

BTW,  the fact giga will trade 5MH bonds for 20MH bonds for free, just shows you how incredibly overpriced these things are.

[EskimoBob]

So basically gigavps devalues your existing bonds by 4 times if you take the "free  upgrade" and if you pay .25 BTC extra (additional 25% from IPO price), you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.
If this is correct, then this must be the worst upgrade path ever proposed by any mining contract out there.

No, giga gives a free upgrade path, which he is under absolutely zero obligation to do. Most other bond issuers dont and wont.  If anything, I think Giga is being quite generous. Not that it will fundamentally change the fact that these bonds, even the upgraded ones will most likely turn out to be terrible investments. But you bought mining bonds not shares. You dont own the fpgas, you have no claim to the upgrade.  Giga owns it and only owes you coupon payments that are function of difficulty, no more, no less.  Those payments will become worthless as mining revenue per GH is about to vaporize, but thats not giga's fault and its not up to him to compensate anyone for their stupidity.

BTW,  the fact giga will trade 5MH bonds for 20MH bonds for free, just shows you how incredibly overpriced these things are.

OK, thanks for clearing this up.

[jamesg]

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/$.

So basically gigavps devalues your existing bonds by 4 times if you take the "free  upgrade" and if you pay .25 BTC extra (additional 25% from IPO price), you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.
If this is correct, then this must be the worst upgrade path ever proposed by any mining contract out there.

EskimoBob,

It seems you only like to rant without answering any specific questions. If you don't like the plans I have laid out for my bond holders to upgrade to ASIC hardware, please come back to my thread and answer the questions I asked you there. I even sent you a PM regarding this some time ago.

Best,
gigavps

Hi EskimoBob,

If you get a moment, I posed some questions to you in my response to your posts in the gigamining thread. I would like to hear your answers so that I can improve Gigamining  / Teramining if possible.

https://bitcointalk.org/index.php?topic=75802.msg1048217#msg1048217

Best,
gigavps

[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.

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/$.

I specifically said companies invested in butterfly only, like mine. Gigamining is not all fpga. I'm increasing the hashrate 21.5x if they meet the specs.

[Meni Rosenfeld]

BTW,  the fact giga will trade 5MH bonds for 20MH bonds for free, just shows you how incredibly overpriced these things are.

That's not really fair, giga will trade 5 MH/s assets for 20 MH/s for free if and when BFL releases their ASICs and upgrades his equipment. Part of the current valuation of mining bonds is a result of uncertainty (whether justified or not) of this event.

you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.

I take it that if Giga's DC gets hit by a meteorite, the asset should downgrade to 0 MH/s because the melted equipment really belongs to the holders?

If you want to enjoy all positive events but suffer from none of the negative events, we can do that but it would cost extra and people who don't want this extra service shouldn't be forced to pay for it.

[EskimoBob]

...

you get a upgrade,  you actually must for free in the first place. Yes, for free! Because equipment is paid by bitcoins from IPO - your money, bondholders.

I take it that if Giga's DC gets hit by a meteorite, the asset should downgrade to 0 MH/s because the melted equipment really belongs to the holders?

If you want to enjoy all positive events but suffer from none of the negative events, we can do that but it would cost extra and people who don't want this extra service shouldn't be forced to pay for it.

You are right, my statement is not correct in context of how bonds are operated. 
Let me rephrase it. What we are actually witnessing is a massive devaluation of so called "currency" aka Mh/s while the bond issuer escapes this buy upgrading the equipment for free. Bondholders will get hit by a massive 20x inflation, miners with FPGA upgrade to ASIC, do not.
Question is, if "Mh/s currency" gets devalued, is it honest to let bondholders get fucked?
   

[conspirosphere.tk]

Question is, if "Mh/s currency" gets devalued, is it honest to let bondholders get fucked?

Yes, because they would get even more phucked if they personally invest in mining with anything else than BFLs, IF asics are really incoming as they say.

Since many (me included) have more than one doubt about the promised BFL Asic's performances and timing of delivery, non-asic mining bonds can deliver anyway if such doubts materialize.

It just takes that mining bonds sustain their dividends around 2% maintaining a stable price for a few months to get the capital back.

Moreover, whatever will happen, much depends on decisions by the bond issuers: some might decide to upgrade too, or liquidate and offer a partial refund, others might just liquidate and run.  

[Meni Rosenfeld]

Question is, if "Mh/s currency" gets devalued, is it honest to let bondholders get fucked?

Yes. They didn't invest in FPGA currency or BFL currency or whatever (and there are ways to do that if that's what you want). They invested in MH/s currency. Usually when a currency you invest in is devalued you will suffer loss.

[sarpar]

Question is, if "Mh/s currency" gets devalued, is it honest to let bondholders get fucked?

Yes. They didn't invest in FPGA currency or BFL currency or whatever (and there are ways to do that if that's what you want). They invested in MH/s currency. Usually when a currency you invest in is devalued you will suffer loss.

Which was the scenario to be expected considering rising difficulty paired with technology cycles - while you issuing the shares profit additionally (besides IPO profit margin) from customers losses by exchanging mining equipment (protecting your hardware currency from devaluation). Technology shifts not being a specific scenario in the contract gives you all right to realize the full share of additional profits, but the question whether this is fair still remains. Other issuers obviously answered the question differently. They might have thought of establishing a long term trust-relationship with their investors instead of gambling against them.

People investing in these vehicles should already think of further technology shifts (this is not a once in a lifetime scenario) and how their issuer decided to pursue. but i guess not long and those gambling against their customers bought back their shares (financing of your mining farm nicely done - trust gone).
 

[Meni Rosenfeld]

They might have thought of establishing a long term trust-relationship with their investors instead of gambling against them.

I am thinking of establishing a long term trust-relationship with my investors by doing exactly what I said I would do, rather than resort to whims and marketing gimmicks. Really, if you read the PureMining OP and contract appendix you'll see I went out of my way to specify what I would do in every contingency and why, and I made a huge deal out of it being deterministic. I have no idea how could anyone get the impression that upgrading the bond was an option. If I wanted to do a mining company like everyone else I would have done a mining company.

People investing in these vehicles should already think of further technology shifts (this is not a once in a lifetime scenario)

Switching from GPU/FPGA to ASIC is once in a lifetime. There will be further hardware advances but they won't be anywhere near as drastic. The disruptive thing here isn't the ASIC, it's BFL's upgrade plan. There's no way every time they make a new device they will allow everyone to do 100% value trade-in.

and how their issuer decided to pursue. but i guess not long and those gambling against their customers bought back their shares (financing of your mining farm nicely done - trust gone).

Buying back does not harm investors. If the asset devalues it means so have its expected earnings, at which point the investors are better off with the issuer buying the bonds back.

[sarpar]

Seriously: Given that, for whom can you still recommend an investment in your fund?

The only scenario I can think of with a small chance for profit is when the trade-in fails.

Blaming the 100% trade-in is not entirely correct, since mining equipment might have multiple uses in the future (f.e. research, alternative mining etc.). Also a 50% trade-in might be as drastic if the hash-rate multiplies respectively.

I doubt your intention creating a win-win situation, you bet to find investors stupid enough to finance your one-sided game. Since you made a clear contract, it is your right to do so - still fair is different! You must be like many a greedy person.

[Meni Rosenfeld]

Seriously: Given that, for whom can you still recommend an investment in your fund?

As I said multiple times, an investment being "recommended" is a function of the price. It will be inappropriate for me to discuss whether the investment is recommended at any specific price. I am currently not offering any new bonds so I have no direct interest in people buying them at this point.

I doubt your intention creating a win-win situation

You can doubt it all you want, it was my intention. I wanted to simultaneously make a profitable, honest business venture, offer people a streamlined way to invest in mining, and move us one step closer to a hashrate commodity market.

you bet to find investors stupid enough to finance your one-sided game.

When I created the bond I did not know when would ASICs arrive, did not expect them to be introduced with such an aggressive pricing strategy, and I definitely didn't expect the trade-in program. To suggest that I somehow plotted to cunningly profit from these events is ludicrous.

In the long term issuers don't determine the price of bonds, the market does. I explained very clearly what the asset does, what factors go into valuating it, and that it is every investor's responsibility to evaluate how much they stand to gain from it. It is not my fault if someone decides to pay 0.7 BTC per bond (not to me, in the secondary market) and it ends up a bad investment.

In theory the prospect of profiting from upgrade plans and such would make its way into the price the issuer is willing to offer the bond at. In my case I had not expected such a plan, and so it was not reflected in my initial price.

You must be like many a greedy person.

I am not. (Not like most greedy people, or like most people of any kind for that matter. I do like money however.) If I was I would probably have given up my word and my values and offered an upgrade plan to win the popularity contest. Or try to offer new bonds the moment ASICs arrive to capitalize on the uncertainty with regards to the target equilibrium.

You keep focusing on the "fairness" of issuers sharing the outcome of every positive event with investors but never stop to consider the bad things that can happen, and the risks of being committed to stick to the contract no matter what. I could die and continue to pay coupons from beyond the grave, would many greedy people do that?

[cytokine]

Seriously: Given that, for whom can you still recommend an investment in your fund?

As I said multiple times, an investment being "recommended" is a function of the price. It will be inappropriate for me to discuss whether the investment is recommended at any specific price. I am currently not offering any new bonds so I have no direct interest in people buying them at this point.

I doubt your intention creating a win-win situation

You can doubt it all you want, it was my intention. I wanted to simultaneously make a profitable, honest business venture, offer people a streamlined way to invest in mining, and move us one step closer to a hashrate commodity market.

you bet to find investors stupid enough to finance your one-sided game.

When I created the bond I did not know when would ASICs arrive, did not expect them to be introduced with such an aggressive pricing strategy, and I definitely didn't expect the trade-in program. To suggest that I somehow plotted to cunningly profit from these events is ludicrous.

In the long term issuers don't determine the price of bonds, the market does. I explained very clearly what the asset does, what factors go into valuating it, and that it is every investor's responsibility to evaluate how much they stand to gain from it. It is not my fault if someone decides to pay 0.7 BTC per bond (not to me, in the secondary market) and it ends up a bad investment.

In theory the prospect of profiting from upgrade plans and such would make its way into the price the issuer is willing to offer the bond at. In my case I had not expected such a plan, and so it was not reflected in my initial price.

You must be like many a greedy person.

I am not. If I was I would probably have given up my word and my values and offered an upgrade plan to win the popularity contest. Or try to offer new bonds the moment ASICs arrive to capitalize on the uncertainty with regards to the target equilibrium.

You keep focusing on the "fairness" of issuers sharing the outcome of every positive event with investors but never stop to consider the bad things that can happen, and the risks of being committed to stick to the contract no matter what. I could die and continue to pay coupons from beyond the grave, would many greedy people do that?

I have to jump in here and defend Mr. Rosenfeld. He has been 100% honest here and upheld all of his obligations, and I think many of these attacks are a way of investors not taking personal responsibility for their decisions. If an investor made a bad bet, it's not the fault of an contract issuer that followed his contract to a T.

And of course, while the market is currently signalling that the arrival of ASICs will be disruptive (based on current pricing and the relatively much higher interest rates of non-ASIC upgradable mining assets), there is no guarantee that this will occur, which would subsequently send prices for these assets higher and prices for ASIC-based ventures lower.

I generally like to bet that the market is right (except at extremes), but it's not always the case.

[sarpar]

Not to be misunderstood:
1. I am not invested in these perpetual mining funds.
2. I respect him for his reliability
BUT - to me contractual design is unfair because risk distribution is skewed. Looking at the market reaction people having bought this asset might have not been aware of the contractual implications (compare to complexity of derivatives sold to the elderly). Others miners realized how inappropriate their deal was and voluntarily corrected their contract only to their investors' benefit.

[Meni Rosenfeld]

BUT - to me contractual design is unfair because risk distribution is skewed. Looking at the market reaction people having bought this asset might have not been aware of the contractual implications (compare to complexity of derivatives sold to the elderly). Others miners realized how inappropriate their deal was and voluntarily corrected their contract only to their investors' benefit.

Clearly our views on this subject differ. Yes, the deterministic model doesn't handle the current events very gracefully. But it's not about the current events, deterministic contracts will play a key role for many years to come, and I am not interested in contaminating the concept.

[EskimoBob]

Rosenfeld, chill out and screw your investors any way you like it. Be a true Rosenfeld.

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.

Imagine it like this: all the money is exchanges to a new money and you get 20:1 what you had before. Your 1 becomes 20.
Only problem is, that some of the guys, who borrowed money from you, decide that they will be paying you back the same sum of money as before, so what it's 20 times less.

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.

[Meni Rosenfeld]

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?

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.