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

[EskimoBob]

Net present value analyis relies on using a discount rate to model the present value of a flow of money.

I was dicking around in excel to get some NPVs for an xMH/s perpetual (zero face value) mining bond. I am modeling these simply as a flow of ever-decreasing dividends. The difficulty increase rate (dividend decrease rate) is also an input. The mining rewards are modeled to halve after 18 weeks from today, and the NPV is then calculated at 1%, 2%, and 4% weekly discount rates over 2 years of projected dividends.

Might be fun to play around with!

http://www.filedropper.com/miningnpv

Good idea. Thank you.
http://striketeam.ath.cx/btccalc/btccalc.php is a nice Mh/s calculator that shows you what happens to Mh/s production, when difficulty rises.
In February 2012, difficulty was 1379647.  I did calculations with 5% rise per month. I was sure, it never happen that fast. I was wrong
We are at 2440642.60
 

[EskimoBob]

I'll bump this because people are still getting sucked in to fixed Mh/s perpetual bond scams.

[Francesco]

I'll bump this because people are still getting sucked in to fixed Mh/s perpetual bond scams.

You have a funny definition of "scam". Then anyone betting with Matthew N. Wright has been scamming him, since he has allowed him to make a stupid choice with his money...

[odolvlobo]

I'll bump this because people are still getting sucked in to fixed Mh/s perpetual bond scams.

You mean you'll bump this because you are now trolling. I think a good in-depth thoughtful analysis would make a good sticky, but this thread is far from that.

[EskimoBob]

I'll bump this because people are still getting sucked in to fixed Mh/s perpetual bond scams.

You mean you'll bump this because you are now trolling. I think a good in-depth thoughtful analysis would make a good sticky, but this thread is far from that.

You can thank your fellow forum users for that

[nimda]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

[Bitcoin Oz]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

Point proven.

[bitcoinbear]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

Nice list.

Now people who support these are going to say "But for the people who bought in AFTER the IPO, after the price crashed, these were a great deal since they got them cheaper." But the price will continue to go down in the future, so what looks like a great price now is going to look overpriced when you look back at it in a couple months.

[jamesg]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1	0.443176	0.6	+0.043176 (+04%)

For what it's worth, GIGAMINING's original IPO price was 1 BTC each.

Thanks,
gigavps

EDIT: FTFY

[organofcorti]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

For what it's worth, GIGAMINING's original IPO price was 1 BTC each.

Thanks,
gigavps

And Puremining's was 0.37.

[bitcoinbear]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

For comparison, could you add a few of the "mining companies" to the list? I mean the ones where the shares actually own a percentage of the company?

[puffn]

I suggest a new list as that would not be an apples to apples comparison.

[nimda]

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1.3	0.443176	0.6	-0.256824 (-20%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.45	0.101208	0.0953	-0.253492 (-56%)

For what it's worth, GIGAMINING's original IPO price was 1 BTC each.

Thanks,
gigavps

And Puremining's was 0.37.

Well then.

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1	0.443176	0.6	+0.043176 (+04%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.37	0.101208	0.0953	-0.173492 (-47%)

How does one find the IPO Price? I was using the earliest trade, or so I thought.

Comparison with equity companies:

Asset	IPO Price	Total Dividends	Last Traded	Profit
BTC-MINING	1	0.250579	0.8	+0.050579 (+5%)
COGNITIVE	0.6	0.092174	0.62479998	+0.116974 (+20%)
FPGAMINING	1	0.344258	0.688	+0.032258 (+3%)

Everyone is welcome to expand upon this table, but I find it boring work

[jamesg]

Well then.

Asset	IPO Price	Total Dividends	Last Traded	Profit
GIGAMINING	1	0.443176	0.6	+0.043176 (+04%)
BITBOND	0.6	0.188358	0.32	-0.091642 (-15%)
YABMC	0.3	0.085533	0.0999	-0.114567 (-38%)
PUREMINING	0.37	0.101208	0.0953	-0.173492 (-47%)

How does one find the IPO Price? I was using the earliest trade, or so I thought.

Thanks for making the table with pretty colors. 

I feel that mining bonds are not the means to the end, aka, just buy the bond and hold it. Although, if you bought at the original IPO, you would still be ahead of the game by the 4%.

This thread claims that mining bonds are the turds. Could it be that "investors" strategies in owning mining bonds are the real problem?

Bitcoin mining should be considered to be a depleting asset and as such, one must understand depleting assets in order to understand how to invest in them. It is becoming common place knowledge now that reinvestment is an essential part of any mining strategy, whether you are buying mining equipment or you are buying mining bonds. Otherwise, you lose on both ends because of technology advances eroding value in your mining equipment and difficulty increases eroding your dividend payments.

If you are not willing to reinvest, mining and mining bonds are probably not for you.

[kakobrekla]

Everyone is welcome to expand upon this table, but I find it boring work

Hm, try assbot

( smickles ) !pl gigamining 1
( @assbot ) GIGAMINING [1@1BTC] paid: 0.45625096 BTC. Last price: 0.6 BTC. Capital gain: -0.4 BTC. Total: 0.05625096 BTC. (5.6%)

#bitcoin-assets.

[ciuciu]

If I remember well, only the first 5000 GIGAMINING were sold at 1 BTC. The rest were sold at 1.5.

[jamesg]

If I remember well, only the first 5000 GIGAMINING were sold at 1 BTC. The rest were sold at 1.5.

The first 10k bonds sold at 1 BTC. All trading activity to 1.5 BTC was the market finding what it felt was the current value.

[misterbigg]

YO, 'Bob? What's up with NASTY, is that a mining turd? Because it looks to have appreciated over the last few months instead of going down. And it has paid dividends:

https://glbse.com/asset/view/NASTY

[Bitcoin Oz]

YO, 'Bob? What's up with NASTY, is that a mining turd? Because it looks to have appreciated over the last few months instead of going down. And it has paid dividends:

https://glbse.com/asset/view/NASTY

lrn2read contracts

"Shareholders will own the Bitcoin mining equipment and in the event of a liquidation, proceeds from sales of equipment will be paid to shareholders"

NASTY is not a mining bond at all. Thanks for proving the point that I made earlier about a mining company being better than a fixed mining bond.

[Fjordbit]

Bitcoin mining should be considered to be a depleting asset and as such, one must understand depleting assets in order to understand how to invest in them. It is becoming common place knowledge now that reinvestment is an essential part of any mining strategy, whether you are buying mining equipment or you are buying mining bonds.

This is ultimately the crux of the situation. You can either buy a mining company which will manage the reinvestment for you or buy mining bonds and perform the reinvestment yourself.

There are still some things about fixed MH/s bonds that are rather "turdy" in my opinion. This is in the short term, and will be corrected once ASIC is out and is established.

Basically, the argument is that what miners do is use real money (bitcoins) at a present day to purchase equipment with a fixed MH/s, thus a bond holder is really performing the same action that miner is now. However, just look at that statement. If you wanted to get into mining, would you buy equipment now? With ASIC difficulties coming along with the reward halving, I certainly wouldn't buy a GPU. I wouldn't even consider a non-BFL FPGA. So my option is a BFL FPGA.

However, BFL FPGAs are not spending a fixed amount now for a fixed MH/s because of the ASIC upgrade program. Right now, assuming BFL delivers on their specs, 830 MH/s can be traded for about 18,445 MH/s, a 2200% increase. Let's go back to GPUs, they have a secondary market, and so they could be sold to purchase ASICs as well. I could see 3,000 MH/s being traded for a 40,000 MH/s SC single, a 1333% increase.

But owners of fixed mining contracts right now have no promises to increase hashrate in the future. All of the outstanding bonds for gigamining could be fulfilled with a single $30,000 SC minirig, with hash power to spare, and all the existing equipment can be sold to the owner's profit. I'm not saying it's wrong: people went into that deal with a clear understanding of what they were going to get. I'm just saying that at the prices I've seen for these contracts, it's a horribly bad deal and I don't see how people are going to get an ROI.