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Author Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It  (Read 3914570 times)
velacreations
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August 22, 2013, 05:52:01 AM
 #11601

here's the most important piece of that update:

There hasn't been a huge hardware dividend payoff: is it because of reduced margins, or delays?
Because we are collecting funds to get ready for the exponentially increased devices to be assembled in September and October.

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Vycid
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August 22, 2013, 06:06:23 AM
 #11602

I've produced a rational argument why you should expect them to attempt to exit.

As we saw today, the market cannot support significant sell volume. This is unsurprising, since the share price is buoyed by sentiment and not underlying value. ASICMiner has nowhere near 1.2 million BTC worth of assets and intangibles, so it is impossible for all holders to liquidate the current market value of their shares.

So, if everyone cannot liquidate completely, then it is the first actor who profits most. From a game theoretical perspective, every whale should be searching for the best way to be the first one out without demolishing the value of their own shares.

what security does have the volume to support massive liquidation?  None of them.  Not even BTC itself on most exchanges.  That does not mean the value of the company is any less, it means that not many orders are posted on the exchange.  Pass-through shares are always going to be like that because they represent a very small part of the company.  

Look at how many shares are on BTCT: ~26K.  That's just 6.5% of the shares.  And out of those 26K, how many shares changed hands today? ~1400.  So, like 0.35%.  That's a very small sample.

I am pleased by the opportunity for a real discussion.

Exactly -- 0.35% of the outstanding shares in daily volume, and everything goes to shit. This market is propped up by the paper-thin support of irrational buyers.

Do you think that if someone sold 0.35% of Shell Oil or Dow Chemical or similar that it would crash the price? No. Those companies are worth quite a bit even bankrupt. They own chemical plants and refineries and shipping networks. More importantly they have decades of consistent profit, so you can expect to recoup your investment. Money would flow in because it represents profit with nearly zero risk.

AM is profoundly uncertain. It owns little of value (50 TH primarily). As I've detailed before, the very potential for profit in the mining sector will be demolished by competition via a "tragedy of the commons" scenario. The mined BTC will largely be gobbled up by electricity costs. Even if AM maintains a significant hashrate percentage their profits will still plummet. We saw this happen with GPUs. Similarly AM's margins for hardware sales are based on the (former) lack of credible competition.

All this thing needs is a push. The whales know it. None of them want to be the one to destroy the market, but they want to be the last one out even less.

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August 22, 2013, 06:12:38 AM
 #11603

AM is profoundly uncertain. It owns little of value (50 TH primarily). As I've detailed before, the very potential for profit in the mining sector will be demolished by competition via a "tragedy of the commons" scenario. The mined BTC will largely be gobbled up by electricity costs. Even if AM maintains a significant hashrate percentage their profits will still plummet. We saw this happen with GPUs. Similarly AM's margins for hardware sales are based on the (former) lack of credible competition.

All this thing needs is a push. The whales know it. None of them want to be the one to destroy the market, but they want to be the last one out even less.


Have you looked at their financials? They have an assembly infrastructure which is enormous and can clearly handle hundreds of terahashes of manufacturing a month. And they have more than 50TH, they just haven't deployed it and are selling it instead apparently.

The only way your idea could be accurate is if friedcat is lying, which could effectively be considered the end of argument.

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August 22, 2013, 06:14:33 AM
 #11604

AM is profoundly uncertain. It owns little of value (50 TH primarily). As I've detailed before, the very potential for profit in the mining sector will be demolished by competition via a "tragedy of the commons" scenario. The mined BTC will largely be gobbled up by electricity costs. Even if AM maintains a significant hashrate percentage their profits will still plummet. We saw this happen with GPUs. Similarly AM's margins for hardware sales are based on the (former) lack of credible competition.

All this thing needs is a push. The whales know it. None of them want to be the one to destroy the market, but they want to be the last one out even less.


Vycid, He's alive.. I thought he got fried
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August 22, 2013, 06:16:22 AM
 #11605

Update

There hasn't been a huge hardware dividend payoff: is it because of reduced margins, or delays?
Because we are collecting funds to get ready for the exponentially increased devices to be assembled in September and October.


great to hear from you friedcat, thanks for the update, this is exactly what I wanted to hear! I'm happy that I held on to all of my shares and I plan to do so in the future...

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August 22, 2013, 06:17:57 AM
 #11606

Update

There hasn't been a huge hardware dividend payoff: is it because of reduced margins, or delays?
Because we are collecting funds to get ready for the exponentially increased devices to be assembled in September and October.


great to hear from you friedcat, thanks for the update, this is exactly what I wanted to hear! I'm happy that I held on to all of my shares and I plan to do so in the future...



People so easily forget about his earlier post re: AM hashing at 800-1000TH by the end of the year.  Even with upcoming new entrants into the space, that's plenty to stay comfortably positioned.
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August 22, 2013, 06:18:31 AM
 #11607

AM is profoundly uncertain. It owns little of value (50 TH primarily). As I've detailed before, the very potential for profit in the mining sector will be demolished by competition via a "tragedy of the commons" scenario. The mined BTC will largely be gobbled up by electricity costs. Even if AM maintains a significant hashrate percentage their profits will still plummet. We saw this happen with GPUs. Similarly AM's margins for hardware sales are based on the (former) lack of credible competition.

All this thing needs is a push. The whales know it. None of them want to be the one to destroy the market, but they want to be the last one out even less.


Have you looked at their financials? They have an assembly infrastructure which is enormous and can clearly handle hundreds of terahashes of manufacturing a month. And they have more than 50TH, they just haven't deployed it and are selling it instead apparently.

The only way your idea could be accurate is if friedcat is lying, which could effectively be considered the end of argument.

Can you back up the "hundreds of TH a month" statement please? Bizarre they're operating 50 if so.

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August 22, 2013, 07:48:21 AM
 #11608

Thanks for the update! 

Friedcat for president!
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August 22, 2013, 08:15:18 AM
 #11609

Can you back up the "hundreds of TH a month" statement please? Bizarre they're operating 50 if so.

from what I hear it's pretty difficult to find high power density server rooms in China so the deployment is definitely not an easy task.
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August 22, 2013, 08:20:10 AM
 #11610


great to hear from you friedcat, thanks for the update, this is exactly what I wanted to hear! I'm happy that I held on to all of my shares and I plan to do so in the future...



Great ! I come from Taiwan.
I will keep all shares on hand too.
ASICMINER is the world leader who can set up hash power quickly and sell miner machine without delay.

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Vycid
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August 22, 2013, 08:20:51 AM
 #11611

Can you back up the "hundreds of TH a month" statement please? Bizarre they're operating 50 if so.

from what I hear it's pretty difficult to find high power density server rooms in China so the deployment is definitely not an easy task.

Perhaps that's why. Clearly they're having enough difficulty with 50:

Update

Why has the hashrate dropped the past weeks?
It dropped in different few days. Some of them are internal hardware/network glitches, some of them are luck based. We haven't identified any form of DDOS attacks recently though.


This is ultimately good news for Bitcoin as a whole. The harder it is to run big mining ops, the more decentralized things will be.

In the long run, though, I suspect extensive consolidation is inevitable based on the variance in electricity rates by region.

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August 22, 2013, 08:34:05 AM
 #11612


from what I hear it's pretty difficult to find high power density server rooms in China so the deployment is definitely not an easy task.

Foxconn is building a new Data Center in Kaohsiung in Taiwan .
Friedcat may consider it.
It could be ready and operate this year.

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August 22, 2013, 08:42:39 AM
 #11613

Vycid = epic troll.
Vycid
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August 22, 2013, 08:48:37 AM
 #11614

So, now that I'm behind a real keyboard and things are calmed down a bit (yes, I was on my phone - all my posts today were made from a Galaxy S3. Samsung should put me in a commercial), I'm going to share my thoughts on the update. While the fact that FC hasn't gone incommunicado is definitely a positive sign for longs, I believe that the content of the message is markedly less bullish than the reaction implied.

Update

We have collected several shareholders' questions for answering.

Could we have an official live hashrate meter from ASICMINER?
We have an internal one, mainly for troubleshooting when some of the racks going down. The hashrate meter based on the blocks mined reflects more of the real speed (plus luck of course). We will buy more bandwidth before making it accessible by the whole internet. It also requires more commitment in maintenance.

For more transparency, is it possible to share a wallet address for depositing income from ASICMINER hardware sales?
We use a different deposit address for each payment transaction. But a centralized nexus address is good. Then people could see how the funds are separated as dividends and expenses.


This is a good thing. Any movement of AM toward transparency is positive, in my book, although longs should be aware that transparency can be a double-edged sword. If things are going well, it will get noticed. If they are going poorly, it will get noticed. It may end up increasing volatility.


Besides mining, hardware sales, and franchising, are there any other potential sources of revenue?
There are many possible ones considered, but none can support serious sound business model based on a 1-2billion dollar total market value of Bitcoin: selling patents, offering solution for mining farm construction, assembly service, etc.


I've talked before about AM and its refusal to grow beyond an ASIC company. Certainly the upsides of expanding their business with the BTC market in the 1-2B USD range are limited, but if BTC never grows beyond 1-2B USD then AM is in deep shit to start with (FC loves to talk about transaction fees to justify valuation). Their cashflow should allow them to explore and capitalize on new business prospects far better than a start-up. Why is AM so lacking in vision?


Why has the hashrate dropped the past weeks?
It dropped in different few days. Some of them are internal hardware/network glitches, some of them are luck based. We haven't identified any form of DDOS attacks recently though.


This is a bad sign. Sure, their hashrate hasn't decreased, but they're having trouble managing their hardware at 50 TH. On the bright side, they managed to maintain a stable hashrate for a pretty long period of time, so it's not something they're incapable of, but it's not the trend you want. Downtime was more expected and forgivable close to launch.


There hasn't been a huge hardware dividend payoff: is it because of reduced margins, or delays?
Because we are collecting funds to get ready for the exponentially increased devices to be assembled in September and October.

How are things going regarding your business plan? Did you account for the sudden network hashrate increase? How is the international expansion of ASICminer coming along?
The business plan is unchanged. The network hashrate increase was still under our projection. The total hash target originally set for the end of this year would probably achieved earlier.
The ASICMiner expansion via franchising is still much within China border. The internationally deployed portion will dominate when the gain of operation cost outweigh the delay and cost of international shipping/assembling abroad.

I'm gonna address these two at once.

Quote
The network hashrate increase was still under our projection. The total hash target originally set for the end of this year would probably achieved earlier.

This is CEO-speak for "we didn't expect this, but we have a plan". Which is unsurprising, since there's still something like 500 TH of Avalon chips still due for delivery, god knows how many BFL units, 100TH/Bitfury firing up, et al. (One must wonder where AM would have been if Avalon and BFL had delivered on time.)

The reason I know it was unexpected is that FC is curtailing dividends to save up for more devices in Sept/Oct. If things were exactly as expected, competent leadership would have known the amount of money required in advance, and smoothed out that deduction over many dividends. Instead, FC decided to cut deeply into this dividend, and the next few (apparently).

So that's either a management failure, or AM recognizes they are in a tighter spot than they expected. Take your pick.

Either way, I suspect that the market was operating on the assumption that AM had already the funds they needed for new devices, so these reduced dividends are a negative surprise. A correction is to be expected.

Finally,

The internationally deployed portion will dominate when the gain of operation cost outweigh the delay and cost of international shipping/assembling abroad.

This means "we plan to play catch-up when other firms have finished localizing in the regions where electricity and rent are cheapest."

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August 22, 2013, 09:13:52 AM
 #11615

Thanks for the update, Vycid. You are such a troll. It's almost funny.
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August 22, 2013, 09:36:33 AM
 #11616

Thanks for the update, Vycid. You are such a troll. It's almost funny.

He's not even worth putting on ignore he's so full of his own hype, it's fun to watch him squirm Wink.  The entertainment value of a short who's trapped... begging for attention.  Hilarious... Grin Grin

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August 22, 2013, 09:48:29 AM
 #11617

It seems you have a talent for misinterpretation. Maybe it's your bearish sentiment which leads you to some of those conclusions.

This is a good thing. Any movement of AM toward transparency is positive, in my book, although longs should be aware that transparency can be a double-edged sword. If things are going well, it will get noticed. If they are going poorly, it will get noticed. It may end up increasing volatility.
Words without meaning. What are you trying to say? If the sun shines today it may rain tomorrow?

I've talked before about AM and its refusal to grow beyond an ASIC company ... Their cashflow should allow them to explore and capitalize on new business prospects far better than a start-up. Why is AM so lacking in vision?
You seem to be fixed on the idea that ASICMINER should chase more than one rabbit. As stated elsewhere, it is not impossible, but it has to fit neatly into the strategy of the company - otherwise there is a disconnect and a loss of focus. Your critique is heard - and if new monetizing strategies come along I am certain friedcat will be eager to employ them.

Why has the hashrate dropped the past weeks?
It dropped in different few days. Some of them are internal hardware/network glitches,...
This is a bad sign. Sure, their hashrate hasn't decreased, but they're having trouble managing their hardware at 50 TH. On the bright side, they managed to maintain a stable hashrate for a pretty long period of time, so it's not something they're incapable of, but it's not the trend you want. Downtime was more expected and forgivable close to launch.
You seem to have no experience with reality. Downtimes due to unforeseen reasons happen in the most professional circles. Also we're not talking about a redundancy business here, but a capacity business. If all friedcat had to do is run 1 blade with a 5000 fold redundancy, I am sure we'd have 100% uptime, no trouble.

Quote
The network hashrate increase was still under our projection. The total hash target originally set for the end of this year would probably achieved earlier.

This is CEO-speak for "we didn't expect this, but we have a plan". Which is unsurprising, since there's still something like 500 TH of Avalon chips still due for delivery, god knows how many BFL units, 100TH/Bitfury firing up, et al. (One must wonder where AM would have been if Avalon and BFL had delivered on time.)
Again, you're not really saying much. Projections are bound to be off, that's why they are projections. In this case the deviation is  rather positive.

The reason I know it was unexpected is that FC is curtailing dividends to save up for more devices in Sept/Oct. If things were exactly as expected, competent leadership would have known the amount of money required in advance, and smoothed out that deduction over many dividends. Instead, FC decided to cut deeply into this dividend, and the next few (apparently).
Are you suggesting friedcat should increase the cash holdings of ASICMINER? Are you not satisfied with the strategy that payments are aggressively deducted from the most recent dividend? Does the volatility in dividends bother you for some reason?

So that's either a management failure, or AM recognizes they are in a tighter spot than they expected. Take your pick.
What exactly should the failure be? Pay as you go? Need I remind you - Most existing competitors are effectively financing the production through pre-orders. Probably only Avalon is now in a position to pay for a production run out of pocket from previous earnings.

Either way, I suspect that the market was operating on the assumption that AM had already the funds they needed for new devices, so these reduced dividends are a negative surprise. A correction is to be expected.
I doubt that investors are that naive. And it's irrelevant anyway - any dividend not payed goes into the cash pool of the company. Dividends not payed may interfere with timing your share purchases though - I understand that.

The internationally deployed portion will dominate when the gain of operation cost outweigh the delay and cost of international shipping/assembling abroad.
This means "we plan to play catch-up when other firms have finished localizing in the regions where electricity and rent are cheapest."
Now your logic is out of the window. The statement means that the opportunity costs between rapid local deployment and relocation have to be considered. When that incentive is strong enough, hashpower will go abroad. When it comes to bitcoin we still live in an "empty world", with a lot of relocation opportunities. It will take at least another few years until that changes. But I sympathize with your sentiment to push aggressively into international distribution.

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August 22, 2013, 10:16:45 AM
 #11618

Thanks a lot, Jutarul. I was too lazy to reply to so much bs.  Grin

One thing I would like to add regarding cash holdings: fc had clearly stated he would only deduct necessary expenses from the dividends as and when required and not hold cash. This has been discussed here over and over again.

Too bad we have to deal with so much ignorant fud here...  Undecided
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August 22, 2013, 10:50:51 AM
 #11619

Too many trolls and useless walls of text..

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August 22, 2013, 11:50:31 AM
 #11620

Can you back up the "hundreds of TH a month" statement please? Bizarre they're operating 50 if so.

from what I hear it's pretty difficult to find high power density server rooms in China so the deployment is definitely not an easy task.

even in shenzhen?
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