ASICMINER: Entering the Future of ASIC Mining by Inventing It

[TheSwede75]

The maximum share price possible would be approximately 20,999,950 (maximum number of bitcoins that could ever exist anywhere - the unspendable 50 coins generated in the genesis block by Satoshi) / 400,000 (outstanding shares of ASICMINER).

Not considering bitcoin that was or is lost or detroyed, the max it could ever be per share would be 52.499875 BTC.

So we have a ways to go.  

You're forgetting the transaction fees, which are essentially infinite if we just have enough transactions, so thus the maximum price would be (infinite-50)/400K.

In addition to infinite dividends on transaction fees, we also in theory have potential for infinite dividends on miner hardware sales. For example, say AM decided to 100% convert to a miner dev/sales company and not mine at all themselves. Furthermore, presume everyone was willing to spend all of their BTC on purchasing mining equipment and AM was able to meet the demand with the hardware. The result would be *all* BTC -> AM -> Dividends to AM owners (minus expenses).

Next assume AM owners cash out their BTC dividend bounty to fiat and the new BTC owners also want to spend all of their freshly purchased BTC buying mining hardware. Rinse and repeat. Infinite dividends, at least until all fiat and other assets are converted to BTC.

I have a bridge to sell as well for just 999 BTC.

-dmc

But transaction fees are paid out of existing BTC, right?  If BTC were created beyond 21,000,000 because of transaction fees then there could be an infinite amount of BTC.  I did not think it was possible to ever exceed 21,000,000.

Transaction fees are paid out of existing BTC, but I'm referring to dividends from selling mining rigs.

Regardless, there is an upper limit on how much BTC can be paid out in dividends (the total amount of BTC that currently exists) but my point is that amount resets itself every week after dividends are paid out because the BTC is then back in circulation and might end up flowing back to AM (as mining rig sales). So the theoretical limit to the amount of BTC AM can pay out in dividends is the total amount of BTC that exists, but it resets itself every week. So there is only a weekly limit, which friedcat could get around by paying dividends more frequently. How about every 10 minutes?

Ha ha ha, yeah. That's what we need, some extra bulk in the block chain 

[ThickAsThieves]

100% believer in ASICMINER, but stepping out at BTC2 for a while now. It's gone too fast from BTC1.30-BTC2 and I think we will see at least BTC1.50 again shortly. I am going to be sad if I miss the dividend on the 21st though..

If you want to take profits, more power to you, but consider that even if we only got .015 divs every week, and if the shares were 3BTC each, that would still be a consistent 26% yield (excluding reinvestment potential). No bitcoin stock can claim that kind of potential income. SDICE did it for a couple months here and there, but now has tanked.

Like it or not, AM is the only game in town for the time being, and Friedcat has a demonstrated track record. That's why the shares are rallying.

[TheSwede75]

100% believer in ASICMINER, but stepping out at BTC2 for a while now. It's gone too fast from BTC1.30-BTC2 and I think we will see at least BTC1.50 again shortly. I am going to be sad if I miss the dividend on the 21st though..

If you want to take profits, more power to you, but consider that even if we only got .015 divs every week, and if the shares were 3BTC each, that would still be a consistent 26% APR (excluding reinvestment potential). No bitcoin stock can claim that kind of potential revenue. SDICE did it for a couple months here and there, but now has tanked.

Like it or not, AM is the only game in town for the time being, and Friedcat has a demonstrated track record. That's why the shares are rallying.

Oh I know, I am basically just speculating that the stock is somewhat overheated right now. It's been a VERY fast journey from basically BTC1 -> BTC2 and there are still quite a few people sitting on 1-5000+ shares that I am thinking might want to hedge their bets by liquidating a little. I guess we will see.

[fently]

OK, silly limitations aside, we need to start with some baseline principles:

1) ASICMINER should never have more than half of all hashing power. In order to make sure this never happens even by accident, we need to consider what happens if a large competitor suddenly has an outage, like what might be caused by a natural disaster. For example, if two players each have 40% of all hashing power, and either of them has an outage, then the other winds up with > 50%. In other words, the absolute maximum hashing power of ASICMINER can never be greater than all other competitors combined, minus the largest competitor.

ie: if Avalon is the largest competitor and they have 20% of the network, ASICMINER should never exceed 40% to avoid reaching 51% in the case of an Avalon outage.

Related to this, if we are considering the natural disaster scenario:
1a) We damn well better make sure that these large players are distributed throughout the globe -- a reason to seriously consider other ventures like AMC.
1b) We have to be able to use commodity equipment. It's critical to the maintenance of a decentralized network. Since we've switched to ASICS, this means ASICS must become so available that anyone can buy one (like a GPU).


2) There is a practical limit to how much people will pay for hashing equipment, and this is also bounded. Expectations for ROI on mining equipment are bounded by network growth rate. When network hash power is not on the rise, ROI can be long term. When network hash power is on the rise, 100% ROI must be obtained within relatively short order (before the equipment becomes obsolete). Right now the time tolerance for 100% ROI on ASIC hardware is probably around 3 months from when it starts mining. If network hash rate growth slows, we'll tolerate longer term ROI just as we did with GPUs -- maybe a max of about 1 year. If we zoom out to the big picture, we can probably derive a ratio of  X BTC invested in mining must produce 100% return in X months. Right now mining returns are measured in BTC generated and mining fees. BTC reward keeps halving. Due to deflation (in terms of buying power), it's not likely that mining fees will rise per transaction, but we may experience some rise due to increased number of transactions. Still, there are only so many people on the planet, and ultimately only so many transactions that can go on (obviously we need to increase funding to our space program).


3) Due to the increasing buying power of BTC, we will likely experience more technological leaps in the coming years. But they will still be constrained by the same limits. Cost of electricity is indeed a factor, but I would argue that it is negligible compared to how quickly your equipment becomes obsolete. Remember that we're calculating in BTC, not in USD.


So, the short version:
1) we can estimate how much BTC ASICMINER can earn as a percentage of the network and we know that this figure is diminishing over time.
2) we can estimate how much BTC individuals can invest in mining equipment by using the relationship between network growth rate and ROI, and we know that this figure is diminishing over time.
3) the increasing buying power of BTC means that operating expenses aren't a major consideration


If these ideas are sound, it means we can come up with a maximum stock price for ASICMINER (or any other such company). It also means that we know that this maximum will decrease over time. The long term challenge is to get as close to that maximum as possible. The short term challenge is to convince organofcorti to do the calculations


edit: I am currently all in

[ThePanCakeKid95]

Hey guys, I posted a video about ASICMiner shares breaking 2BTC/share. It has received a lot of positive feedback, if you able, I suggest you go check it out
http://youtu.be/76EcAinKPDo

[ghostshirt]

First $100M company without a website.

[tolan77]

Hey guys, I posted a video about ASICMiner shares breaking 2BTC/share. It has received a lot of positive feedback, if you able, I suggest you go check it out
http://youtu.be/76EcAinKPDo

The cat blanket is what really ties the video together

[fently]

A simpler calculation: there are approximately 9 million coins remaining to be mined. 10% of that, divided by 400,000 shares gives you 2.25 BTC per share. So things like hardware sales, transaction fees, and optimism that we'll have more than 10% share of the network had darn well better make up for the long wait to earn those 2.25 BTC. That might be reasonable. Any thoughts? (sure beats estimates based on infinity)

[stripykitteh]

A simpler calculation: there are approximately 9 million coins remaining to be mined. 10% of that, divided by 400,000 shares gives you 2.25 BTC per share. So things like hardware sales, transaction fees, and optimism that we'll have more than 10% share of the network had darn well better make up for the long wait to earn those 2.25 BTC. That might be reasonable. Any thoughts? (sure beats estimates based on infinity)

Yes, if you're looking at the next 3.5 years until the next halving, it's not clear that a valuation much higher than the current share price is warranted. After that, no one is seriously claiming that returns will be infinite, but do you agree that in the long term it's all going to be about the transaction fees? Bitcoin is a payment system, so it's going to be about how fast those Bitcoins fly around the container. The faster they fly, the more miners will make. At the moment it's very difficult to predict how soon and how fast they will be flying, but that's where most of the ongoing value in AM will be if it survives and thrives.

[fently]

A simpler calculation: there are approximately 9 million coins remaining to be mined. 10% of that, divided by 400,000 shares gives you 2.25 BTC per share. So things like hardware sales, transaction fees, and optimism that we'll have more than 10% share of the network had darn well better make up for the long wait to earn those 2.25 BTC. That might be reasonable. Any thoughts? (sure beats estimates based on infinity)

Yes, if you're looking at the next 3.5 years until the next halving, it's not clear that a valuation much higher than the current share price is warranted. After that, no one is seriously claiming that returns will be infinite, but do you agree that in the long term it's all going to be about the transaction fees? Bitcoin is a payment system, so it's going to be about how fast those Bitcoins fly around the container. The faster they fly, the more miners will make. At the moment it's very difficult to predict how soon and how fast they will be flying, but that's where most of the ongoing value in AM will be if it survives and thrives.

Oh the halving affects the rate, but not the total amount. Not to mention, we're currently at much higher than 10% of all coins even before counting hardware sales. So if we continue as we are now, we'd probably be looking at close to 50%. I'm just looking at the pessimistic, ultra-conservative scenario of 10% between mining, hardware sales, and transaction fees. Regarding the transaction fees, it is indeed difficult to determine what will happen, but if they aren't high enough to provide incentive for the miners, then they won't go through. Funny thing that.. we may end up mining not because of the transaction fees but because failure to mine means our existing bitcoins may become worthless.

[InstantBTC]

A simpler calculation: there are approximately 9 million coins remaining to be mined. 10% of that, divided by 400,000 shares gives you 2.25 BTC per share. So things like hardware sales, transaction fees, and optimism that we'll have more than 10% share of the network had darn well better make up for the long wait to earn those 2.25 BTC. That might be reasonable. Any thoughts? (sure beats estimates based on infinity)

Interesting way to calculate it, but there are a few flaws. That estimate is based off of the total mined income over the course of then next ~130 years, assuming AM maintains 10% of the network for that entire time frame. However, they only expect to maintain 10% of the network for the next year or so, and at most until the next halving. Bear in mind, this only pertains to mining income. I'm having trouble trying to value based on sales of hardware.

[rastapool]

I'm auctioning off 400 of my shares https://bitcointalk.org/index.php?topic=208348.0
remains less than 12 hours
current lowest price is 1.72 it is chance to get really cheap AM shares

[fently]

A simpler calculation: there are approximately 9 million coins remaining to be mined. 10% of that, divided by 400,000 shares gives you 2.25 BTC per share. So things like hardware sales, transaction fees, and optimism that we'll have more than 10% share of the network had darn well better make up for the long wait to earn those 2.25 BTC. That might be reasonable. Any thoughts? (sure beats estimates based on infinity)

Interesting way to calculate it, but there are a few flaws. That estimate is based off of the total mined income over the course of then next ~130 years, assuming AM maintains 10% of the network for that entire time frame. However, they only expect to maintain 10% of the network for the next year or so, and at most until the next halving. Bear in mind, this only pertains to mining income. I'm having trouble trying to value based on sales of hardware.

It's horribly flawed, but it might be a reasonable start. One thing to offset that very long time span is the expectation that we will exceed those performance goals earlier and probably not quite meet them near the end.

[Surprise]

Hashrate is plummeting, we're at ~13 TH/s now. I wonder if this is the transition to the solo pool in action.

[SmiGueL]

Hashrate is plummeting, we're at ~13 TH/s now. I wonder if this is the transition to the solo pool in action.

First thing I thought was that Friedcat just sold 5TH/s of Blades which would give us an ~0.06 BTC/share dividend.  

*Serious mode:
But I think it's 'one of those dips' or indeed switching to solomining. Couldn't find them in one of the other pools.

(I'd rather see them put that effort in getting more blades online than switching from the pools....
More mining blades = more profit , and the poolswitching can be done when the whole batch is up or sold and we're waiting for the new 200 TH/s batch to arrive (aka: end of june or july))

[Caesium]

Hashrate is plummeting, we're at ~13 TH/s now. I wonder if this is the transition to the solo pool in action.

I sure hope so, currently us shareholders are lining the pockets of BTC Guild for no good reason.

[thx1164]

Regarding the transaction fees, it is indeed difficult to determine what will happen, but if they aren't high enough to provide incentive for the miners, then they won't go through. Funny thing that.. we may end up mining not because of the transaction fees but because failure to mine means our existing bitcoins may become worthless.

No one will mine with transaction fees not at least equaling out to the amount of money via electricity going in, and therefore simply will not accept tx fees below a market set amount, which will cover costs + profit. Only the small minority with "free" energy will be able to afford not to do so, and eventually I'm sure landlords, business owners etc, will all wise up. Mining farms will be centralized near the cheapest sources of energy.  Holy conspiracy theories Batman, what if Satoshi was trying to get the free market to develop free or reduce the cost of energy by giving an incentive to make energy delivery more efficient?

*edit: Even if that is just a side effect, it would be a good one...

[lophie]

[shibaji]

ASICMINER shares at 2BTC will soon look like a steal 

Very nice!

[bit777]

Unbelievable!! It might be the first btc company to hit a billion $ valuation a few years!