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Author Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It  (Read 3914552 times)
101111
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July 05, 2013, 10:17:16 AM
 #9421


Markets are hard to predict short-term. But, long-term, I am very confident that the current valuation, based on the current value and potential for growth, is unreasonable.

Really good to have someone on here who can predict the long term outlook of a speculative startup in a nascent disruptive technology and thus the various competitive landscapes of the associated businesses that will be launched within the context of a crazy and rapidly evolving global economic/financial system.

False contextualization. The potential mining revenue for a bitcoin-denominated company can already be fully realized (and already is for AM). Sure, it's hard to predict what will happen to Bitcoin, but it's really not so hard to analyze what happens to the mining 'industry'. There's a fixed number of coins, very clear barriers to entry for competition, and lots of information about anticipated deployment timelines (like the half million Avalon chips that are due in a couple of weeks).

If we were talking about Coinbase, or Bitpay, or whatever, I'd agree 100%. We're not - we're talking about a much simpler business model that has no more growing to do. In other words, this is a mature company; it's just the economy that's immature.

Mature companies with simple business models are not so challenging to value.
It's not false contextualization; your context is simply too narrow-minded. A mature company? Maybe in your world. Easy to value? Do you have access to financial reports? Have you and friedcat chatted about business, product and marketing strategy?  No I didn't think so. Your jumping to conclusions based on simple metrics.

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July 05, 2013, 10:28:30 AM
 #9422

Cool. Sell me some puts, then. I'm beating the dividend APR by quite a bit.

Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d

Without jumping into the rest of the to-ing and fro-ing, just a point of interest: this option would be severely undervalued relative both to pricing based on historical volatility and to other options currently up for grabs on BTCT. Assuming for the sake of argument a dividend yield of 30% and 5% cost of capital, this comes out to around 80% implied volatility. By contrast, most of the options available on BTCT run into triple digits -- 250%, 300% or more. In other words, if you were to persuade someone to sell you these options, you would, theoretically, be getting a great bargain.

To be fair, nearly all options pricing I've noticed on the exchanges has bordered on ludicrous. Maybe a realistic level would be somewhere between the bargain you've suggested and the nosebleed levels seen on the exchanges.  Undecided

I own dozens of these options at price points similar to the one I've just described. Suffice to say: the BTCT options are generally enormously overpriced.

It is true that my Black-Scholes calculation is quite a bit out of date; it should come as little surprise that all of my options were purchased prior to the events of the past few days.

Seeing that the events of the past few days were probably manipulation, and that I've already reached a satisfactory options portfolio, I am not motivated to raise my premium. If nobody is interested, that's okay, but the offer stands.

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July 05, 2013, 10:55:59 AM
 #9423

Look at those guys in the loan section of this forum. They are going to bankrupt. Lending an deflation money is a Ponzi scheme!!!
Bullshit

Let's suppose we're now using a currency with 10% deflation. Joe wants to lend Bob 100 currency units. In order to make a 5% profit, this means Joe must lend at -5% APR.

Wait - that doesn't work! Bob could borrow 100 units, sit on them for a year, and return 95. Joe has made a 5% profit, but Bob has actually come out ahead!

So Joe could simply sit on his currency for a year, and make 10% profit instead of the 5% he'd make from a loan with 5% inflation-adjusted APR. In the inflationary scenario, Joe would have been willing to lend out his money at 0% inflation-adjusted interest just to avoid losing money from inflation!
It's easy to get confused by deflationary economies: you must think the other way around.

Since I can sit on my money and be happy, I will obviously ask for something more if you want a loan.
Let's say I factor in 2.5% default risk plus 2.5% profit, I'll still ask you a 5% interest on your loan.

People should stop thinking that "deflation is magic": it isn't. Absolute values don't matter: what matters are how much you are rich relative to other people... if money deflates for everyone, then it's not an issue. And since people want to try to get richer, they will still try to invest them, hoping to get more than they would get just thanks to the deflation.

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July 05, 2013, 11:41:59 AM
 #9424


It's easy to get confused by deflationary economies: you must think the other way around.

Since I can sit on my money and be happy, I will obviously ask for something more if you want a loan.
Let's say I factor in 2.5% default risk plus 2.5% profit, I'll still ask you a 5% interest on your loan.

People should stop thinking that "deflation is magic": it isn't. Absolute values don't matter: what matters are how much you are rich relative to other people... if money deflates for everyone, then it's not an issue. And since people want to try to get richer, they will still try to invest them, hoping to get more than they would get just thanks to the deflation.


Complete bullshit
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July 05, 2013, 11:56:32 AM
Last edit: July 05, 2013, 12:21:32 PM by Rival
 #9425

Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed. In fact, if it is deflating rapidly enough, profit could still be realized lending at negative interest rates.

Comparing the returns of investing in AM with the returns of loansharking may lead one to assume the better value will be returned by loansharking. While this is possible, all investments follow the same basic risk/ reward paradigm we are all familiar with. If you believe the risk /reward is better for AM than loansharking, then Buy AM. Otherwise, you can certainly lend to your heart's desire. But these are personal investment decisions, and it is of course possible to lose in either case. The risk premiums should reflect the risk. If you believe them to be skewed, you will find a good place to invest.

The potential for AM to grow nearly indefinitely should be obvious, as it is for most industries. Even if every computer on Earth was running Windows 95, and Microsoft had 100% market penetration and adoption, they can still roll out Windows 98 and do it all again. Likewise, while AM mining has practical caps, their hardware does not. The caps on hardware are only temporary, and increases in global hash are simply opportunities to sell the next generation of eruptors. And the next... and the next... each generation contributing to a higher hash, enabling... another generation of eruptors.

As I said in a previous post, they welcome the competitors. They have no desire to become Standard Oil, it would not be in their self-interest. Constantly predicting that other companies will spell the demise of AM only plays in their hands. The competitors are necessary for AM to continue with it's business model, and they would quickly become stagnant without them.

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July 05, 2013, 12:57:17 PM
 #9426

Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.
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July 05, 2013, 01:38:45 PM
 #9427

Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.

Accepted.
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July 05, 2013, 04:32:06 PM
 #9428

Block Erupter infographic: http://bitcoinexaminer.org/asic-miner-infographic/

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July 05, 2013, 07:23:22 PM
 #9429

Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.

Accepted.

Right, and it's not hard to see where the breakdown of global economics emerges from the refusal to lend. New businesses will disappear with no capital; individuals will struggle to buy their own houses; and - perhaps the part that many await eagerly - governments must shrink or default.

But, clearly, credit crunches are bad for the economy. Deflation introduces a permanent sort of credit crunch.

Ideally, in my mind, inflationary currencies and deflationary currencies can coexist. Inflationary currencies could remain the currencies in which tax debts must be settled, among other things; deflationary currencies like Bitcoin will offer a haven, not unlike gold. The new feature is that it will enable cheap and effortless transactions.

Honestly, though, I see Bitcoin more and more as a platform than a currency. Bitcoin over and over proves its unsuitability as a long-term store of value. Perhaps it is a good investment, but nobody would treat it as cash if half their value could be gone in a month.

No, instead what I imagine is Bitcoin powering transactions without the need to suffer the unstable and deflationary currency. Regardless of what the exchange rate is, you can move from, for example, USD (party 1) -> BTC (party 1) - BTC (party 2) -> USD (party 2) with little effort. I am sure companies will soon offer cheap services to do exactly that. Imagine a company that can do what Western Union and Visa can do - for less. That's disruptive.

Perhaps, in the long term, the use of Bitcoin as a transaction medium will stabilize its currency as well.

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July 05, 2013, 07:35:15 PM
 #9430

Honestly, though, I see Bitcoin more and more as a platform than a currency. Bitcoin over and over proves its unsuitability as a long-term store of value. Perhaps it is a good investment, but nobody would treat it as cash if half their value could be gone in a month.
This derails the thread - but I want to comment on that. It seems you got it backwards. Bitcoin over the longterm is a superior store-of-value medium (conditional on that the internet and the bitcoin network itself is sustainable). Don't confuse valuation with store-of-value features. Valuation of an asset depends on the cost of capital and the political environment. Store-of-value is a feature of the medium itself and is mainly determined by it's scarcity. Gold served as a superior store-of-value, because it can hold the purchasing power over thousands of years. Try that with paper.

addendum: Time horizons matter. For an individual an undervaluation of an asset for 20 years maybe dramatic. For nation states this is not the case, which is why gold traditionally is mainly interesting for maintaining the wealth of countries or for hedge funds.

No, instead what I imagine is Bitcoin powering transactions without the need to suffer the unstable and deflationary currency. Regardless of what the exchange rate is, you can move from, for example, USD (party 1) -> BTC (party 1) - BTC (party 2) -> USD (party 2) with little effort. I am sure companies will soon offer cheap services to do exactly that. Imagine a company that can do what Western Union and Visa can do - for less. That's disruptive.

Perhaps, in the long term, the use of Bitcoin as a transaction medium will stabilize its currency as well.
Yes - but we don't need the scarcity of bitcoin for this. Any "predictable" money supply will do - which is the idea of freicoin and the like.

The ASICMINER Project https://bitcointalk.org/index.php?topic=99497.0
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July 06, 2013, 12:25:45 AM
 #9431

The interest in ASICMiner options still seems pretty limited, so I wanted to restate this offer here:

I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.


3 BTC limit.

With the share price near 2.75, I think you'll find this is a pretty attractive bargain.

(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)

Vycid,

You have been Bearish on Asicminer, and buying puts at a strike price of 1.8BTC.  Your prognostication of the price going down was eventually right, but only after it was incredibly wrong.  Frankly, when the share price was at 2.75 Asicminer was an absolute steal and you were wrong to try to bet against it then.  You may get back your losses if enough people are willing to sell puts at 4, but I'm not sure you're going to find so many takers.  And your intensely active talking down Asicminer is due to either or both of your interest in seeing the shares go down and your own insecurity about having been wrong before.
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July 06, 2013, 12:50:38 AM
 #9432

The interest in ASICMiner options still seems pretty limited, so I wanted to restate this offer here:

I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.


3 BTC limit.

With the share price near 2.75, I think you'll find this is a pretty attractive bargain.

(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)

Vycid,

You have been Bearish on Asicminer, and buying puts at a strike price of 1.8BTC.  Your prognostication of the price going down was eventually right, but only after it was incredibly wrong.  Frankly, when the share price was at 2.75 Asicminer was an absolute steal and you were wrong to try to bet against it then.  You may get back your losses if enough people are willing to sell puts at 4, but I'm not sure you're going to find so many takers.  And your intensely active talking down Asicminer is due to either or both of your interest in seeing the shares go down and your own insecurity about having been wrong before.

Don't be so fast to conclude I will not be able to exercise those options. I still have months left - I did not expect, in fact, that AM would start dropping already. Things are ahead of schedule, although there was more of a price runup than I had expected.

Besides, I bought a healthy spread of options on the way up while I was holding shares. It is a poor assumption that my strategy was entirely bearish simply because I was buying puts; I was buying puts because I appreciated a significant potential for disaster. I'm sold out and already in the black, so it's all gravy from here.

Certainly, don't take my prognostication any more seriously than anyone else's. But my strategy has been successful, after all.

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July 06, 2013, 01:00:20 AM
 #9433

Already, people selling goods denominated in bitcoins peg them to the USD/BTC exchange rate. www.bitcoinstore.com is an example.
This is pretty obvious, since they don't pay their goods with BTC.
It shouldn't surprise anyone, really.

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July 06, 2013, 02:53:26 AM
 #9434

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
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July 06, 2013, 03:02:47 AM
 #9435

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
We still in big mining era , think back to the time when Spanish discovery a huge gold miner in south american , what is the result ? Gold price suddenly drop , So what Huh ASICs devices just like skillful miners, how could you believe everyone can be a skillful miners Huh Short- run BTC will drooped for sure ,but It will rebuild the price when mines are running out ...and I can't believe people selling at 60s are really lose their basic logical.
Of course, if you are super earlier adopters and still make profit on selling at this price ,then my assumption is not regard to you .
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July 06, 2013, 03:14:25 AM
 #9436

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
We still in big mining era , think back to the time when Spanish discovery a huge gold miner in south american , what is the result ? Gold price suddenly drop , So what Huh ASICs devices just like skillful miners, how could you believe everyone can be a skillful miners Huh Short- run BTC will drooped for sure ,but It will rebuild the price when mines are running out ...and I can't believe people selling at 60s are really lose their basic logical.
Of course, if you are super earlier adopters and still make profit on selling at this price ,then my assumption is not regard to you .

I think you misunderstand. This is not a disscussion about the price of bitcoin. It is about the sustainability of centralised mining.
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July 06, 2013, 03:21:31 AM
 #9437

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin

Although this is a great link and I encourage folks to listen, I think it'd be best in a thread of its own, this thread is already very crowded.
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July 06, 2013, 03:23:08 AM
 #9438

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
We still in big mining era , think back to the time when Spanish discovery a huge gold miner in south american , what is the result ? Gold price suddenly drop , So what Huh ASICs devices just like skillful miners, how could you believe everyone can be a skillful miners Huh Short- run BTC will drooped for sure ,but It will rebuild the price when mines are running out ...and I can't believe people selling at 60s are really lose their basic logical.
Of course, if you are super earlier adopters and still make profit on selling at this price ,then my assumption is not regard to you .

I think you misunderstand. This is not a disscussion about the price of bitcoin. It is about the sustainability of centralised mining.
Sustainable centralized mining is the trend , just like not everyone can be a skillful miners, and we need centralized miners to sustainablelly to provides conformations for our transaction.
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July 06, 2013, 03:27:46 AM
 #9439

I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?

https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
We still in big mining era , think back to the time when Spanish discovery a huge gold miner in south american , what is the result ? Gold price suddenly drop , So what Huh ASICs devices just like skillful miners, how could you believe everyone can be a skillful miners Huh Short- run BTC will drooped for sure ,but It will rebuild the price when mines are running out ...and I can't believe people selling at 60s are really lose their basic logical.
Of course, if you are super earlier adopters and still make profit on selling at this price ,then my assumption is not regard to you .

I think you misunderstand. This is not a disscussion about the price of bitcoin. It is about the sustainability of centralised mining.
Sustainable centralized mining is the trend , just like not everyone can be a skillful miners, and we need centralized miners to sustainablelly to provides conformations for our transaction.

I tend to disagree. But as pierrejo mentioned, this may belong in a thread of its own. I just thought this is the most basic information when trying to speculate about company like ASIC Miner.
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July 06, 2013, 04:11:08 AM
 #9440

I do not see how ANY alternate hashing system solves the centralization problem long term.  Data centers are more efficient then a home office... no matter what you are running, your margins will be better in an optimized space.  Electricity/Cooling costs also are different in areas.  You are not going to start a mining farm where the grid goes down 4 hours a day.  You are not going to start a mining farm in death valley.

Limiting the mining to only CPU's or some mix of hashing functions puts a band aid on the problem.  Long term when margins get thin and you need every ounce of optimization to turn a profit, you will centralize.

Does this ruin bitcoin?  Who knows.  I know that bitcoin will NEVER be as centralized as current money.  Sure we wont have everyone mining on every computer device they have all the time distributed over the whole world... but just because we can not achieve the ideal, does not mean we are horrible.  We can be far from the ideal system, and still be the best solution out there.

Bitcoin solves far more problems then it has.  The other example people bring up is how early adopters have an advantage in bitcoin.  Sure, that may be bad... but would having latecomers benefit be better?  No... who would drive the adoption and the innovation?  It may not be the ideal to have early adopters get super rich, but its better then the other options as I see it, so we have to live with it.

So to tie this in, what does this all mean?

It means we are in a good position.  We have the current mining leader shown to be someone who seems to understand his place as was discussed last week.  Their deployment and sales are set to bring in profits, whilst leaving ample breathing room for competition.  Hell, chances are that if some bad actor did spin up a bunch of asic's with the intention of doing a 51% attack, chances are Friedcat may be able to crush them.

So what am I doing?  Putting in buy orders at 4 with every BTC I can find Smiley  I might even buy into BTC with USD (something I have not done seriously since 2011, since I have had no need to) since prices are so low.

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