ASICMINER: Entering the Future of ASIC Mining by Inventing It

[JaredR26]

Will this mess cause the difficulty to increase less the next time it changes? Or will it not have an affect (or only a marginal one)?

It should cause it to rise by less.  It will also mean next difficulty change will take longer to reach - so more blocks mined at the current difficulty.  To that limited extent it helps ASICMINER - but that's offset if BTCguild were previously mining on the v0.8, as all work done on the (soon to be) orphaned part of the chain will be lost.  Depends a bit on the pool's policy for paying for orphaned blocks as well.

FYI: BTC Guild pays orphaned blocks on PPS (by definition, PPS pays orphaned blocks).  We also pay for them on PPLNS, so this fork event hasn't had any affect on ASICMINER earnings passed through from BTC Guild.

I kinda feel sorry for pool owners who have that policy... this could be a huge sum of orphaned coins out of their pocket.

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[JordanL]

Will this mess cause the difficulty to increase less the next time it changes? Or will it not have an affect (or only a marginal one)?

It should cause it to rise by less.  It will also mean next difficulty change will take longer to reach - so more blocks mined at the current difficulty.  To that limited extent it helps ASICMINER - but that's offset if BTCguild were previously mining on the v0.8, as all work done on the (soon to be) orphaned part of the chain will be lost.  Depends a bit on the pool's policy for paying for orphaned blocks as well.

FYI: BTC Guild pays orphaned blocks on PPS (by definition, PPS pays orphaned blocks).  We also pay for them on PPLNS, so this fork event hasn't had any affect on ASICMINER earnings passed through from BTC Guild.

I kinda feel sorry for pool owners who have that policy... this could be a huge sum of orphaned coins out of their pocket.

True, although in an era where mining is becoming more centralized, they have just shown an advantage of using them versus solo mining. One that a lot of us were not thinking about.

[mrb]

I consider 0.6 BTC/share to be overpriced, therefore a risky investment. But that is just my opinion. I tend to be conservative. Other investors might think differently.

How can 0.6 BTC per share be overpriced?  In no way thats true. I got 0.02135376 BTC per share in each of the last 2 weeks. 52 weeks with this are 2.22BTC.

Your math completely fails to take into account how quickly difficulty is going to rise.

Look, even friedcat estimates that ASICMINER will average only 10% of the global hashrate over the year. It means each share will bring: 25 (coins/block) * 6 (block/hour) * 730 (hours/month) * 9 (months) * 10% / 400k (shares) = merely 0.25 BTC of revenue between now and Dec 2013 (1/10th of your "2.22 BTC" estimate!)

Plus the 0.25 BTC of revenue per share assumes 100% of the mining revenues are going to be distributed to shareholders. We know this is not going to be the case given friedcat's plans (he will reduce the dividend).

And in 2014, all bets are off. ASICMINER's efficiency (130nm chip) is relatively bad compared to other ASICs (55-65nm). They are not hosted in a country with low electricity prices. I can't see how they will remain profitable in 2014. Plus I think 10% of the global hashrate is itself an optimistic estimation for 2013.

This is why I think 0.6 BTC is overpriced for a share that definitely will not return more than 0.25, maybe 0.3 or 0.4 BTC if being overly optimistic.

The only possible justification for a price of 0.6 BTC/share is if you assume that ASICMINER is going to plan to build a more efficient chip, and if they are going to succeed, and if they are going to deploy and ramp it up as fast as (or faster than) the competion. But at this point it would be a very speculative gamble. There are too many "ifs" for me.

[memvola]

Regarding share pricing; if you are thinking the sale price of the company, please take into account the IP itself, the initial investment for ASIC production, current inventory, the chips in production and the mining income till the others catch up. However, the real investor would care more about inertia than these. If investment value was measured by inventory, angels wouldn't even exist. I'm sure if you had calculated Apple's share price over its inventory during foundation years, you would have gone the way of Ronald Wayne.

I hate to crush the euphoria, but difficulty didn't change, so it doesn't really matter how much the hashrate dropped, the #blocks/time is the same for ASICMINER.

We really need to start using blockchain clocks. At least this would cause a slight decrease in the increase of difficulty, which converts to revenue for us.

I kinda feel sorry for pool owners who have that policy... this could be a huge sum of orphaned coins out of their pocket.

True, although in an era where mining is becoming more centralized, they have just shown an advantage of using them versus solo mining. One that a lot of us were not thinking about.

Well, fees are there to cover these sort of losses, so I don't see it as an advantage. However there is the real advantage that mining pools are more vigilant about these events. It's their business after all; it could have taken more time for Bitfountain to react.

[Gabit]

Your math completely fails to take into account how quickly difficulty is going to rise.

Look, even friedcat estimates that ASICMINER will average only 10% of the global hashrate over the year. It means each share will bring: 25 (coins/block) * 6 (block/hour) * 730 (hours/month) * 9 (months) * 10% / 400k (shares) = merely 0.25 BTC of revenue between now and Dec 2013 (1/10th of your "2.22 BTC" estimate!)

This is the situation AFTER the IPO have been paid back. How much revenue will be used to R&D is anyone's guess. But if BTC keeps rising, that is getting smaller and smaller.

This is why I think 0.6 BTC is overpriced for a share that definitely will not return more than 0.25, maybe 0.3 or 0.4 BTC if being overly optimistic.

The only possible justification for a price of 0.6 BTC/share is if you assume that ASICMINER is going to plan to build a more efficient chip, and if they are going to succeed, and if they are going to deploy and ramp it up as fast as (or faster than) the competion. But at this point it would be a very speculative gamble. There are too many "ifs" for me.

In the real world (dunno, haven't been there a while) I could have sworn that 10% profit a year was a good year. This being the internet and BTC, I assume we need to complain if the revenue isn't at least 100%/share/a year.

[SebastianJu]

Look, even friedcat estimates that ASICMINER will average only 10% of the global hashrate over the year. It means each share will bring: 25 (coins/block) * 6 (block/hour) * 730 (hours/month) * 9 (months) * 10% / 400k (shares) = merely 0.25 BTC of revenue between now and Dec 2013 (1/10th of your "2.22 BTC" estimate!)

Plus the 0.25 BTC of revenue per share assumes 100% of the mining revenues are going to be distributed to shareholders. We know this is not going to be the case given friedcat's plans (he will reduce the dividend).

And in 2014, all bets are off. ASICMINER's efficiency (130nm chip) is relatively bad compared to other ASICs (55-65nm). They are not hosted in a country with low electricity prices. I can't see how they will remain profitable in 2014. Plus I think 10% of the global hashrate is itself an optimistic estimation for 2013.

This is why I think 0.6 BTC is overpriced for a share that definitely will not return more than 0.25, maybe 0.3 or 0.4 BTC if being overly optimistic.

The only possible justification for a price of 0.6 BTC/share is if you assume that ASICMINER is going to plan to build a more efficient chip, and if they are going to succeed, and if they are going to deploy and ramp it up as fast as (or faster than) the competion. But at this point it would be a very speculative gamble. There are too many "ifs" for me.

When you take the electricity prices into account you cant only take BTC to it, but instead the price a BTC has in exchange for USD for example. And i think the powercosts wont be something that will have such a heavy weight.
But like i already said... it was a simplified calculation, maybe overentusiastic. At least i think 10% over the year is a statement when friedcat thought the competition will be way more powerful. I still dont see this competition and it doesnt really look like they will be a danger soon.
And i already claimed that the dividends will halve. With that i mean that not only the sold shares will get a dividend but the whole stock.
Plus i dont see why you doesnt take into account that we only mine with 6TH at the moment. I mean you know there are much more coming soon. Only justifying the price on a 10% statement that was made in the past for a not so bright future like it is now isnt the best. We already are better now than this prediction. And im confident that friedcat thought about the possibilites how to make deployment faster. At least it sounds this way.
So no, im not at all convinced that the shares are worth 0.25btc only.

[Deprived]

I consider 0.6 BTC/share to be overpriced, therefore a risky investment. But that is just my opinion. I tend to be conservative. Other investors might think differently.

How can 0.6 BTC per share be overpriced?  In no way thats true. I got 0.02135376 BTC per share in each of the last 2 weeks. 52 weeks with this are 2.22BTC.

Your math completely fails to take into account how quickly difficulty is going to rise.

Look, even friedcat estimates that ASICMINER will average only 10% of the global hashrate over the year. It means each share will bring: 25 (coins/block) * 6 (block/hour) * 730 (hours/month) * 9 (months) * 10% / 400k (shares) = merely 0.25 BTC of revenue between now and Dec 2013 (1/10th of your "2.22 BTC" estimate!)

Plus the 0.25 BTC of revenue per share assumes 100% of the mining revenues are going to be distributed to shareholders. We know this is not going to be the case given friedcat's plans (he will reduce the dividend).

And in 2014, all bets are off. ASICMINER's efficiency (130nm chip) is relatively bad compared to other ASICs (55-65nm). They are not hosted in a country with low electricity prices. I can't see how they will remain profitable in 2014. Plus I think 10% of the global hashrate is itself an optimistic estimation for 2013.

This is why I think 0.6 BTC is overpriced for a share that definitely will not return more than 0.25, maybe 0.3 or 0.4 BTC if being overly optimistic.

The only possible justification for a price of 0.6 BTC/share is if you assume that ASICMINER is going to plan to build a more efficient chip, and if they are going to succeed, and if they are going to deploy and ramp it up as fast as (or faster than) the competion. But at this point it would be a very speculative gamble. There are too many "ifs" for me.

Best you tell us what percentage dividend/month it is that you think is the barrier below which something is totally unthinkable.  Becasue from where I'm standing if we took that .25/share in 9 months and instead made it .25 a year (i.e. taking out 25% of mined coins for costs and development/expansion) investors still get 2%+ per month on a share price of 1 BTC and not far short of 4% on a share price of .6 BTC.  Which to most people is pretty decent.  Do you want to try making a list of companies returning more than that?   It would be a pretty small list.

[samson]

Once a proper trading platform is setup the market will find the correct price.

[Mausini]

pfffff seems like all the non-shareholders have a very sophisticated estimations of share value  

Friedcat did his calculations based on the assumption of 10% network hashing speed over a long period of time. That's just a back of the napkin calculation, yet highly conservative and realistic. It's just something to get a feeling for the numbers. Still there is a lot of uncertainty (difficulty, competiton, deployment speed) and also some risk, but honestly if anyone has proven himself it's friedcat and his team.

And all these misconceptions about dividend halving...
And sure, China has no competitive electricity prices...

Go make your bets on avalon, bfl, oh wait a minute... and primeasic, suckers!

[VeeMiner]

Once a proper trading platform is setup the market will find the correct price.

yep

Anyway, it seems like the whole 6,159.22 GH/s hashrate was moved to BTC Guild now (nothing seems to be left on OzCoin)

in current difficulty we should be mining ฿4,964.10 per week, so it should be around 0.0248 per share - not counting the bitfountain shares and electricity/ maintenance cost

[memvola]

Plus the 0.25 BTC of revenue per share assumes 100% of the mining revenues are going to be distributed to shareholders. We know this is not going to be the case given friedcat's plans (he will reduce the dividend).

I don't understand this. Revenue is revenue. Actually, I would value the company far less if they promised to pay dividends, or if they indeed paid regular dividends. Dividends directly mean that they don't have means to expand the company to make it more profitable. I hope to see no dividends after the initial investors get paid (of course accompanied with better accounting books, audit reports, inventory and such). I hope people on the board share this view as well.

The only possible justification for a price of 0.6 BTC/share is if you assume that ASICMINER is going to plan to build a more efficient chip, and if they are going to succeed, and if they are going to deploy and ramp it up as fast as (or faster than) the competion. But at this point it would be a very speculative gamble. There are too many "ifs" for me.

If I counted on them successfully producing a more efficient chip and deploy it faster than competition, I would value it much much more than 0.6 per share. It is almost impossible.

What I believe is that they will continue doing what they have proven that they can for a long time: seize opportunities and successfully implement plans. This will get me far more than 0.6 per share. They may become a competitive hardware manufacturer and some kind of payment processor, depending how Bitcoin will evolve in the coming years. They might even stop producing chips altogether and build farms around the world. Or they could become the standard chip developer. It's an unknown future.

[SebastianJu]

I hope to see no dividends after the initial investors get paid (of course accompanied with better accounting books, audit reports, inventory and such). I hope people on the board share this view as well.

Why do you think thats needed? I mean they already kept the money needed for loans and investments and didnt pay it out as dividend. The money needed for investing in new asics and other things seems to be peanuts at the moment, so dividends still are possible. Of course investment comes before dividend, but i dont see a problem at this point. It looks to me like Bitfountain is handling it this way already.

If I counted on them successfully producing a more efficient chip and deploy it faster than competition, I would value it much much more than 0.6 per share. It is almost impossible.

I dont think they will soon. I mean a better chip with less electricity and more Hashingpower would be nice... but it would be way more efficient now, and possibly far into future, to simply buy 2 old asics and still have more revenue from it than with a better chip. Plus smaller manufacturing means a higher price for the units too.
Of course, if bitfountain lives longer they have to create better chips at some point...

@All... do you think that the bitcoin exchange price will take a big drop once the news about the fork will find its way into the mass media?

[rudrigorc2]

Im interested in buying shares from ASICMINER but Im confused about the math to know my expected ROI.

Can anyone help me?

[memvola]

Of course investment comes before dividend, but i dont see a problem at this point. It looks to me like Bitfountain is handling it this way already.

Then we agree on the essentials. There are many uncertainties about the evolution of the mining market, but each potential path will likely bring a new opportunity. My hope is that Bitfountain can develop itself by seizing these.

If I counted on them successfully producing a more efficient chip and deploy it faster than competition, I would value it much much more than 0.6 per share. It is almost impossible.

I dont think they will soon. I mean a better chip with less electricity and more Hashingpower would be nice... but it would be way more efficient now, and possibly far into future, to simply buy 2 old asics and still have more revenue from it than with a better chip. Plus smaller manufacturing means a higher price for the units too.
Of course, if bitfountain lives longer they have to create better chips at some point...

Mostly yes, but I'm not sure this will be valid far into the future. Depends on what sort of devices other manufacturers come up with. If too many of these pop up, even merging development efforts might begin to make sense.

[xkrikl]

Where/how can one buy shares?

If i wanted to buy 10 shares, what % of ASICMINERS network total would that be equal to. Also what would 10 shares cost? And are any shares available?

You can buy 11 shares of DMC on Bitfunder and trade them (someday) for 1 ASICMINER.

If you just want the exposure, buy into a pass-through or a mining fund holding the shares, such has JAH.

https://bitfunder.com/asset/DMC
https://bitfunder.com/asset/JAH
https://bitfunder.com/asset/G.ASICMINER-PT

I'm buying all three!   

https://btct.co/security/PAJKA.BOND
as well

[mrb]

This is the situation AFTER the IPO have been paid back. How much revenue will be used to R&D is anyone's guess. But if BTC keeps rising, that is getting smaller and smaller.

No, the 0.25 BTC return that I estimated does average out the period of time after and before shareholders have recouped their IPO investment. In other words, ASICMINER will represent 10% of the global hashrate on average, from the moment they launched until the end of 2013 (IOW right now they are at 15% and it will go down to 5%).

In the real world (dunno, haven't been there a while) I could have sworn that 10% profit a year was a good year.

No, that would not be a 10% profit. What I explained is that if you buy a share at 0.6 BTC today, and recoup 0.25 BTC by the end of 2013, and if after that the share's worth is close to 0 (because by that time ASICMINER will generate negligible profits), then you have not made any profit. You have lost 0.35 BTC per share.

When you take the electricity prices into account you cant only take BTC to it, but instead the price a BTC has in exchange for USD for example. And i think the powercosts wont be something that will have such a heavy weight.

Even if you make power free or ignore all operating costs, ASICMINER won't generate significant profits: if the difficulty increases by 30x by early 2014, which is a reasonable estimate, then one share (assuming they are at 50 Thash/s) will generate merely 0.014 BTC per month ignoring operating costs. Assuming you buy a share at 0.6 BTC today, and assuming you recoup about half the investment by early 2014 (by my estimate in my previous post), you have 0.3 BTC remaining to be recouped, and at 0.014 BTC per month, at a constantly increasing difficulty, you will basically never do it...

The only shareholders who will make money are those who bought low (0.1-0.3 BTC, eg. those who went in the IPO), or those who manage to buy & sell at the right time (the share may be volatile enough to have lows & highs despite being overpriced). That, or you may make money if ASICMINER's future unknown plans about scaling beyond 50 Thash/s with more efficient chips turn out to be at least moderately successful. Maybe they will but that is not certain at all.

[creativex]

That, or you may make money if ASICMINER's future unknown plans about scaling beyond 50 Thash/s with more efficient chips turn out to be at least moderately successful. Maybe they will but that is not certain at all.

...or the competition continues to fall flat on their face.

[kaerf]

also need to take into account the intrinsic value of the security at the end of your calculations. you should add on how much will you be able to sell shares for (if anything).

[memvola]

if you buy a share at 0.6 BTC today, and recoup 0.25 BTC by the end of 2013, and if after that the share's worth is close to 0 (because by that time ASICMINER will generate negligible profits), then you have not made any profit. You have lost 0.35 BTC per share.

That's quite right. If you think that ASICMINER will generate negligible profits after one year of operation, you shouldn't value it 0.6 per share. I for one don't understand why I should think that though.

[iCEBREAKER]

And in 2014, all bets are off. ASICMINER's efficiency (130nm chip) is relatively bad compared to other ASICs (55-65nm). They are not hosted in a country with low electricity prices.

2014 is a long time from now and China is a big place. 

They have plenty of freezing, snow covered mountains and hydroelectric dams.

AM may deploy later batches to such places, obviating the disadvantages of the 130nm process.

British Columbia or Washington would work too, with better connectivity to boot.