ASICMINER: Entering the Future of ASIC Mining by Inventing It

[stripykitteh]

Informal, unofficial update on hashing

I asked friedcat to clarify a few things.
(1) Deployment rate will vary from 3 TH/s - 10 TH/s per week for the next few weeks.
(2) 20% at most of the second batch will be sold, so we will most likely see around 50 TH/s deployed.
(3) Full deployment by June is the plan.
(4) No power or network bottlenecks are expected.
(5) People can stop complaining about centralization because we will be solo-mining within the month.

It's good news of course. Excitement needs to be tempered with the realization Avalon will be rolling out some significant kit in the next couple of months. Market share will go up, but we won't get anywhere near 50%, more like 30%. Hardware sales should provide a nice bit of cash flow as well.

[punkideas]

Informal, unofficial update on hashing

I asked friedcat to clarify a few things.
(1) Deployment rate will vary from 3 TH/s - 10 TH/s per week for the next few weeks.
(2) 20% at most of the second batch will be sold, so we will most likely see around 50 TH/s deployed.
(3) Full deployment by June is the plan.
(4) No power or network bottlenecks are expected.
(5) People can stop complaining about centralization because we will be solo-mining within the month.

It's good news of course. Excitement needs to be tempered with the realization Avalon will be rolling out some significant kit in the next couple of months. Market share will go up, but we won't get anywhere near 50%, more like 30%. Hardware sales should provide a nice bit of cash flow as well.

Well we've been hovering around ~20% for the last week, I think we may be higher than 30% for a few weeks and stabilize near 30% until the next major rollout.  Either way, I think ASICMINER is probably in the position to have the largest ownership of hashpower in the forseeable future.

[SebastianJu]

Are there any shares available for purchase anywhere at this point?

https://bitcointalk.org/index.php?topic=188550.0

[furuknap]

C'mon what's wrong with this picture?

friedcat updates with fantastic news, stock prices on PT exchanges plummets. And by plummets, I mean a 10% drop in a week.

Volatility is fine, but except a slightly skeptical price reception on those bees, I have seen positive news only for the previous week. BFL is late as always, Avalon delayed, friedcat responding with perfection to inquiries (including mine)...

We should have started the weekly run-up to Wednesday already, but instead, sellers are popping out from every grain of sand on the beach. On BTCT there's basically no buy support until 1.14-1.15, and if that falls, there's nothing down to 0.9. Meanwhile, the sell side is heavy just a few bitcents above last sale.

More or less same situation on Bitfunder, no buy support of consequence until 1.09ish, with solid support as low as 1.03-1.05. The auction subforum is heavy with sellers of fairly large quantities.

At these levels we're looking at a yield of 28% or more and that's before the new hash rate earnings come in! I know the Bitcoin community loves their risk and all, but almost 30% dividend from a company as solid as ASICMiner? You're not getting 1/10 of that from Apple or Microsoft.

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

.b

PS: In case it's not bleeding obvious by now, I am an AM shareholder and I have an interest in seeing a high share price, but right now, I'm more interested in figuring out whether it's the world or me that's gone mad.

[Mausini]

C'mon what's wrong with this picture?

friedcat updates with fantastic news, stock prices on PT exchanges plummets. And by plummets, I mean a 10% drop in a week.

Volatility is fine, but except a slightly skeptical price reception on those bees, I have seen positive news only for the previous week. BFL is late as always, Avalon delayed, friedcat responding with perfection to inquiries (including mine)...

We should have started the weekly run-up to Wednesday already, but instead, sellers are popping out from every grain of sand on the beach. On BTCT there's basically no buy support until 1.14-1.15, and if that falls, there's nothing down to 0.9. Meanwhile, the sell side is heavy just a few bitcents above last sale.

More or less same situation on Bitfunder, no buy support of consequence until 1.09ish, with solid support as low as 1.03-1.05. The auction subforum is heavy with sellers of fairly large quantities.

At these levels we're looking at a yield of 28% or more and that's before the new hash rate earnings come in! I know the Bitcoin community loves their risk and all, but almost 30% dividend from a company as solid as ASICMiner? You're not getting 1/10 of that from Apple or Microsoft.

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

.b

PS: In case it's not bleeding obvious by now, I am an AM shareholder and I have an interest in seeing a high share price, but right now, I'm more interested in figuring out whether it's the world or me that's gone mad.

Just ignore the share value, collect your dividends (if I spelled out the amount, I wouldn't believe myself) and smile

[redbeans2012]

C'mon what's wrong with this picture?

friedcat updates with fantastic news, stock prices on PT exchanges plummets. And by plummets, I mean a 10% drop in a week.

Volatility is fine, but except a slightly skeptical price reception on those bees, I have seen positive news only for the previous week. BFL is late as always, Avalon delayed, friedcat responding with perfection to inquiries (including mine)...

We should have started the weekly run-up to Wednesday already, but instead, sellers are popping out from every grain of sand on the beach. On BTCT there's basically no buy support until 1.14-1.15, and if that falls, there's nothing down to 0.9. Meanwhile, the sell side is heavy just a few bitcents above last sale.

More or less same situation on Bitfunder, no buy support of consequence until 1.09ish, with solid support as low as 1.03-1.05. The auction subforum is heavy with sellers of fairly large quantities.

At these levels we're looking at a yield of 28% or more and that's before the new hash rate earnings come in! I know the Bitcoin community loves their risk and all, but almost 30% dividend from a company as solid as ASICMiner? You're not getting 1/10 of that from Apple or Microsoft.

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

.b

PS: In case it's not bleeding obvious by now, I am an AM shareholder and I have an interest in seeing a high share price, but right now, I'm more interested in figuring out whether it's the world or me that's gone mad.

A good portion of people new to bitcoin probably don't even know you can buy and sell securities.  Maybe its time for a PR campaign. :p

[furuknap]

A good portion of people new to bitcoin probably don't even know you can buy and sell securities.  Maybe its time for a PR campaign. :p

That wouldn't explain the previous high prices. The market hasn't become smaller by 10% the last week. If anything, it has become larger.

.b

[ineededausername]

C'mon what's wrong with this picture?

friedcat updates with fantastic news, stock prices on PT exchanges plummets. And by plummets, I mean a 10% drop in a week.

Volatility is fine, but except a slightly skeptical price reception on those bees, I have seen positive news only for the previous week. BFL is late as always, Avalon delayed, friedcat responding with perfection to inquiries (including mine)...

We should have started the weekly run-up to Wednesday already, but instead, sellers are popping out from every grain of sand on the beach. On BTCT there's basically no buy support until 1.14-1.15, and if that falls, there's nothing down to 0.9. Meanwhile, the sell side is heavy just a few bitcents above last sale.

More or less same situation on Bitfunder, no buy support of consequence until 1.09ish, with solid support as low as 1.03-1.05. The auction subforum is heavy with sellers of fairly large quantities.

At these levels we're looking at a yield of 28% or more and that's before the new hash rate earnings come in! I know the Bitcoin community loves their risk and all, but almost 30% dividend from a company as solid as ASICMiner? You're not getting 1/10 of that from Apple or Microsoft.

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

.b

PS: In case it's not bleeding obvious by now, I am an AM shareholder and I have an interest in seeing a high share price, but right now, I'm more interested in figuring out whether it's the world or me that's gone mad.

It's that weird thing I pointed out earlier -- even though Bitfunder and BTCT are a very small part of the market, they used to set the prices for the entire market.

However, I must point out that the situation is changing now, as people realize the market is irrational.  Auctions are holding out at 1.2 with massive buying support, and I saw one small auction hit 1.5.  If you aggregated bids for direct and PT shares I bet you would see a massive 2000-share bidwall or something at 1.2.

[SebastianJu]

Maybe the traders on btcco and bitfunder only see the dividends and dont know about the hashrate? Otherwise i dont know why its sold now. I mean next wednesday we have the chance of a double dividend in comparison to the week before. Normally that should lead to way higher shareprice. Instead the relatively small income from auctioning miners leads to a 50% raise in price. Im not complaining... i bought lower because of that...

[stripykitteh]

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

My thoughts:

• AM is still not widely known yet even among people who know something about Bitcoin and mining. Probably for every 50 people who order from BFL there is 1 person interested in investing in AM. AM do not have a pretty website. Heck, they don't even have a website. I only found out about AM from reading bitcointalk and talking to a colleague who also reads bct.
• At current prices AM has to perform well for the remainder of the 25BTC/block era to provide a decent return. They are one of the *BIG* winners of the ASIC gen 1 era. However there's always a risk something goes wrong or someone else will beat them to the punch at ASIC gen 2 or ASIC gen 3.
• Most of the early investors in AM (pre-IPO or IPO) have just made spectacular profits, especially considering the btc:USD exchange rate appreciation since late 2012. A lot of those people now have a significant portion of their wealth measured in fiat in AM, and are looking to diversify.
• AM compete in a fixed reward market. They can only be a certain percentage of the network before it becomes uneconomic to add more capacity. They can compensate for this to a degree by selling a fraction of their hardware to customers who effectively become their competition, so they get a return from a larger part of the network than they contribute to directly. However the fixed reward is is a boat anchor on the share price, and always will be.

All of the above probably means there are more motivated sellers than buyers of AM right now, even though they appear to be performing flawlessly. This is not supposed to be a recommendation to sell AM, just a collection of facts that are widely known and in my opinion have an effect on the share price. I hold a few AM but I don't think the price is going to the moon.

[furuknap]

However, I must point out that the situation is changing now, as people realize the market is irrational.  Auctions are holding out at 1.2 with massive buying support, and I saw one small auction hit 1.5.  If you aggregated bids for direct and PT shares I bet you would see a massive 2000-share bidwall or something at 1.2.

Yeah, I've thought about that a bit and I find comfort in the fact that people pay a premium for what they perceive as 'real' shares, despite the fact that in reality, there isn't much difference between a PT and a regular share (except you get friedcat's email address, which isn't all that secret, really).

This can mean that buyers are idiots who will throw thousands of dollars at something without doing at least basic research, and I doubt that very much, or it can mean that they see the shares as something to hold on to for a long time and not trade at all, which is very comforting.

However, there's one pice of the puzzle that doesn't fit; I've bought shares at auction over the previous weeks, and I've managed to purchase them below bid price at least on BTCT. In other words, at that time (just a couple of weeks ago), buyers were not interesting in long-term holding, or there was some other reason. This piece of the puzzle bothers me a bit. I can't find a reason, rational or otherwise, why this may be the case.

.b

[furuknap]

AM compete in a fixed reward market. They can only be a certain percentage of the network before it becomes uneconomic to add more capacity. They can compensate for this to a degree by selling a fraction of their hardware to customers who effectively become their competition, so they get a return from a larger part of the network than they contribute to directly. However the fixed reward is is a boat anchor on the share price, and always will be.

I'm not sure I agree with the conclusion of this, although I recognize the facts. Selling hashrate is an immediate return on investment that can be cashed out at high prices, securing revenue and capital. As a shareholder, I like this in terms of long-term plans and in my eyes it should contribute to a higher share price.

All of the above probably means there are more motivated sellers than buyers of AM right now, even though they appear to be performing flawlessly. This is not supposed to be a recommendation to sell AM, just a collection of facts that are widely known and in my opinion have an effect on the share price. I hold a few AM but I don't think the price is going to the moon.

The fixed market reward is true for the Bitcoin mining part of the company, but not for the sales of equipment or other operations.

Long-term and due to their unique first-mover experience (and FM is really a benefit in a marked that talks about generations as if they were financial quarters), AM can easily supplement or replace mining revenue by selling hardware. They can lead development of new generations to keep mining profitable (higher efficiency), migrate to other coins if that is deemed worthwhile, and so on.

There are a range of supplemental areas where AM can move their knowledge and resources, so although I realize the halving issue in 2016, I don't see that as a threat to profitability, simply because there are so many other venues the company can pursue.

.b

[Jutarul]

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

My thoughts:

• AM compete in a fixed reward market. ...

I hold a few AM but I don't think the price is going to the moon.

Miners are competing for about 4 million fixed BTC reward within the next 3-4 years. However, people usually forget to include the fees in that picture.

With increasing market adoption, the fees will make up a significant portion of the mining reward. And increasing the block size limit proportionally to the market adoption should only result in lowering the average fee per transaction, not the total reward from fees per block. It's hard to estimate what the equilibrium for the transaction fee reward will be. Right now we have a transaction volume of about 400,000k BTC per day which is about 2700 BTC per block on average. If you take a conservative estimate of 1% transaction fee you arrive at 27 BTC fee per block.

Thus the future mining income is likely to be considerably higher than 4 million BTC within the next 3-4 years and reward from fees will eventually outperform the fixed BTC reward. But it's hard to project the timeline of that development. Transaction fees is a market which is currently neglected by mining companies, but it will become more and more important as bitcoin matures.

[stripykitteh]

I'm not sure I agree with the conclusion of this, although I recognize the facts. Selling hashrate is an immediate return on investment that can be cashed out at high prices, securing revenue and capital. As a shareholder, I like this in terms of long-term plans and in my eyes it should contribute to a higher share price.

...

The fixed market reward is true for the Bitcoin mining part of the company, but not for the sales of equipment or other operations.

Long-term and due to their unique first-mover experience (and FM is really a benefit in a marked that talks about generations as if they were financial quarters), AM can easily supplement or replace mining revenue by selling hardware. They can lead development of new generations to keep mining profitable (higher efficiency), migrate to other coins if that is deemed worthwhile, and so on.

There are a range of supplemental areas where AM can move their knowledge and resources, so although I realize the halving issue in 2016, I don't see that as a threat to profitability, simply because there are so many other venues the company can pursue.

.b

Yeah, I see your point. I agree the price looks cheap at the moment; I guess my comment about the boat anchor was that as long as AM shares are traded in BTC it means that the price can never get absurdly high. Probably doesn't apply to the context of your original point though. I think the general anonymity of AM and the fact that there are sellers wanting to diversity are applicable in the short term. In the long term I think transaction fees will get much more important so that will help keep the rewards for mining high.

[stripykitteh]

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

My thoughts:

• AM compete in a fixed reward market. ...

I hold a few AM but I don't think the price is going to the moon.

Miners are competing for about 4 million fixed BTC reward within the next 3-4 years. However, people usually forget to include the fees in that picture.

With increasing market adoption, the fees will make up a significant portion of the mining reward. And increasing the block size limit proportionally to the market adoption should only result in lowering the average fee per transaction, not the total reward from fees per block. It's hard to estimate what the equilibrium for the transaction fee reward will be. Right now we have a transaction volume of about 400,000k BTC per day which is about 2700 BTC per block on average. If you take a conservative estimate of 1% transaction fee you arrive at 27 BTC fee per block.

Thus the future mining income is likely to be considerably higher than 4 million BTC within the next 3-4 years and reward from fees will eventually outperform the fixed BTC reward. But it's hard to project the timeline of that development. Transaction fees is a market which is currently neglected by mining companies, but it will become more and more important as bitcoin matures.

Yes, I haven't forgotten about the fees, but to keep my post to a reasonable length I haven't considered them. Until they become significant it's probably closer to correct to ignore them rather than try to price them.

[Entropy-uc]

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

My thoughts:

• AM compete in a fixed reward market. ...

I hold a few AM but I don't think the price is going to the moon.

Miners are competing for about 4 million fixed BTC reward within the next 3-4 years. However, people usually forget to include the fees in that picture.

With increasing market adoption, the fees will make up a significant portion of the mining reward. And increasing the block size limit proportionally to the market adoption should only result in lowering the average fee per transaction, not the total reward from fees per block. It's hard to estimate what the equilibrium for the transaction fee reward will be. Right now we have a transaction volume of about 400,000k BTC per day which is about 2700 BTC per block on average. If you take a conservative estimate of 1% transaction fee you arrive at 27 BTC fee per block.

Thus the future mining income is likely to be considerably higher than 4 million BTC within the next 3-4 years and reward from fees will eventually outperform the fixed BTC reward. But it's hard to project the timeline of that development. Transaction fees is a market which is currently neglected by mining companies, but it will become more and more important as bitcoin matures.

This is a very good point.  But there needs to be behavioral change to make transaction fees an expected thing with Bitcoin.  Right now anyone handling more than a few coins can get free transactions processed as quickly as transactions with fees attached.  MT. Gox in particular abuses this to not pay any fees to miners.

If you are solomining, this is easily addressed by reducing the size of the fee free pool in each block by adding the blockprioritysize parameter to bitcoin.conf.  The default value is 27000 bytes.  

Reducing the size of the free transaction pool until zero fee transactions take 4-5 hours to be accepted would be a good start on changing the culture.  A major player who is about to begin solo mining might consider making a 1 line edit to help make that change happen.  

[punkideas]

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

My thoughts:

• AM compete in a fixed reward market. ...

I hold a few AM but I don't think the price is going to the moon.

Miners are competing for about 4 million fixed BTC reward within the next 3-4 years. However, people usually forget to include the fees in that picture.

With increasing market adoption, the fees will make up a significant portion of the mining reward. And increasing the block size limit proportionally to the market adoption should only result in lowering the average fee per transaction, not the total reward from fees per block. It's hard to estimate what the equilibrium for the transaction fee reward will be. Right now we have a transaction volume of about 400,000k BTC per day which is about 2700 BTC per block on average. If you take a conservative estimate of 1% transaction fee you arrive at 27 BTC fee per block.

Thus the future mining income is likely to be considerably higher than 4 million BTC within the next 3-4 years and reward from fees will eventually outperform the fixed BTC reward. But it's hard to project the timeline of that development. Transaction fees is a market which is currently neglected by mining companies, but it will become more and more important as bitcoin matures.

Yes, I haven't forgotten about the fees, but to keep my post to a reasonable length I haven't considered them. Until they become significant it's probably closer to correct to ignore them rather than try to price them.

Just a rough estimate based off the last few blocks, but it looks like they are currently averaging ~.3BTC per block (just over 1% of the built-in reward).  If transaction volume increases 10x in a year (definitely possible with growth), 3BTC per block becomes pretty significant.

[Jutarul]

Just a rough estimate based off the last few blocks, but it looks like they are currently averaging ~.3BTC per block (just over 1% of the built-in reward).  If transaction volume increases 10x in a year (definitely possible with growth), 3BTC per block becomes pretty significant.

Assuming that BTC transaction volume increases is a long shot. It's safer to assume that the granularity changes (i.e. more transactions with smaller BTC amounts) due to an increase in BTC price. Thus more transactions are needed to move the same amount of BTC, making transaction volume more valuable, and thus increasing the incentive to include a larger fee.

[aahzmundus]

Probably for now, most people with BTC sitting around that would invest into ASICMINER have done so.  Newer adopters to BTC are probably still coming to terms with the risk of holding BTC, let alone investing that btc into a security.

There are many barriers to entry, and it scares people off... All the better for those of us with no fear that poured  our money into this. Lets hope this basket can hold my eggs, and keep them safe!  because they are ALL in there.

[parseval]

C'mon what's wrong with this picture?

friedcat updates with fantastic news, stock prices on PT exchanges plummets. And by plummets, I mean a 10% drop in a week.

Volatility is fine, but except a slightly skeptical price reception on those bees, I have seen positive news only for the previous week. BFL is late as always, Avalon delayed, friedcat responding with perfection to inquiries (including mine)...

We should have started the weekly run-up to Wednesday already, but instead, sellers are popping out from every grain of sand on the beach. On BTCT there's basically no buy support until 1.14-1.15, and if that falls, there's nothing down to 0.9. Meanwhile, the sell side is heavy just a few bitcents above last sale.

More or less same situation on Bitfunder, no buy support of consequence until 1.09ish, with solid support as low as 1.03-1.05. The auction subforum is heavy with sellers of fairly large quantities.

At these levels we're looking at a yield of 28% or more and that's before the new hash rate earnings come in! I know the Bitcoin community loves their risk and all, but almost 30% dividend from a company as solid as ASICMiner? You're not getting 1/10 of that from Apple or Microsoft.

What the heck am I missing here? Is there a "Sorrry lolz we were just kidding about those ASICs lolz" update I haven't seen somewhere?

.b

PS: In case it's not bleeding obvious by now, I am an AM shareholder and I have an interest in seeing a high share price, but right now, I'm more interested in figuring out whether it's the world or me that's gone mad.

I believe that part of this is due to the way information abouot the security is disseminated.  There are some very strong indicators for long term success for the company, but many of the good pieces of information are buried deep within various forum threads which most potential investors aren't following.  A centralized source of information that isn't tied up with commentators (eg, an 'announce' thread from AM or a prospectus as a living document) would go a long way towards providing up-to-date information about current operations and future plans for AM to stakeholders and potential stakeholders.  If there is impacting news or updates, such as an ETA on new hashing power or other 'number' updates, the pass-through operators might also consider posting this on the exchanges in the form of a 'News' post associated with the passthrough (though admittedly, as a pass-through, they may wish to keep that news section solely for information specific to operating the passthrough and not about the AM company in general).   I like the Google documents, particularly the one tracking the daily hashrate, but I think if this was presented as part of a whole package of information about the company that this would have a positive impact on stock price.

This isn't to complain...  in fact, I think that buying in at the current rates is a pretty decent deal considering what they have in the pipeline for the future, and I consider investing at this undervaluation as a reward for performing diligent research on the company.