ASICMINER: Entering the Future of ASIC Mining by Inventing It

[freedomno1]

If you think asicminer shares are going up you can make a lot more money by buying options than buying the actual shares.

It'd be interesting to see how well options do given that AM isn't very liquid. In an illiquid market you could end up with a situation of options being in the money but being forced to exercise them yourself to realize the profit, if you can't onsell them.

I did think about buying some call options earlier in the week and then realizing the profit when the price went up by selling some of what I hold and buying back to exercise them (creating my own liquidity). Then I realized I would be way over my comfort level and just forgot about it. 

Good point takes that as good advice, I'm thinking that if the interest keeps rising in ASIC the liquidity will follow today is a very active day on havelock usual 5-10 trades an hour is 25 and watching btc-tc looks like its moving there too but options are always more tricky it takes a bit of time to learn how they work differences between puts and calls exercise price risk premium diminishing value of the option as it gets closer to the exercise date etc. That does mean it has a lower liquidity but thanks for the advice

[1715208160]

1715208160

[1715208160]

1715208160

[1715208160]

1715208160

[1715208160]

1715208160

[1715208160]

1715208160

[Aureum_Coffee]

Have no idea why someone said a company paying out big dividend is going out of business.  Look at IBM, Microsoft, Apple.  They have not gone out of business.

Check out these companies' dividend history.

http://investor.apple.com/dividends.cfm

https://www.microsoft.com/investor/Stock/StockSplit/default.aspx

Now if the argument is that ASICminer is a ponzi company, then there is no need to go to all the extra trouble to design and sell real products.  Just copy what BFL does and still be $$$ ahead by miles.  If AM ultimately turns out to be a ponzi, I am not saying it is, all those people who bought shares knows full well any company can go tomorrow.  It can be getting sued by patent lawyers, IP trolls, people who claim the ASIC hardware next door can make them go crazy with radio waves.  That's the risk of investing.

As for people selling large numbers of shares, my educated guess is that they purchased at IPO price, probably at 1/20th of what the market value is.  After the stock has run up 100% or 200%, it's not unusual to see large share holders to sell some shares to decrease the risk.  Diversify.  What they are doing is getting their original capital investment back, and the rest of the shares are lottery tickets.  If the company goes away next week, then they still have their original capital in BTC.  Their position is "hedged".   

I would be very worried if the stock or share exchanges allow HFT computers to trade.  With HFT, the gig is up, anyone with enough computational power can crash the share price to 0 (or nearly zero) and pick up shares for nothing, and profit from the manipulation.

Full Disclosure: I am an AM share holder.  Don't invest more than you can afford to lose.

[furuknap]

Have no idea why someone said a company paying out big dividend is going out of business.  Look at IBM, Microsoft, Apple.  They have not gone out of business.

Check out these companies' dividend history.

http://investor.apple.com/dividends.cfm

You do realize, of course, that Apple is famous for not paying a dime in dividends under Steve Jobs, the period in which they grew most and became the largest company in the world?

You do realize, of course, that from the time Apple started paying dividends again, their value has dropped drastically?

You do realize, of course, that Apple really has no market in which to grow anymore?

You do realize, of course, that one of the primary reasons why Apple has been so successful is their large capital base that allows them to squeeze virtually every vendor and supplier with whom they work and protect their IP through numerous patents and legal actions against breaches of those patents?

I believe I was the one saying what you erroneously paraphrase, though, but what I said was that taking money out of a growth company limits the growth, thus undermining the company's ability to survive in the long term. It's simple math, feel free to argue against it, and for practice, you can start arguing against 2+2=4.

You may also want to look up histories of non-dividend paying companies like, I don't know, Berkshire Hathaway? You may have heard about Warren Buffett? Ask him when you'll get dividends from his company, which is now the higest priced share in the US at least, trading at around $170,000 per share (yeah, that's ~฿1500 per share). When Warren Buffett bought them, they cost $11.75 (฿0.1)

If AM ultimately turns out to be a ponzi, I am not saying it is, all those people who bought shares knows full well any company can go tomorrow.  It can be getting sued by patent lawyers, IP trolls, people who claim the ASIC hardware next door can make them go crazy with radio waves.  That's the risk of investing.

You do realize, of course, that having the largest pile of cash in the known world sorta reduces the risk that a patent troll can turn a company into dust tomorrow?

Honestly, do you think that the reason why Apple and its peers have billions of dollars in their accounts is that they just like seeing those huge sums at their bank statements each month? Do you also believe that investors think "You know, that Jobs guy is really swell, I'll help him achieve his dream of seeing 10 digits on the Available Balance for no other reason than being nice"?

As for people selling large numbers of shares, my educated guess is that they purchased at IPO price, probably at 1/20th of what the market value is.  After the stock has run up 100% or 200%, it's not unusual to see large share holders to sell some shares to decrease the risk.  Diversify.  What they are doing is getting their original capital investment back, and the rest of the shares are lottery tickets.  If the company goes away next week, then they still have their original capital in BTC.  Their position is "hedged".   

Yes, because the people who have been with this share since its inception and know it like they know the insides of their own foreskins most likely think that the price will continue to rise and they'll just throw that extra money out the window.

Could it possibly be that, and let's just be purely hypothetical here for a moment, that people that sell out at these very low levels (according to the logic of those buying) have done the math and think that the price won't rise anymore? That, perhaps, they believe the policy of paying out every last dime of available cash may not be the best strategy for future growth?

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

I'll happily admit I've sold most of my AM holdings after running numbers again that show me there is no possible way to recouperate a share price of ฿1.7, much less yield a profit, when you think beyond 2016.

At these price levels, investors have a negative ROI of 8% per year if friedcat manages to get his projected 10% of the total hash rate on average and only manages to sell ฿1000 worth of hardware per month. Even at 15% of the total hash rate, the annual yield looks like around 1%. At 20% of the hash rate on average, AM yields slightly better than a NASDAQ composite index fund.

.b

[freedomno1]

Do appreciate the bears always gives me perspective  on how the market behaves but think that page one covered a lot of the scenarios
Given that this is a mining stock that sells mining hardware it makes sense to pay out there's not much they can do if they retain equity unless they diversify their holdings into other fields

Return On Rally If the price of Bitcoin rallies too much, then we probably don't need so much money to make our project succeed. We will
return part of the principals as big dividends before we tape out the chips
when BTC/USD exchange rate rises a lot.

No Future Dilution Each share of ASICMINER always
represents 1/400,000 of the whole company. If we have to attract more investors
in the future, we will only sell our own Bitfountain shares.

Potential Risks and Tips on How to Hedge We list all possible risks of
our project here, and the most straightforward way to hedge each of them.

  BTC drops too much in value This will finally make mining
unprofitable because even with ASIC devices people still have to pay
electricity bills and operating fees. Hedge: take a short position on BTC.

  BTC increases too much in value This might make your
investment of your Bitcoins to ASICMINER less profitable than simply holding
them. Hedge: take a long position on BTC.

  Failure to produce The IC production has some minimum
failure rate. We have some fund reservation ourselves to cope with this
scenario, but the risk here is still not zero. Hedge: diversify your portfolio
by also making bets on our competitors.

  Outpaced too much by competitors It will make the
difficulty very high and our efficiency/price less attractive. Hedge: same as
above, making some bets on competitors of us.

Regarding the dividends if they need the money they can cut it as related to point 1
We will return part of the principals as big dividends before we tape out the chips
when BTC/USD exchange rate rises a lot.
Furthermore
If we have to attract more investors in the future, we will only sell our own Bitfountain shares.

However that said if they need the capital they can get it

But thinking about it two other points
Not sure if the executives pay themselves a salary or if they are shareholders a benefit of dividends is that they pay themselves for good work instead of multi-million dollar salaries also the capital gain for taxation.
Also as there are no stakeholders technically this falls under shareholder theory if we go philosophical XD

[ThickAsThieves]

Could it possibly be that, and let's just be purely hypothetical here for a moment, that people that sell out at these very low levels (according to the logic of those buying) have done the math and think that the price won't rise anymore? That, perhaps, they believe the policy of paying out every last dime of available cash may not be the best strategy for future growth?

Today's volume and price behavior is a blip in the life of ASICMINER. Do you know how many shares have been imported into ASICMINER-PT this week? Maybe 500 or so. G.ASICMINER? About 200. The TAT assets? about 200. Yet somehow the average price is still over 1.7. Only about 21% of the publicly held shares even exist on an exchange. My point is, MANY people are still buying, and MANY MANY more are still holding.

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

You do realize, that AM is nearly debt free, is sitting on cash and BTC, and has a steady income that is very significant?

You do realize, that Friedcat has a demonstrated history of forethought, execution, agility, and business acumen?

I'll happily admit I've sold most of my AM holdings after running numbers again that show me there is no possible way to recouperate a share price of ฿1.7, much less yield a profit, when you think beyond 2016.

Ah, so this is the root of it. You have provided us with a giant wall of text, while rudely responding to Aureum_Coffee, in some unrealized attempt to convince yourself you did the right thing by taking your money and running. It's okay, and a very sound strategy to realize your profits when you are comfortable with your gains, but your actions do not limit ASICMINER from being more creative, diverse, and industrious than you can predict.

At these price levels, investors have a negative ROI of 8% per year if friedcat manages to get his projected 10% of the total hash rate on average and only manages to sell ฿1000 worth of hardware per month. Even at 15% of the total hash rate, the annual yield looks like around 1%. At 20% of the hash rate on average, AM yields slightly better than a NASDAQ composite index fund.
.b

You do realize, it is quite possible that it is you that is being short-sighted here? 10% is Friedcats minimum goal. We still have next-gen hardware to make, and who knows what other hardware, partnerships, and contracts will come from ASICMINER. He just sold 8000+ BTC of hardware in ONE WEEK, and you want to presume he can only sell 1000 BTC per month going forward?

Don't mistake my responses for unabashed lemming fanboism, I too have my reservations and limits to what I will risk. However, in this case I see more room for growth, and you do realize that growth potential is the true driver of share value, not dividends or some volatility.

[furuknap]

Ah, so this is the root of it. You have provided us with a giant wall of text, while rudely responding to Aureum_Coffee, in some unrealized attempt to convince yourself you did the right thing by taking your money and running. It's okay, and a very sound strategy to realize your profits when you are comfortable with your gains, but your actions do not limit ASICMINER from being more creative, diverse, and industrious than you can predict.

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The dividend that AM paid this week is 50% of the theoretical possible limit they can get from mining. They can kill Bitcoin to maintain this level, yes, but I don't think they will. All their competitors can fail, but I don't think they will.

Let's be crazy, then, and say that they generate dividends equivalent to 30% of the network for the next 44 months. At that rate, we'll see dividends at 0.018 per week, which would give us an ROI of 21 months. Great, right? 50% yield per year?

Except in 2016, at a known and predictable time, poof, 50% of the possible income and dividends disappear and thus the share value drops to 50%. Now you've lost 0.85 in a day. Or around a years worth of dividends at 30% hash rate.

It's still a profit, sure, but it's not even close to what people think at present, and it assumes that AM pays 30% of all coin production on average.

Can they maintain 30% for that long? I don't know. Their 262 TH will be a spit in the ocean in a year. AM needs funds to finance the next big thing, which needs to come on top of those 30%. Can all their competitors fail? Yeah, but I doubt they will.

Remember that hardware sales isn't really a factor here because that hardware needs to come from the maximum limit AM can produce. Whether they hash from it themselves over time or realize that hashrate immediately by selling isn't relevant except in temporarily boosting their dividends. Their customers will run the math when more purchase options are available. Selling hardware is at most a way to realize short-term capital, but doesn't really increase their long-term profitability when they pay sales out in the form of dividends.

Actually, screw all this, I'll publish my numbers and you can argue against those.

.b

[furuknap]

I own shares because i see it as an investment. I doesnt care about the shareprice because its the dividend im interested it. I would buy the best paying stocks in normal share too because im no speculator. I wouldnt care about Asicminer when it is only a company that earns money for itself. I invested because i get a reward.

This is probably one reason why you will fail as an investor.

And this ASIC-Business is something different from real world businesses. In real world there are many opportunities to invest in. A mining company doesnt have much areas to invest in. What should they buy? Solar panels? It would be a loss in fact because of the low ROI. So a normal mining company might be comparable, when they mine with GPUs or FPGAs because the profit is way lower.
So whats the investment tha AM could do now that would lead to even higher returns? Because thats whats investments are for. Not for stockpiling money without a plan. Im with you with a financial cussion for bad times... but collecting bitcoins without common sense... i dont see why.

That is probably a second reason why you will fail as an investor.

I think you dont see the enourmous profits AM is making. You speak like AM has to collect many weeks of money to buy something. In fact AM collects each week so enourmous much money that it can pay nearly everything with it.

That is probably a third reason why you will fail as an investor.

In fact, this isn't even about investing, it is about basic math. There is a very fixed limit to how much money AM can generate because the inflow of new coins is finite. For AM to yield the 100% in a year that some people think they can, they need to have 50% of the network hashrate continuously throughout the next 12 months.

Those 262 THs will not be enough by far to accomplish that. Already we know that Bitfury has 200 THs in the pipe. Avalon has finally started shipping and at some point over the next 12 months, BFL may actually get their shit together and send out something too. The swedes is a complete unknown. 262 is peanuts if even one of these ventures manages to deliver.

Even though I had shares during the dividend yesterday, I was seriously disappointed in the huge dividend because it has severely limited AMs ability to survive.

There is no theoretical way, barring AM doing a 51% attack and killing Bitcoin, to make back what the current share price is before the halving of block reward kills 50% of the share price. At that point, AM will have half of their current income to stay in the race, a race, I might add, they are only leading now because they are the only friggin horse running.

Let's imagine, hypothetically of course, that one mining company ACME Mining had a huge order for next-gen chips in production, paid for, but not delivered, and then went belly-up for whatever reason. With a few piles of cash, ASICMiner would snap up the order and possibly make a killing.

Why should AM buy a new ASIC-Company? First there would be competitors that would like to buy this company too and second... AM wouldnt have a gain from it. They already have ASICs, they can bring 1TH of hashingpower only for $10000 only. So buying another ASIC-Company would be a waste of money for AM. Or what do you think would be worth it to outbid other interested parties?

Read my argument again, please, and try to understand that as of right now, AM do not have the best chips, they have the only chips. The next company to bring chips to the market won't use antiquated 130 nm processes. Even Avalon doesn't use that.

AM currently has Pentium III chips. The swedes are talking about making an i7.  

BTW, you're arguing that because you don't think my examples are good, then there are no unforeseen circumstances in which AM could genefit from having cash at hand. That's just silly.

Because there is roughly 40ish months left until the halving, the share value will be, in a perfect equation, reduced by 1/80 every month. At the current price of ~฿1.7, that means 0.0215 per month of 0.0053 per week, but note that this is share price, not value. 

Start deducting 0.005 from your dividends each week and see how much is left, if AM gets its expected 10% of the network hash rate on average throughout 2013. I guess the ROI looks somewhat different then.

Despite this, I am still bullish about AM. I'm just not as certain at these prices if the extreme dividends people expect are paid out.

I'm going to write an article and publish my numbers. At these rates, AM needs to exceed their own goals by 200% to beat NASDAQ over 5 years.

.b

[stripykitteh]

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

[freedomno1]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

[ThickAsThieves]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

DDOS attacks, they are working hard to get back up!

[furuknap]

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

This is a very good thought, and exactly why I still have confidence in AM. Not just that, but AM can commit its vast financial power to ensure longevity of their operation in a way that ensures that the halving, which right now is the single largest cost to the share and something that nobody apparently accounts for, will not ruin shareholder value.

They need to stop this dividend madness. The herd doesn't sit down and carefully calculates profitability long-term. I fear a lot of people may get burned badly.

.b

[freedomno1]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

DDOS attacks, they are working hard to get back up!

Ah guess I'll just hang out on the forums more today as I use that as a basis for whats a fair price on havelock hehe I wonder how many people refresh that page to do that woops
Thanks for the info

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

This is a very good thought, and exactly why I still have confidence in AM. Not just that, but AM can commit its vast financial power to ensure longevity of their operation in a way that ensures that the halving, which right now is the single largest cost to the share and something that nobody apparently accounts for, will not ruin shareholder value.

They need to stop this dividend madness. The herd doesn't sit down and carefully calculates profitability long-term. I fear a lot of people may get burned badly.

.b

Diversification is a good idea the question is what to diversify into
I would say that is the responsibility of the future board that will be established sooner or later and then a shareholders quorum and vote
If we follow Warren Buffet it would be something that's a staple and easy to understand but has potential for growth
What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange
Since I have no idea what that will be I suggest the obvious one Graphics Cards and an ASIC company to sell to manufacturers if they can be competitive in that industry in a few years

[TiuraZ]

What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange

Global chain of chinese restaurants where you could pay in Bitcoins! 

[furuknap]

Diversification is a good idea the question is what to diversify into

The nice thing about Bitcoin is that it doesn't inflate, so we should nto be in a rush to spend whatever money we have. If you want to follow in WB's footsteps, you'll realize he can sit on billions upon billions of dollars for years, waiting until the right opportunity comes along. The thing is that if AM pays out everything they have or even a large part of it, they will not have the ability to move on those opportunities.

.b

[freedomno1]

What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange

Global chain of chinese restaurants where you could pay in Bitcoins! 

I can see that working ha-ha promote the bitcoin and get my chow mein delivered worldwide Bwahah Xd

[freedomno1]

Diversification is a good idea the question is what to diversify into

The nice thing about Bitcoin is that it doesn't inflate, so we should nto be in a rush to spend whatever money we have. If you want to follow in WB's footsteps, you'll realize he can sit on billions upon billions of dollars for years, waiting until the right opportunity comes along. The thing is that if AM pays out everything they have or even a large part of it, they will not have the ability to move on those opportunities.

.b

Also true assuming they want to buy a company or if they want to make another one or extend the current one guess it depends on a long term strategy plan that needs to be discussed sometime May as well start it in these threads that said if they ever decide to do so can always sell some of the bitcoinfoundation shares not just the dividend profit

[furuknap]

Also true assuming they want to buy a company or if they want to make another one or extend the current one

Those are only a few examples, but the defining characteristics of a unique and unforeseen opportunity is that it is unforeseen and unique :-)

.b

[freedomno1]

Also true assuming they want to buy a company or if they want to make another one or extend the current one

Those are only a few examples, but the defining characteristics of a unique and unforeseen opportunity is that it is unforeseen and unique :-)

.b

Hmm Facebook Bitcoin Ebay guess twitter and even groupon all the IT opportunities tougher question is recognizing one of them and investing early, or making and creating a new one
Of course these are all online examples not physical ones lot of routes

Ah Either way sometimes as proven with ASIC cheap and efficient beats fancy and takes forever to do and still is not around
BFL superior non delivered stuff vs something on batch 2

[Aureum_Coffee]

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

I'll happily admit I've sold most of my AM holdings after running numbers again that show me there is no possible way to recouperate a share price of ฿1.7, much less yield a profit, when you think beyond 2016.

At these price levels, investors have a negative ROI of 8% per year if friedcat manages to get his projected 10% of the total hash rate on average and only manages to sell ฿1000 worth of hardware per month. Even at 15% of the total hash rate, the annual yield looks like around 1%. At 20% of the hash rate on average, AM yields slightly better than a NASDAQ composite index fund.

.b

I get you don't like where ASICminer is going.  Would you sell me 5 shares of your ASICminer stock for $1.5 BTC each?  Use John K. as escrow.  Thanks.

[furuknap]

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

I get you don't like where ASICminer is going.  Would you sell me 5 shares of your ASICminer stock for $1.5 BTC each?  Use John K. as escrow.  Thanks.

Yeah, sure, I'm so stupid I'll give money away when I can sell them for more than that at an exchange.

I need to clarify that I don't like what AM did this week, and the previouc couple of weeks before that. I like AM in general. I think friedcat is great, but the company needs better financial management.

.b