ASICMINER: Entering the Future of ASIC Mining by Inventing It

[Vycid]

Could someone please explain something simple to me....I don't get the share/dividend pricing.

Please correct where I'm wrong:
I pay BTC2.5 or BTC3 a share and I will get BTC0.03 in dividends week?
If so if my math is correct it will take me a year and a half to break even if the share price remains at ~BTC0.03? Or is it possible the share price will hit BTC0.5?

Is this a long term investment plan and am I being too short sighted?

Thanks!

Well, you are forgetting that your share entitles you to dividends in perpetuity. These dividends are based on mining output of a growing mining operation, and hardware sales. Assuming that AM can keep expanding their mining farm, and keep up with the growing network, and that they remain competitive in releasing new mining HW for sale (and use themselves), then the share price will largely remain firm, and likely rise. As long as the price + all dividends you have received is higher than the price you paid, you are at break even, or profitable.

If they can not keep up, then we don't know where the share price will end up. (on the downside). It does however get ugly fast and 0.5 could be quite possible. I do not consider this a likely scenario however, because Friedcat has exceeded almost all overall expectations of investors to date.

According to my most favorable long term valuation estimations, a share price of 5.75btc has about a 25% chance of happening.

For this to happen two things would have to occur.

1) ASICMINER can keep paying on average at least 0.015 btc dividends per week. To do this they would need to maintain about 15% of the network over the long term. If they drop below 15% they could make up for it in increased HW sales. This rate is lower than their current average income generation, so I am arbitrarily putting a 50% probability on them being able to do this.

2) People would have to accept lower annual yields. I am estimating ~13% as a reasonable APY for a consistently delivering BTC stock, that has strong management and a long term consistent track record. (As time goes on and Asicminer delivers consistently on point #1, I expect the trust the community places in them will continue to grow. I give this a 50% probability as well.

Of course only time will tell if Asicminer can deliver, and if they do whether the market recognizes them as a BTC "Blue Chip" and adjusts it's valuation and expectations accordingly.

I would have posted this in speculation, however, I think since a) the question wasn't in speculation and b) it's more of an "investment/valuation" question, I feel it's ok to respond in this thread.

Two things my simplistic model does not take into account are revenue from transactions, and block award dropping, as we have no way to know if these won't just cancel each other out.


EDIT: Adding some other really rough and ballpark scenarios:
25% - AM is overcome by the competition and downward price spiral begins: Price could fall very far.
40% - AM struggles a bit but largely stays competitive but doesn't maintain clear leadership: price probably remains in the 2-3.5btc range
10% - AM does what I said above and market doesn't give them a strong valuation: 3.5-5.5btc range.
25% - AM does what I said above and market recognizes them as leader: price could go as high as 5.75btc

-helixone

Do you have any methodology for producing those percentage probabilities? What is the time window? Or are you just guessing and passing it off as a mathematical model?

[EskimoBob]

Can any of you point me to a financial statement you base your valuations on?
Thank you.

[tinus42]

Why the hell is friedcat verifying shares anywho... people can just sign their div address....

I should probably know this, but can you explain what this means and how it's done?

ASICMiner dividend payments are public, since you can view them on the blockchain. So once you're certain that someone owns a bitcoin address that has received ASICMiner div's, you know that person owns the shares.

I don't want my div address to be posted on Bitcointalk.org. I would only share it in confidence via PM.

Even there were only 429 shareholder addresses last time I checked in the publicized spreadsheet it's more anonymous than posting it on the forum with my username attached to it.

[ning]

What else can we do to help ASICMiner grow?

Things that are floating in my mind:
    *) Investing more;
    *) Opening exchanges that make AM shares more accessible;
    *) Reporting the weekly dividend;
    *) Answering questions from new investors;
    *) Posting pictures and words reflecting our euphoria;
    *) Asking our friends to join the club (be very careful with this);
    *) Being quiet;
    ...

[philipma1957]

       
    This drives price down to 50 USD per btc   so your AM selling at 4 BTC a share or 3 BTC a share lost value  if you want to convert it to USD.

if you want to convert it to USD.

  Well obvious that if you live in USA that is the liquidity that concerns yourself..An Italian would not need USD nor would an AUSSIE.    I have seen a few countries tighten the liquidity of BTC to their native 'coin'     This brings a really interesting twist or wildcard to the game.   If these coins are driven underground do they gain value rather then lose value ?

[miTgiB]

       
    This drives price down to 50 USD per btc   so your AM selling at 4 BTC a share or 3 BTC a share lost value  if you want to convert it to USD.

if you want to convert it to USD.

  Well obvious that if you live in USA that is the liquidity that concerns yourself..An Italian would not need USD nor would an AUSSIE.    I have seen a few countries tighten the liquidity of BTC to their native 'coin'     This brings a really interesting twist or wildcard to the game.   If these coins are driven underground do they gain value rather then lose value ?

Odds are they would lose value to local currency, as they lose liquidity.  That is not a given written in stone, just my view of a likely outcome.  If government approved fiat was to lose acceptance as stable, BTC may be highly desired and increased demand might make it more valuable, but in some economic crisis gold/silver would be my guess as the goto store of wealth before BTC.

[helixone]

Could someone please explain something simple to me....I don't get the share/dividend pricing.

Please correct where I'm wrong:
I pay BTC2.5 or BTC3 a share and I will get BTC0.03 in dividends week?
If so if my math is correct it will take me a year and a half to break even if the share price remains at ~BTC0.03? Or is it possible the share price will hit BTC0.5?

Is this a long term investment plan and am I being too short sighted?

Thanks!

Well, you are forgetting that your share entitles you to dividends in perpetuity. These dividends are based on mining output of a growing mining operation, and hardware sales. Assuming that AM can keep expanding their mining farm, and keep up with the growing network, and that they remain competitive in releasing new mining HW for sale (and use themselves), then the share price will largely remain firm, and likely rise. As long as the price + all dividends you have received is higher than the price you paid, you are at break even, or profitable.

If they can not keep up, then we don't know where the share price will end up. (on the downside). It does however get ugly fast and 0.5 could be quite possible. I do not consider this a likely scenario however, because Friedcat has exceeded almost all overall expectations of investors to date.

According to my most favorable long term valuation estimations, a share price of 5.75btc has about a 25% chance of happening.

For this to happen two things would have to occur.

1) ASICMINER can keep paying on average at least 0.015 btc dividends per week. To do this they would need to maintain about 15% of the network over the long term. If they drop below 15% they could make up for it in increased HW sales. This rate is lower than their current average income generation, so I am arbitrarily putting a 50% probability on them being able to do this.

2) People would have to accept lower annual yields. I am estimating ~13% as a reasonable APY for a consistently delivering BTC stock, that has strong management and a long term consistent track record. (As time goes on and Asicminer delivers consistently on point #1, I expect the trust the community places in them will continue to grow. I give this a 50% probability as well.

Of course only time will tell if Asicminer can deliver, and if they do whether the market recognizes them as a BTC "Blue Chip" and adjusts it's valuation and expectations accordingly.

I would have posted this in speculation, however, I think since a) the question wasn't in speculation and b) it's more of an "investment/valuation" question, I feel it's ok to respond in this thread.

Two things my simplistic model does not take into account are revenue from transactions, and block award dropping, as we have no way to know if these won't just cancel each other out.


EDIT: Adding some other really rough and ballpark scenarios:
25% - AM is overcome by the competition and downward price spiral begins: Price could fall very far.
40% - AM struggles a bit but largely stays competitive but doesn't maintain clear leadership: price probably remains in the 2-3.5btc range
10% - AM does what I said above and market doesn't give them a strong valuation: 3.5-5.5btc range.
25% - AM does what I said above and market recognizes them as leader: price could go as high as 5.75btc

-helixone

Do you have any methodology for producing those percentage probabilities? What is the time window? Or are you just guessing and passing it off as a mathematical model?

Please reread what I wrote, before throwing accusations. Just in case you don't have a dictionary handy:

arbitrarily - Determined by chance, whim, or impulse, and not by necessity, reason, or principle
estimate - Roughly calculate or judge the value, number, quantity, or extent of.

To be clear, I, like pretty much everyone who offers an opinion on AM's valuation, am just guessing. And I believe I made that fairly clear.

-helixone

[Vycid]

Please reread what I wrote, before throwing accusations. Just in case you don't have a dictionary handy:

arbitrarily - Determined by chance, whim, or impulse, and not by necessity, reason, or principle
estimate - Roughly calculate or judge the value, number, quantity, or extent of.

To be clear, I, like pretty much everyone who offers an opinion on AM's valuation, am just guessing. And I believe I made that fairly clear.

-helixone

You used the words "simplistic model" in conjunction with "model" limitations, specific scenario probabilities, and valuation ranges.

So no, it was not clear at all that it came out of your ass. I typically expect methodology where I see those things (as opposed to the pure guesswork of "it's going up!" or "it's going down!").

The difference between the words "estimate" and "arbitrary", as far as I am concerned, is that an estimate involves methodology. I believe the definitions you provided support this interpretation ('calculate' or 'judge' vs 'chance', 'whim', or 'impulse').

[Pierre]

Here's my optimistic scenario for AM in 5 years time.

Assumptions:

The $ per BTC keeps rising slowly but surely. Reaches about $500 in 2018
Bitcoin transaction volume doubles roughly every 18 months, increasing over 5 years to 10 times 2013 levels.
AM manages to hang on to about 10% of the global hashrate and continues to sell mining hardware to others albeit at a much reduced profit.
The block reward has halved but the block size limit has increased from 1MB to 5MB.
Average transaction fees per block is up to 10 BTC.

So in this case AM will make about 100,000 BTC in 2018. That's .25 dividends per share. Share price might be around 10x or perhaps BTC 2.5 each.

If AM manages 20% global hash rate and average fees per block reaches 20 BTC that makes dividends of 0.65 per share (share price perhaps BTC 6.5 each)

Thoughts?

[Vycid]

Here's my optimistic scenario for AM in 5 years time.

Assumptions:

The $ per BTC keeps rising slowly but surely. Reaches about $500 in 2018
Bitcoin transaction volume doubles roughly every 18 months, increasing over 5 years to 10 times 2013 levels.
AM manages to hang on to about 10% of the global hashrate and continues to sell mining hardware to others albeit at a much reduced profit.
The block reward has halved but the block size limit has increased from 1MB to 5MB.
Average transaction fees per block is up to 10 BTC.

So in this case AM will make about 100,000 BTC in 2018. That's .25 dividends per share. Share price might be around 10x or perhaps BTC 2.5 each.

If AM manages 20% global hash rate and average fees per block reaches 20 BTC that makes dividends of 0.65 per share (share price perhaps BTC 6.5 each)

Thoughts?

I'd be very, very cautious about 5 year projections. Right now ASICMiner is one of very few companies with chips, but within a couple years there will almost certainly be several companies with 22 nm chips. It's even possible that Avalon, whose primary objective is protecting the blockchain, will sell those chips for the cost of manufacture, making ASICMiner unable to turn a profit on hardware sales because of undercutting by grassroots, open-source group buys similar to those we're seeing for 110 nm right now.

At that point ASICMiner's competitive advantage will be gone, and their margins will be much thinner.

[Rival]

In 5 years time we may all be chained to plows cutting furrows in state-owned ethanol fields to provide fuel for the military campaigns of our respective governments in the resource wars.

Hard to say what a share of ASICminer will be worth in 1 week, to say nothing of the value in 5 years.

It is certainly doing just fine today though.

[empoweoqwj]

What else can we do to help ASICMiner grow?

Things that are floating in my mind:
    *) Investing more;
    *) Opening exchanges that make AM shares more accessible;
    *) Reporting the weekly dividend;
    *) Answering questions from new investors;
    *) Posting pictures and words reflecting our euphoria;
    *) Asking our friends to join the club (be very careful with this);
    *) Being quiet;
    ...

You know that's very interesting because I was wondering the same thing myself, only because I believe ASICMINER is "hiding its light under a bushel" i.e. not being publicised.

I had been on bitcointalk for several months and the only mining company I ever heard about was BFL ... BFL this, BFL that. OK, I have had dug properly into the right place I would have come across ASICMINER, but it wasn't until I said to myself "its time to put my BTC to work instead of just sitting on them" I came across this ASICMINER mega-thread, read it, and decided very quickly to invest (@ 2.5)

My point?
     *) ASICMINER themselves are as quiet as mouse.
     *) ASICMINER has no website (as many people pointed out, a first for such a big company)
     *) ASICMINER has rarely advertised at bitcointalk (only I believe when they had direct hardware to sell to public)

So I believe awareness is a key factor that has held share price down for so long. Bitcoins "best kept secret" if you will. Although the amazing value has now gone, I believe its still a good way for people to put some bitcoins to work in terms of risk / reward.

What can shareholders / ASICMINER do to boost interest?

1) Get involved in discussions on bitcointalk about mining i.e. don't just sit here following one thread, go out and contribute to other threads that talk about mining. I don't mean spam. I mean actually contribute, because a lot of people don't know about ASICMINER at all, just BFL and then maybe Avalon. Personally I use a twitter feed to get new topics from bitcointalk but there are lots of ways to find relevant topics to contribute to.

2) About the website thing - just my mate's experience .... but he's a very savvy Internet person. He google'd ASICMINER and asicminer.co comes up number 1. He *automatically* assumed this was ASICMINER's website. I really had to persuade him that ASICMINER has no website and the site he found was a forum member's site. And I'm definitely not having a go at whoever owns asicminer.co, merely pointing out that ASICMINER have left a vacuum due to not having a site. I argued last week that ASICMINER didn't need a site, but .... if we are talking about "spreading the word" and giving people confidence to invest in ASICMINER, I'd definitely be happy to beat up my own argument  

3) I'm sure ASICMINER will advertise hardware again *but* honestly, they could run a very simple ad at *any time* showing growth of shares, how much they have made shareholders, and where to buy shares. Or even the guys that run the passthrough shares could do this.

4) If anyone knows people that write articles online, write about the amazing success story of ASICMINER - bitcoin is an easy sell for a topic at the moment, this would be a neat angle on the whole bitcoin scene.

"The bitcoin company that went from nothing to $100M in under a year without a website" )

Summary: I believe ASICMINER (for good reasons, not bad) has been very publicity shy to date, and again for good reasons, so have the shareholders.
There *will* be much more mining competition in the next 12 months, its been a very lucrative business, competition is inevitable, so I think now is the time to get out and start spreading the word about ASICMINER and how amazingly its performed. But yeah, most of it falls pretty flat unless ASICMINER is on board, does a website etc.

[FNG]

^  Threads can be created on hotstockmarket, investorsvillage, investorshub, etc

[freedomno1]

It is kind of funny that the fanbase aka us forum members are the ones who do the advertising 
Just proves how awesome it is

[helixone]

What else can we do to help ASICMiner grow?

Things that are floating in my mind:
    *) Investing more;
    *) Opening exchanges that make AM shares more accessible;
    *) Reporting the weekly dividend;
    *) Answering questions from new investors;
    *) Posting pictures and words reflecting our euphoria;
    *) Asking our friends to join the club (be very careful with this);
    *) Being quiet;
    ...

You know that's very interesting because I was wondering the same thing myself, only because I believe ASICMINER is "hiding its light under a bushel" i.e. not being publicised.

I had been on bitcointalk for several months and the only mining company I ever heard about was BFL ... BFL this, BFL that. OK, I have had dug properly into the right place I would have come across ASICMINER, but it wasn't until I said to myself "its time to put my BTC to work instead of just sitting on them" I came across this ASICMINER mega-thread, read it, and decided very quickly to invest (@ 2.5)

My point?
     *) ASICMINER themselves are as quiet as mouse.
     *) ASICMINER has no website (as many people pointed out, a first for such a big company)
     *) ASICMINER has rarely advertised at bitcointalk (only I believe when they had direct hardware to sell to public)

So I believe awareness is a key factor that has held share price down for so long. Bitcoins "best kept secret" if you will. Although the amazing value has now gone, I believe its still a good way for people to put some bitcoins to work in terms of risk / reward.

What can shareholders / ASICMINER do to boost interest?

1) Get involved in discussions on bitcointalk about mining i.e. don't just sit here following one thread, go out and contribute to other threads that talk about mining. I don't mean spam. I mean actually contribute, because a lot of people don't know about ASICMINER at all, just BFL and then maybe Avalon. Personally I use a twitter feed to get new topics from bitcointalk but there are lots of ways to find relevant topics to contribute to.

2) About the website thing - just my mate's experience .... but he's a very savvy Internet person. He google'd ASICMINER and asicminer.co comes up number 1. He *automatically* assumed this was ASICMINER's website. I really had to persuade him that ASICMINER has no website and the site he found was a forum member's site. And I'm definitely not having a go at whoever owns asicminer.co, merely pointing out that ASICMINER have left a vacuum due to not having a site. I argued last week that ASICMINER didn't need a site, but .... if we are talking about "spreading the word" and giving people confidence to invest in ASICMINER, I'd definitely be happy to beat up my own argument  

3) I'm sure ASICMINER will advertise hardware again *but* honestly, they could run a very simple ad at *any time* showing growth of shares, how much they have made shareholders, and where to buy shares. Or even the guys that run the passthrough shares could do this.

4) If anyone knows people that write articles online, write about the amazing success story of ASICMINER - bitcoin is an easy sell for a topic at the moment, this would be a neat angle on the whole bitcoin scene.

"The bitcoin company that went from nothing to $100M in under a year without a website" )

Summary: I believe ASICMINER (for good reasons, not bad) has been very publicity shy to date, and again for good reasons, so have the shareholders.
There *will* be much more mining competition in the next 12 months, its been a very lucrative business, competition is inevitable, so I think now is the time to get out and start spreading the word about ASICMINER and how amazingly its performed. But yeah, most of it falls pretty flat unless ASICMINER is on board, does a website etc.

I'll offer a counterpoint. As long as the share price of AM hasn't achieved its full share price potential, reinvesting dividends is a great use for the dividends. The more advertising we do, the less likely we'll be able to reinvest at a good price.

-helixone

[JordanL]

Hash rate appears to be dropping again (likely luck, could be a similar issue to last time). Don't forget to panic-sell, everyone!! Daddy needs a new pair of shoes.   

[Eric Muyser]

Hash rate appears to be dropping again (likely luck, could be a similar issue to last time). Don't forget to panic-sell, everyone!! Daddy needs a new pair of shoes.   

Yah and there's already 0.01 in the dividend from mining alone and still half a week to go.

[FNG]

Hash rate appears to be dropping again (likely luck, could be a similar issue to last time). Don't forget to panic-sell, everyone!! Daddy needs a new pair of shoes.   

cracked 4 out of the last 7.

Major slow down 

[dhenson]

Hash rate appears to be dropping again (likely luck, could be a similar issue to last time). Don't forget to panic-sell, everyone!! Daddy needs a new pair of shoes.   

cracked 4 out of the last 7.

Major slow down 

What did you expect?

[notme]

ASICMINER is a SCAM and is ILLEGAL. The issuer has not registered his investment with the SEC or other authorizes. HE IS BREAKING THE LAW.

Since when do businesses in China have to register with the SEC?