ASICMINER: Entering the Future of ASIC Mining by Inventing It

[candoo]

I guess we will hit 5 BTC per share tomorrow!:o

[nubbins]

You were the first to bring up dividends, so I responded to that point -- I don't think dividends are a compelling reason to do anything at the moment. It's much more interesting (and profitable) to just be buying and selling shares at this point.

And for what it's worth, name-calling reflects poorly on one's character. There's enough shitheads on the forum already, why don't we at least try to keep the conversation civil?

Sorry nubbins, I'm going through some IRL stuff. I agree, that was uncalled for. I shouldn't be arguing online.

Luckybit brought up dividends, then you countered, then I countered.

Apology accepted, discussions about AM tend to heat up pretty quickly. I've been so busy tracking the share price that I didn't even notice the last dividend payout.

[Luckybit]

When stories spread about people paying off their college loans or tripling their Bitcoins just from buying shares they'll get in.

I've tripled my investment in under 2 months.

For the record, I think anybody who buys shares at current prices (~4.5) is making a bad decision.

Why would you consider it a bad decisions with the ridiculous dividends coming in the future?

Because daily fluctuations in share prices are already orders of magnitude larger than any dividend payment to date. A BTC0.04 dividend equals a net loss if the shares you bought at BTC4.5 are now selling for BTC4.45.

But I think the shares are worth around 5BTC and while I wouldn't buy them at 10BTC (I cannot afford to at that price) I'm sure some people can. It's a good place to put your Bitcoins and it's better than leaving it in cold storage or hot wallet. You might have to deal with the fluctuations but if it gets to 5BTC it's not going back down to 4.5 so the problem of fluctuations mostly affects people who get in too late. If you're getting in at 5+ then I would think it's far more risky than getting in right now at 4.5.

[nubbins]

But I think the shares are worth around 5BTC and while I wouldn't buy them at 10BTC (I cannot afford to at that price) I'm sure some people can. It's a good place to put your Bitcoins and it's better than leaving it in cold storage or hot wallet. You might have to deal with the fluctuations but if it gets to 5BTC it's not going back down to 4.5 so the problem of fluctuations mostly affects people who get in too late. If you're getting in at 5+ then I would think it's far more risky than getting in right now at 4.5.

Emphasis mine, and I agree with the points in bold. To extend it another step, getting in at 4.5 is riskier than if you'd done so at 4.

If you bought in at a lower price (let's say <2 for the sake of the discussion), the question is not whether you lost or gained money, but how much profit you've made.

I disagree with your statement that share price won't drop to 4.5 once it passes 5; all I can see are those "hold, spartans!" memes on /r/Bitcoin when BTC/USD was $200+. If x can go up, x can go down, which leads me to your statement that AM is a better parking spot than cold storage; that's only true if AM shares don't decrease in value.

[nubbins]

I should also mention that I'm not trying to antagonize people by being pessimistic. The "sky's the limit" crowd is a mixture of (a) genuinely optimistic investors, and (b) people trying to keep the price high while they cash out. Devil's advocates are necessary in times like these

[chkgk]

I disagree with your statement that share price won't drop to 4.5 once it passes 5; all I can see are those "hold, spartans!" memes on /r/Bitcoin when BTC/USD was $200+. If x can go up, x can go down, which leads me to your statement that AM is a better parking spot than cold storage; that's only true if AM shares don't decrease in value.

I fully agree with you there. However, it's relatively easy to deal with the risk of a stock price falling below initial investment. I have a simple script monitoring the exchange rate. If it drops below my average buy-in share price (+10%) it places a sell order at a price which should immediately be matched by open buy orders.

[Luckybit]

But I think the shares are worth around 5BTC and while I wouldn't buy them at 10BTC (I cannot afford to at that price) I'm sure some people can. It's a good place to put your Bitcoins and it's better than leaving it in cold storage or hot wallet. You might have to deal with the fluctuations but if it gets to 5BTC it's not going back down to 4.5 so the problem of fluctuations mostly affects people who get in too late. If you're getting in at 5+ then I would think it's far more risky than getting in right now at 4.5.

Emphasis mine, and I agree with the points in bold. To extend it another step, getting in at 4.5 is riskier than if you'd done so at 4.

If you bought in at a lower price (let's say <2 for the sake of the discussion), the question is not whether you lost or gained money, but how much profit you've made.

I disagree with your statement that share price won't drop to 4.5 once it passes 5; all I can see are those "hold, spartans!" memes on /r/Bitcoin when BTC/USD was $200+. If x can go up, x can go down, which leads me to your statement that AM is a better parking spot than cold storage; that's only true if AM shares don't decrease in value.

There is no reason to move the Bitcoins because there is nothing else paying dividends this much. So where else will people put their savings? You keep it in a cold storage and it doesn't collect 20-30% APR. And there is really nothing to spend it on except BFL and we see where that goes.

For the next month dividends will be high and there is no better investment. In August we can look at the share price then but I suspect it could be over 6 or even over 7 by then and the pressure will exist to sell but will that be enough to out pace demand? If the price of Bitcoins keep dropping then I would say no. The cheaper Bitcoins are the more demand there will be for these particular shares.

[JimiQ84]

There is no reason to move the Bitcoins because there is nothing else paying dividends this much. So where else will people put their savings? You keep it in a cold storage and it doesn't collect 20-30% APR. And there is really nothing to spend it on except BFL and we see where that goes.

Coincidentically, that's what causes chinese real estate bubble right now. Lack of proper investment opportunities other than real estate.

[freedomno1]

This might be part of the reason for the latest upswing(s):

Chinese investors go crazy for Bitcoin:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130630000002&cid=1202

Well nice Chinese article
Anyways I see up but I'm also watching the exchange fiat rate

Auction Alert

I have initiated a third offering for my holdings. I am offering at 4.5BTC/share for a maximum of 1000 shares:
https://bitcointalk.org/index.php?topic=247803.0

Guess I speculated bang on  
Either that or its intervals or 2 lol leaves that to the speculation thread haha
This min is smaller that last time by 10 BTC looks like it won't last long with the bubble fever

Well temporary stability is highly appreciated kind of an observation gauge on demand

[Rival]

ASICMiner- Letting the cat out of the bag.

Recent analysis has led me to some interesting conclusions. I would like to present them to the community for discussion. Feel free to shoot holes in it as you desire.

In the early 1990's, Microsoft made a huge investment in their direct competitor, Apple. Apple was failing, and common wisdom dictated that this was done to keep from getting impaled by anti-trust lawsuits. I would suggest that it was nothing of the sort. I believe they were just doing it to grow the market, so that the value of their share would increase. Witness AM. AM has demonstrated a capability to completely dominate the entire global hash if they so desired. I don't think this is conjecture, but rather a demonstrable fact. But unlike Microsoft, they had to deal with a very important restraint: they could not ever under and circumstances breach 50% of market share. This placed a practical limit on their growth. They could never grow to more than 50% of the current hash. So what is the obvious solution? Increase the hash that they do not control, and the easiest way to do that is to supply their competitor (Joe and Jane miner) with devices that could hash. AM, in order to grow, increased the hash of their competition by selling them hardware that they could have easily put into their own farm. AM effectively put themselves into the catbird seat by not only profiting from their own farm, but from hardware sales as well. The tertiary profit came from increased hashrate allowing them to expand even further. They raised the value of the cap.

I have no doubt that many have realized this strategy already, in fact, there have been several posts that have alluded it to it. What I think most have missed however is much more complicated.

As specialized hardware is required to make any sort of profit, the actual number of miners has been decreasing. The costs of obtaining the latest hardware continue to increase leading to only one conclusion: That eventually no individual will be able to own hardware capable of hashing a profit. We will eventually reach a point where there exist only a handful of companies with the resources to purchase and operate the hardware required... and instead of owning hardware, we will all own shares in farms. Just as the wildcat oil-drillers gave way to Standard Oil. But Friedcat has a trick up his sleeve, there will be no Standard Oil. Friedcat appears to have embarked on a strategy that pays attention to history. He knows the result of a monopoly, and knows it is poison to bitcoins. He welcomes the competition. he encourages it, and above all else, he profits from it. He knows he needs it. So he ensures it exists.

Where will this lead? The obvious conclusion is a system wherein Friedcat runs the bitcoin mining ecosystem in the same manner the federal Reserve manages dollars. A total domination on almost every level. Avalon kicking up the hash? Excellent, we can just increase to match, and sell even more block erupters to everyone who is trying to keep up. More profit for shareholders. BFL actually delivering? Pop the cork, we can now bring another 10 Terrahash online and sell even more USB miners! More profit for shareholders!

And so, we end up with AM ensuring no entity ever gets 51%, protecting the bitcoin system, and rewarding shareholders with an almost endless stream of dividends. It almost looks like it is all tied up with a pretty bow. When you read it like this, it is hard to wonder if Friedcat and Satoshi might be in some way... related.

Oh, well, off to bed. It was a good bedtime story if nothing else. Please deposit the tinfoil hats in the bin as you leave.

[freedomno1]

In other words stability in the wild west of bitcoin
Or the ZOMG stash of doom

[stripykitteh]

Where will this lead? The obvious conclusion is a system wherein Friedcat runs the bitcoin mining ecosystem in the same manner the federal Reserve manages dollars. A total domination on almost every level. Avalon kicking up the hash? Excellent, we can just increase to match, and sell even more block erupters to everyone who is trying to keep up. More profit for shareholders. BFL actually delivering? Pop the cork, we can now bring another 10 Terrahash online and sell even more USB miners! More profit for shareholders!

There are several insiders who post in this thread who've acknowledged this. AM is ultimately a hardware sales company. The mine is just a bootstrap. Profit per unit sold will come down as competition increases, but volume will go up too. As long as they have the lowest cost of production (which given the volume they can afford is likely) there will always be a place for them.

The first few weeks after I bought my first AM shares, every few days I'd have a "A-ha!" moment where I'd realise something else that friedcat and crew must have realised months before they produced any hardware. This idea was one of my "A-ha!" moments.

[Eric Muyser]

Where will this lead? The obvious conclusion is a system wherein Friedcat runs the bitcoin mining ecosystem in the same manner the federal Reserve manages dollars. A total domination on almost every level. Avalon kicking up the hash? Excellent, we can just increase to match, and sell even more block erupters to everyone who is trying to keep up. More profit for shareholders. BFL actually delivering? Pop the cork, we can now bring another 10 Terrahash online and sell even more USB miners! More profit for shareholders!

Came to this same conclusion a while ago, and it was reinforced with the presentation.

[Vycid]

Where will this lead? The obvious conclusion is a system wherein Friedcat runs the bitcoin mining ecosystem in the same manner the federal Reserve manages dollars. A total domination on almost every level. Avalon kicking up the hash? Excellent, we can just increase to match, and sell even more block erupters to everyone who is trying to keep up. More profit for shareholders. BFL actually delivering? Pop the cork, we can now bring another 10 Terrahash online and sell even more USB miners! More profit for shareholders!

There are several insiders who post in this thread who've acknowledged this. AM is ultimately a hardware sales company. The mine is just a bootstrap. Profit per unit sold will come down as competition increases, but volume will go up too. As long as they have the lowest cost of production (which given the volume they can afford is likely) there will always be a place for them.

The first few weeks after I bought my first AM shares, every few days I'd have a "A-ha!" moment where I'd realise something else that friedcat and crew must have realised months before they produced any hardware. This idea was one of my "A-ha!" moments.

Alright, so it's a hardware company.

And if Avalon, or BFL, or KNCMiner, or whomever else gets their shit together... are we going to value those companies at $132M also?

Furthermore, I think we have to realize ASICMiner is in a powerful monopoly position right now, so they're getting away with charging ridiculous sums for their hardware. That will end very soon; within 2 years I suspect the margins on mining hardware will be comparable to the margins on other electronics.

I'm still buying puts, by the way.

Strike: 3.5
Premium: 0.32
Exp: ~90d

[velacreations]

And if Avalon, or BFL, or KNCMiner, or whomever else gets their shit together... are we going to value those companies at $132M also?

if they make $7.5M+ per week, then yes, we might.

[Lohoris]

Because daily fluctuations in share prices are already orders of magnitude larger than any dividend payment to date. A BTC0.04 dividend equals a net loss if the shares you bought at BTC4.5 are now selling for BTC4.45.

Only if you sell...

[supert]

they could not ever under and circumstances breach 50% of market share. This placed a practical limit on their growth. They could never grow to more than 50% of the current hash. So what is the obvious solution? Increase the hash that they do not control, and the easiest way to do that is to supply their competitor (Joe and Jane miner) with devices that could hash. AM, in order to grow, increased the hash of their competition by selling them hardware that they could have easily put into their own farm. AM effectively put themselves into the catbird seat by not only profiting from their own farm, but from hardware sales as well. The tertiary profit came from increased hashrate allowing them to expand even further. They raised the value of the cap.

Yep, I realised this also. However there is a limit to AM dividend even when they control 100% of the network (directly or indirectly). Difficulty increases.

[empoweoqwj]

Firstly, they ain't never gonna control 100% of the market. That's just plain bubble-boy talk. If they did, the whole bitcoin market would collapse anyway.

Second, yet again, transaction fees, miners expect to earn an ever increasing % of their income in the future from transaction fees. Nobody else gets these fees, only miners. So AM earnings are not capped by actual mining of new coins, only by the transaction size of the entire bitcoin network. Nobody knows what this will be next year or in five years, but if you are betting it is nothing, I'm not sure why you are interested in bitcoins at all. If there are no transaction fees in a few years, bitcoin will be dead anyway.

[Eric Muyser]

Firstly, they ain't never gonna control 100% of the market. That's just plain bubble-boy talk. If they did, the whole bitcoin market would collapse anyway.

Second, yet again, transaction fees, miners expect to earn an ever increasing % of their income in the future from transaction fees. Nobody else gets these fees, only miners. So AM earnings are not capped by actual mining of new coins, only by the transaction size of the entire bitcoin network. Nobody knows what this will be next year or in five years, but if you are betting it is nothing, I'm not sure why you are interested in bitcoins at all. If there are no transaction fees in a few years, bitcoin will be dead anyway.

empoweoqwj really gets it. Pay attention kids, try to think further and hold more variables in your head than just A + B = UNDERVALUED! B + C = INFLATED!

[canth]

Where will this lead? The obvious conclusion is a system wherein Friedcat runs the bitcoin mining ecosystem in the same manner the federal Reserve manages dollars. A total domination on almost every level. Avalon kicking up the hash? Excellent, we can just increase to match, and sell even more block erupters to everyone who is trying to keep up. More profit for shareholders. BFL actually delivering? Pop the cork, we can now bring another 10 Terrahash online and sell even more USB miners! More profit for shareholders!

There are several insiders who post in this thread who've acknowledged this. AM is ultimately a hardware sales company. The mine is just a bootstrap. Profit per unit sold will come down as competition increases, but volume will go up too. As long as they have the lowest cost of production (which given the volume they can afford is likely) there will always be a place for them.

The first few weeks after I bought my first AM shares, every few days I'd have a "A-ha!" moment where I'd realise something else that friedcat and crew must have realised months before they produced any hardware. This idea was one of my "A-ha!" moments.

Alright, so it's a hardware company.

And if Avalon, or BFL, or KNCMiner, or whomever else gets their shit together... are we going to value those companies at $132M also?

Furthermore, I think we have to realize ASICMiner is in a powerful monopoly position right now, so they're getting away with charging ridiculous sums for their hardware. That will end very soon; within 2 years I suspect the margins on mining hardware will be comparable to the margins on other electronics.

I'm still buying puts, by the way.

Strike: 3.5
Premium: 0.32
Exp: ~90d

"We" aren't going to value Avalon, BFL or KnC at all, unless they decide to offer a way for public investment. Also, as you eloquently noted, none of these companies (so far) have been able to demonstrably prove their ability for produce a similar volume of miners/hashrate.

I do believe that AM will have at least 1-2 solid competitors in < 1 year and then this will turn into an oligopoly.