ASICMINER: Entering the Future of ASIC Mining by Inventing It

[Jutarul]

It IS dissapointing. What if Microsoft or Apple had gotten to 5x their IPO, then said "OK, we made our shareholders happy!", converted to 100% dividends, and stopped growing?

The generated cashflow of a company is tightly connected to the utility of the products they offer. In case of mining, it's likely the expected nominal yield of the hardware. However, the economics of mining is still not settled. It can range from profit mining to subsistence mining to defensive mining. Defensive mining results from an environment where the utility of mining is not capped by the nominal yield, but by he ability to govern the bitcoin. In such an environment the utility of the produced hardware is greater than the expected nominal yield and should allow companies to demand a higher price than the naive economic calculus would suggest.

I sympathize with your sentiment that it would be disappointing if a growth company would stop to innovate. For that reason it is important for ASICMINER to closely watch the needs of the mining community and respond in a timely manner. As far as Microsoft and Apple goes, they pursued very different strategies and were blessed with the necessary luck. Unfortunately there is no standard recipe for entrepreneurial success, except to be responsive. That said - what do you think would be the next big move for a company like ASICMINER?

[Vycid]

We invested in AM to invest in a company that produces ASIC miners to mine bitcoins.  I want my bitcoins to fund MINING.  If I wanted to invest in an exchange, then I would have invested in an exchange.

There is a direct logical contradiction to claiming that AM is a "growth company" and that bitcoin mining suffers from the tragedy of the commons.  I see that thinking is difficult for you, so I will break it down:

A growth company is a company with rapidly expending revenues and rapidly expanding costs.  Every dollar invested will return more than a dollar but not immediately.  As a result a growth company typically requires additional capital and cannot pay out dividends. If bitcoin mining truly suffers from the tragedy of the commons, then each dollar invested will return less than one dollar.  In this situation no mining company could possibly be a growth company.

AM's revenue is very much capped by bitcoin's scheduled release and the demand for bitcoin mining hardware.  As a result AM has likely come close or already achieved to its maximum revenue (revenue is not equal to profit).  Revenues may very well slowly decline or stagnate but that is fine.

Investing in 130 nm devices to invest in bitcoin mining was an AMAZING investment when AM launched.  It was genius and the shareholders profited enormously.  That is no longer the situation and AM has to operate in a changing industry.

By the way, bitcoin mining is not even close to a "tragedy of the commons" situation.  Tragedy of the commons also doesn't really apply when the resource cannot be exhausted.  You are mis-applying the concept but I understand your point so I originally ignored this point.

AM fit the description of a company with "rapidly expanding revenues and rapidly expanding costs" up until very recently, did it not? Its decision to pidgeonhole itself into mining, pursuing a fixed number of bitcoins with a growing amount of competition, is why it has ceased growing, despite the fact that it is valued like the growth company it so recently was.

Growth companies are supposed to grow. AM is the first "growth" company I have ever seen that has managed to shrink its revenue. I only consider it a growth company because it is priced like one.

--

It IS dissapointing. What if Microsoft or Apple had gotten to 5x their IPO, then said "OK, we made our shareholders happy!", converted to 100% dividends, and stopped growing?

The generated cashflow of a company is tightly connected to the utility of the products they offer. In case of mining, it's likely the expected nominal yield of the hardware. However, the economics of mining is still not settled. It can range from profit mining to subsistence mining to defensive mining. Defensive mining results from an environment where the utility of mining is not capped by the nominal yield, but by he ability to govern the bitcoin. In such an environment the utility of the produced hardware is greater than the expected nominal yield and should allow companies to demand a higher price than the naive economic calculus would suggest.

I sympathize with your sentiment that it would be disappointing if a growth company would stop to innovate. For that reason it is important for ASICMINER to closely watch the needs of the mining community and respond in a timely manner. As far as Microsoft and Apple goes, they pursued very different strategies and were blessed with the necessary luck. Unfortunately there is no standard recipe for entrepreneurial success, except to be responsive. That said - what do you think would be the next big move for a company like ASICMINER?

This is a great question, and I don't have the answer, just ideas.

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?

In order to establish this kind of business, there are a lot of core components - a trusted currency exchange, a bitcoin bank, a USD-denominated Bitcoin wallet.

Who is more trusted and better funded to have done all this than AM?

[Rebelution]

We invested in AM to invest in a company that produces ASIC miners to mine bitcoins.  I want my bitcoins to fund MINING.  If I wanted to invest in an exchange, then I would have invested in an exchange.

There is a direct logical contradiction to claiming that AM is a "growth company" and that bitcoin mining suffers from the tragedy of the commons.  I see that thinking is difficult for you, so I will break it down:

A growth company is a company with rapidly expending revenues and rapidly expanding costs.  Every dollar invested will return more than a dollar but not immediately.  As a result a growth company typically requires additional capital and cannot pay out dividends. If bitcoin mining truly suffers from the tragedy of the commons, then each dollar invested will return less than one dollar.  In this situation no mining company could possibly be a growth company.

AM's revenue is very much capped by bitcoin's scheduled release and the demand for bitcoin mining hardware.  As a result AM has likely come close or already achieved to its maximum revenue (revenue is not equal to profit).  Revenues may very well slowly decline or stagnate but that is fine.

Investing in 130 nm devices to invest in bitcoin mining was an AMAZING investment when AM launched.  It was genius and the shareholders profited enormously.  That is no longer the situation and AM has to operate in a changing industry.

By the way, bitcoin mining is not even close to a "tragedy of the commons" situation.  Tragedy of the commons also doesn't really apply when the resource cannot be exhausted.  You are mis-applying the concept but I understand your point so I originally ignored this point.

AM fit the description of a company with "rapidly expanding revenues and rapidly expanding costs" up until very recently, did it not? Its decision to pidgeonhole itself into mining, pursuing a fixed number of bitcoins with a growing amount of competition, is why it has ceased growing, despite the fact that it is valued like the growth company it so recently was.

Growth companies are supposed to grow. AM is the first "growth" company I have ever seen that has managed to shrink its revenue. I only consider it a growth company because it is priced like one.

Dude, just take a moment to think.  Could AM's revenues continued to expand?  I think most rational people would say no.  It could not gain a greater share of the network hashrate, nor could it realistically sell significantly more hardware.  Thus it transformed from a growth company into a mature company.  That is just a natural progression for all industries that can't be prevented without creating barriers to entry that are not cost.  There is nothing wrong with that, and mature companies can still be very profitable.

Now think about investing.  I give friedcat 100 dollars to build a farm and mine bitcoins.  He then earns 3 bitcoins, then I want him to return me the 3 bitcoins or invest in more mining equipment!  I don't want to him to go investing it in random, unrelated fields that prove to be far less profitable or even fail to generate a return.  As an investor I wanted to invest in MINING.  Now add to the fact that friedcat has already stated that exchanges are more heavily scrutinized in China, then the exchanges would actually bring substantial risk to our mining operation.  That is an even worse result! 

I think you are greatly underestimating the value a company in a mature industry that has comparative advantages.  It can continue to operate indefinitely at a profit.  That is an extremely valuable company.

[Vycid]

We invested in AM to invest in a company that produces ASIC miners to mine bitcoins.  I want my bitcoins to fund MINING.  If I wanted to invest in an exchange, then I would have invested in an exchange.

There is a direct logical contradiction to claiming that AM is a "growth company" and that bitcoin mining suffers from the tragedy of the commons.  I see that thinking is difficult for you, so I will break it down:

A growth company is a company with rapidly expending revenues and rapidly expanding costs.  Every dollar invested will return more than a dollar but not immediately.  As a result a growth company typically requires additional capital and cannot pay out dividends. If bitcoin mining truly suffers from the tragedy of the commons, then each dollar invested will return less than one dollar.  In this situation no mining company could possibly be a growth company.

AM's revenue is very much capped by bitcoin's scheduled release and the demand for bitcoin mining hardware.  As a result AM has likely come close or already achieved to its maximum revenue (revenue is not equal to profit).  Revenues may very well slowly decline or stagnate but that is fine.

Investing in 130 nm devices to invest in bitcoin mining was an AMAZING investment when AM launched.  It was genius and the shareholders profited enormously.  That is no longer the situation and AM has to operate in a changing industry.

By the way, bitcoin mining is not even close to a "tragedy of the commons" situation.  Tragedy of the commons also doesn't really apply when the resource cannot be exhausted.  You are mis-applying the concept but I understand your point so I originally ignored this point.

AM fit the description of a company with "rapidly expanding revenues and rapidly expanding costs" up until very recently, did it not? Its decision to pidgeonhole itself into mining, pursuing a fixed number of bitcoins with a growing amount of competition, is why it has ceased growing, despite the fact that it is valued like the growth company it so recently was.

Growth companies are supposed to grow. AM is the first "growth" company I have ever seen that has managed to shrink its revenue. I only consider it a growth company because it is priced like one.

Dude, just take a moment to think.  Could AM's revenues continued to expand?  I think most rational people would say no.  It could not gain a greater share of the network hashrate, nor could it realistically sell significantly more hardware.  Thus it transformed from a growth company into a mature company.  That is just a natural progression for all industries that can't be prevented without creating barriers to entry that are not cost.  There is nothing wrong with that, and mature companies can still be very profitable.

Now think about investing.  I give friedcat 100 dollars to build a farm and mine bitcoins.  He then earns 3 bitcoins, then I want him to return me the 3 bitcoins or invest in more mining equipment!  I don't want to him to go investing it in random, unrelated fields that prove to be far less profitable or even fail to generate a return.  As an investor I wanted to invest in MINING.  Now add to the fact that friedcat has already stated that exchanges are more heavily scrutinized in China, then the exchanges would actually bring substantial risk to our mining operation.  That is an even worse result!  

I think you are greatly underestimating the value a company in a mature industry that has comparative advantages.  It can continue to operate indefinitely at a profit.  That is an extremely valuable company.

You've just called a ~year old company whose competition hasn't even started launching products yet "mature".

Expanding is a very risky move for a young company, but young companies are risky 100% of the time. Focusing on core competencies is important, but if Google JUST licensed their search engine and never said "hey, we should start doing this advertising thing!", where do you think they'd be?

Follow the money.

(To pre-empt your "it IS mature!" argument - no, it's not. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook/maturecompanies.htm)

[Rebelution]

So are you saying that is a "growth" company?  Again you are contradicting yourself.  Your whole initial argument was that the initial returns are not sustainable and can't be maintained--YOU ARE RIGHT.

Yes, companies / industries can mature very quickly and things move very fast in the technology and bitcoin world. Your link just shows your stupidity and your complete lack of understanding of companies' life cycles.  Let's go through the points:

1 - check
2 - check
3 - check(exactly the type of competitive advantage I have been describing)
4 - does not apply to bitcoin securities as they cannot issue debt
5 - check, and is why friedcat is paying dividends
6 - check

So yes, thanks for posting the link.  You are correct, it is mature.

The companies with huge market caps are not the only companies that have generated amazing returns for their shareholders.  As an investor you are concerned about return.  It doesn't really matter if the company becomes a household name or is only B2B and the average american doesn't even know exists.  Both can bey very extremely profitable.  Good night.

[dhenson]

http://blockchain.info/block-index/408762/000000000000002661e7868b26511a32259d595d20bc056b87e6ca1e00a7bf11

For those that think being poorly connected doesn't matter.  First AM block found in 7 hours and it's an orphan.

[Vycid]

...

your complete lack of understanding of companies' life cycles.  Let's go through the points:

1 - check
2 - check
3 - check(exactly the type of competitive advantage I have been describing)
4 - does not apply to bitcoin securities as they cannot issue debt
5 - check, and is why friedcat is paying dividends
6 - check

So yes, thanks for posting the link.  You are correct, it is mature.

Let's ACTUALLY go through them, yeah?

1: Revenue growth is approaching growth rate in economy.

Hell, we don't even KNOW the revenue growth rate, because the financials aren't published (pretty mature, right?). But it's pretty clear that whatever the revenue growth rate is (positive or negative), it surely hasn't stabilized to the growth rate of the wider economy. It is currently dictated by the rate of increase in the difficulty rate, something completely external to AM and not at all "stable".

2: Margins are established.

I can't fucking believe you just said "check" for this one. Did you read it at all? This was the core of my argument that you actually agreed with. "Another feature shared by growth companies is that they tend to have stable margins". Hurp durp.

3: Competitive advantages?

The advantage is having a product. That's called the "first-mover advantage" and is NOT a hallmark of mature companies for reasons I really, really hope I don't need to explain.

4: Debt capacity

Uh, they could issue bitcoin bonds, no trouble... but AM has no reason to have ever attempted to do so, so this one is sorta irrelevant.

5: Cash build up and return?

This one I agree with, AM fits the bill.

6: Inorganic growth

WTF? What inorganic growth has AM seen?

Please get your head out of your ass.

[Mausini]

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?

I also believe the biggest mistake friedcat made was not to build cars and sell them. Cars could well be sold for bitcoin (as a PLATFORM instead of a currency), you know. Billions of dollars!!! Many transaction fees! Synergistically fuel its mining business!

You just disqualified yourself. What are you smoking? Thank you for shutting up.

[Vycid]

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?

I also believe the biggest mistake friedcat made was not to build cars and sell them. Cars could well be sold for bitcoin (as a PLATFORM instead of a currency), you know. Billions of dollars!!! Many transaction fees! Synergistically fuel its mining business!

You just disqualified yourself. What are you smoking? Thank you for shutting up.

Gosh, I see how silly I am, now. I might as well have said "cars", since cars are obviously just as adjacent a market to bitcoin mining as a bitcoin exchange would be!

If you don't know what I mean by "platform", look up the difference between "bitcoin" and "Bitcoin".

[superduh]

yes! Friedcatmobile - coming in two week (tm)

[Vycid]

09:00 (S) 2 @ 3.50500000 ASICMINER-PT
09:00 (S) 2 @ 3.50500000 ASICMINER-PT
09:00 (S) 1 @ 3.50600000 ASICMINER-PT
09:00 (S) 8 @ 3.50700000 ASICMINER-PT
09:00 (S) 2 @ 3.51000000 ASICMINER-PT
09:00 (S) 1 @ 3.55000000 ASICMINER-PT
08:59 (S) 15 @ 3.56000000 ASICMINER-PT
08:59 (S) 1 @ 3.56200000 ASICMINER-PT
08:59 (S) 1 @ 3.57000000 ASICMINER-PT
08:59 (S) 1 @ 3.58000000 ASICMINER-PT
08:58 (S) 3 @ 3.58100000 ASICMINER-PT
08:58 (S) 1 @ 3.58200000 ASICMINER-PT
08:56 (S) 2 @ 3.60000000 ASICMINER-PT
08:56 (S) 5 @ 3.60000000 ASICMINER-PT
08:56 (S) 10 @ 3.60100000 ASICMINER-PT
08:56 (S) 2 @ 3.60100000 ASICMINER-PT
08:56 (S) 3 @ 3.60200000 ASICMINER-PT
08:56 (S) 2 @ 3.60200000 ASICMINER-PT
08:56 (S) 2 @ 3.60300000 ASICMINER-PT
08:56 (S) 1 @ 3.60400000 ASICMINER-PT
08:56 (S) 2 @ 3.60500000 ASICMINER-PT
08:56 (S) 2 @ 3.60600000 ASICMINER-PT
08:56 (S) 1 @ 3.60800000 ASICMINER-PT
08:56 (S) 1 @ 3.60900000 ASICMINER-PT
08:56 (S) 10 @ 3.60900000 ASICMINER-PT
08:56 (S) 1 @ 3.61000000 ASICMINER-PT
08:56 (S) 1 @ 3.61000000 ASICMINER-PT
08:56 (S) 1 @ 3.61000000 ASICMINER-PT
08:56 (S) 6 @ 3.61100000 ASICMINER-PT
08:56 (S) 1 @ 3.61100000 ASICMINER-PT
08:56 (S) 5 @ 3.61200000 ASICMINER-PT
08:56 (S) 2 @ 3.61300000 ASICMINER-PT
08:56 (S) 1 @ 3.61700000 ASICMINER-PT
08:56 (S) 2 @ 3.62000000 ASICMINER-PT
08:56 (S) 1 @ 3.62100000 ASICMINER-PT
08:56 (S) 1 @ 3.62100000 ASICMINER-PT
08:56 (S) 1 @ 3.62500000 ASICMINER-PT
08:56 (S) 1 @ 3.64000000 ASICMINER-PT
08:56 (S) 1 @ 3.67100000 ASICMINER-PT
08:56 (S) 1 @ 3.67200000 ASICMINER-PT
08:56 (S) 1 @ 3.67300000 ASICMINER-PT
08:56 (S) 4 @ 3.68000000 ASICMINER-PT
08:56 (S) 1 @ 3.68100000 ASICMINER-PT

Thar she blows...

There's now a 0.2 bid/ask spread. MMs must be having a good time.

[Mausini]

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?

I also believe the biggest mistake friedcat made was not to build cars and sell them. Cars could well be sold for bitcoin (as a PLATFORM instead of a currency), you know. Billions of dollars!!! Many transaction fees! Synergistically fuel its mining business!

You just disqualified yourself. What are you smoking? Thank you for shutting up.

Gosh, I see how silly I am, now. I might as well have said "cars", since cars are obviously just as adjacent a market to bitcoin mining as a bitcoin exchange would be!

If you don't know what I mean by "platform", look up the difference between "bitcoin" and "Bitcoin".

I already didnt get what you mean with "growth". Does that have something to do with http://en.wikipedia.org/wiki/Superpower in combination with http://en.wikipedia.org/wiki/Alice_in_Wonderland? I suppose wonderland is the platform? You genius!

[JimiQ84]

What I don't understand is why is vycid trying to convince anyone about anything. If you don't believe in AM then don't buy shares.

[Vycid]

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?

I also believe the biggest mistake friedcat made was not to build cars and sell them. Cars could well be sold for bitcoin (as a PLATFORM instead of a currency), you know. Billions of dollars!!! Many transaction fees! Synergistically fuel its mining business!

You just disqualified yourself. What are you smoking? Thank you for shutting up.

Gosh, I see how silly I am, now. I might as well have said "cars", since cars are obviously just as adjacent a market to bitcoin mining as a bitcoin exchange would be!

If you don't know what I mean by "platform", look up the difference between "bitcoin" and "Bitcoin".

I already didnt get what you mean with "growth". Has that something to do with http://en.wikipedia.org/wiki/Superpower in combination with http://en.wikipedia.org/wiki/Alice_in_Wonderland? I suppose wonderland is the platform? You genius!

Your failure to understand does not constitute a logical inconsistency.

Neither do your straw man arguments.

What I don't understand is why is vycid trying to convince anyone about anything. If you don't believe in AM then don't buy shares.

I'm short via an options position, obviously. That position alone is not the motivation, though, as I don't think I really have much leverage in influencing the price level. It's got a lot more to do with my interest in AM as an apparent violation of rational markets theory.

[Elokane]

What I don't understand is why is vycid trying to convince anyone about anything. If you don't believe in AM then don't buy shares.

This is a discussion forum where people exchange opinions and information.

[Mausini]

Your failure to understand does not constitute a logical inconsistency.
Neither do your straw man arguments.

I'm short via an options position, obviously. That position alone is not the motivation, though, as I don't think I really have much leverage in influencing the price level. It's got a lot more to do with my interest in AM as an apparent violation of rational markets theory.

There are no arguments in my statements. Arguments would just trigger more bullshit from you. Again, I can only laugh at your "being short" explanation.

[Vycid]

There are no arguments in my statements. Arguments would just trigger more bullshit from you.

Spoken like a man with no arguments to make.

[stripykitteh]

I'm short via an options position, obviously. That position alone is not the motivation, though, as I don't think I really have much leverage in influencing the price level. It's got a lot more to do with my interest in AM as an apparent violation of rational markets theory.

Vycid, are you selling calls or buying puts? (I'm not an options guru btw, if you respond, ELI5 thanks).

[Jutarul]

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. ... Who is more trusted and better funded to have done all this than AM?

You ask for utilizing bitcoin as a platform, yet you fall back to traditional thinking and are constrained by the notion of bitcoin as a unit of account.

If you really want to look into the future of this emerging technology you have to take the 50,000 feet view and realize that bitcoin combined a few concepts which are revolutionary beyond monetary use. You now have a decentralized transactional database for irreversible record keeping: the blockchain. This has a tremendous utility for the global society beyond monetary uses. For starters, it allows you to build tamper-detection into every database in the world by computing incremental hashes and submitting them as a bitcoin transaction. Maybe the whole software distribution system can be standardized by letting software developers issue a bitcoin transaction, whenever they release software, making the current system of using certificates obsolete (e.g. a potential application of colored coins).

Whatever the future of bitcoin holds, ASICMINER is a project to serve the mining community first and foremost. Google's "innovation" to go into the "ad" space was not really an innovation - it was the realization that users are willing to pay services by delivering their private information. And that there are companies who a willing to pay cash for that private information. Are you suggesting that ASICMINER should try to develop new monetizing strategies for their deployed hashing power? E.g. by offering a zero-transaction fee inclusion in exchange for something the user is willing to give up? Or maybe even a reward, based on the mining subsidy?

[Vycid]

I'm short via an options position, obviously. That position alone is not the motivation, though, as I don't think I really have much leverage in influencing the price level. It's got a lot more to do with my interest in AM as an apparent violation of rational markets theory.

Vycid, are you selling calls or buying puts? (I'm not an options guru btw, if you respond, ELI5 thanks).

I bought a loooot of puts over the last couple months at a reasonable spread of strikes.

It's easy for me to leverage my short position, actually. For example - I bought 3-month puts at a strike of 3.2 BTC for a ~0.30 BTC premium. That means that I have the right to sell a share of AM for anytime in the 3 months after the contract is issued for 3.2 BTC, in exchange for an up-front payment of 0.3 BTC.

So in the hypothetical situation that I buy 10 of these puts, I spend a modest 3 BTC. If the stock price drops to 2.9 and I buy 10 shares for 29 BTC, then sell them for 32 BTC, I've broken even.

If the price drops to 2 BTC, I buy 10 shares for 20 BTC and sell for 32 BTC, I've made 12 BTC for a 300% profit.

Suffice to say - if the share price drops much below 2.8 BTC or so, I will do more than break even.

My hypothetical vision of the most valuable company in Bitcoin-land is not just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. ... Who is more trusted and better funded to have done all this than AM?

You ask for utilizing bitcoin as a platform, yet you fall back to traditional thinking and are constrained by the notion of bitcoin as a unit of account.

If you really want to look into the future of this emerging technology you have to take the 50,000 feet view and realize that bitcoin combined a few concepts which are revolutionary beyond monetary use. You now have a decentralized transactional database for irreversible record keeping: the blockchain. This has a tremendous utility for the global society beyond monetary uses. For starters, it allows you to build tamper-detection into every database in the world by computing incremental hashes and submitting them as a bitcoin transaction. Maybe the whole software distribution system can be standardized by letting software developers issue a bitcoin transaction, whenever they release software, making the current system of using certificates obsolete (e.g. a potential application of colored coins).

Whatever the future of bitcoin holds, ASICMINER is a project to serve the mining community first and foremost. Google's "innovation" to go into the "ad" space was not really an innovation - it was the realization that users are willing to pay services by delivering their private information. And that there are companies who a willing to pay cash for that private information. Are you suggesting that ASICMINER should try to develop new monetizing strategies for their deployed hashing power? E.g. by offering a zero-transaction fee inclusion in exchange for something the user is willing to give up? Or maybe even a reward, based on the mining subsidy?

I don't doubt there are many potential paths AM could have taken, and you are right that I am taking a constrained view of Bitcoin. I have neither expended the time thinking about the potential uses, nor am I particularly gifted at appreciating growth possibilities. Apparently, neither is Friedcat.

I am a value investor first and foremost. I have beaten the market by an appreciable amount for five years in a row now, based on a simple value investment strategy. That strategy depends heavily on selecting boring companies that I can understand. In the past, that has included traditional mining companies. Now it happens to mean a bitcoin mining company; and instead of being undervalued, it's overvalued. So be it.

If this was truly acting like a growth company (and it should be - it's a year old!), I would never have bought those options. But, for whatever reason, Friedcat doesn't want to explore the rich possibilities available here. Franchising is his greatest innovation - a solution to a problem he doesn't have (threatening network stability because he's got too much hashpower). And the simple corporate structure (well, they mine bitcoins, and sell things that mine bitcoins) leads me to conclude, with a certainty that is all but impossible in traditional markets, that this thing is overvalued.

So, the question is - does the market stay irrational longer than I stay solvent? I guess I'm a gambler after all.