ASICMINER: Entering the Future of ASIC Mining by Inventing It

[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?

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[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.

[ft73]

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

Considered the kind of market we deal with, we're probably all gamblers here (and yes, i find it disturbing).

I can't agree much with your AM view though, i think you are missing some underlying market mechanics.
Good luck however.

[Vycid]

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

Considered the kind of market we deal with, we're probably all gamblers here (and yes, i find it disturbing).

I can't agree much with your AM view though, i think you are missing some underlying market mechanics.
Good luck however.

Yeah, I can't argue with that. The fact that AM is a bitcoin-denominated security makes this insanely volatile already.

I'm curious as to what market mechanics you're referring to, though?

[ft73]

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

Considered the kind of market we deal with, we're probably all gamblers here (and yes, i find it disturbing).

I can't agree much with your AM view though, i think you are missing some underlying market mechanics.
Good luck however.

Yeah, I can't argue with that. The fact that AM is a bitcoin-denominated security makes this insanely volatile already.

I'm curious as to what market mechanics you're referring to, though?

Greed and fear most notably.
In my view you are leveraging on the latter.
The former at the moment pushes quite some vapourware.
Market correlation is a third and important element, you'll be able to collect quite some evidence.

So many key elements play a role in AM share value, other than actual fundamentals.
I think we have to (carefully) live with it.

[BitThink]

The key for AM to survive now is to keep "low profile". If AM really begins growing fast, we all need to be careful. Although I believe friedcat will not do like that.

[Rival]

Things move a warp-speed in the bitcoin universe. This generates a particular form of time-dilation that has the effect of compressing the "Yes, but what have you done for me lately" syndrome. It is a disease of perception closely related to "Space Madness".

"Others promise, Friedcat delivers." This is as true today as it was yesterday.

[stslimited]

Asicminer is 6% of the network and decreasing, and nobody knows what the hardware sales are yet, and nobody knows what friedcat's timeline/plans are for faster chips


that completely explains the selloff,  and also in the auctions there are more sellers than buyers for now

thats it

I believe Friedcat has the infrastructure to deploy quickly, so enjoy your cheaper shares

[tinus42]

Things move a warp-speed in the bitcoin universe. This generates a particular form of time-dilation that has the effect of compressing the "Yes, but what have you done for me lately" syndrome. It is a disease of perception closely related to "Space Madness".

"Others promise, Friedcat delivers." This is as true today as it was yesterday.

I hope so. It took some time for him to transfer my direct share. I hope this means FC is busy with awesome stuff that will surprise us once again.

[btcbot]

Things move a warp-speed in the bitcoin universe. This generates a particular form of time-dilation that has the effect of compressing the "Yes, but what have you done for me lately" syndrome. It is a disease of perception closely related to "Space Madness".

"Others promise, Friedcat delivers." This is as true today as it was yesterday.

Also, it's my impression that the shareholders of the pass-through shares are in large part, new investors, never having weathered a bad quarter or the lure of penny-stock giga-profits.  Dumping and buying back lower and then dumping and buying back higher over and over... 

[velacreations]

damn, back down to 3.5

I guess we gotta wait to see what dividends will be tomorrow to see a rally here.

[tinus42]

damn, back down to 3.5

I guess we gotta wait to see what dividends will be tomorrow to see a rally here.

[stefffe]

damn, back down to 3.5

I guess we gotta wait to see what dividends will be tomorrow to see a rally here.

Yeaah

And here I am thinking I made a good deal when i got them for just under 4 last week

[VeeMiner]

Yes, the selloff reasons are pretty evident:

- new big competition with big plans (so far it's all vaporware though)
- no ETA on new blades
- ASICMINER hashrate doesn't keep up with the quick difficulty rise
- no info about new chip design

however I am still bullish on the AM for these reasons:

- friedcat is a really good and smart businessman
- there is definitely more hashrate to be deployed soon (the 262 Thash, some sold, some deployed, but it's there)
- I'm sure that friedcat and his team are hard at work at new chip design and they have the resources and expertise to make the best chip available. You should be able to walk before you start running!

So I'm long on my position with AM and the current development is fine with me.

[velacreations]

Yes, the selloff reasons are pretty evident:

- new big competition with big plans (so far it's all vaporware though)
- no ETA on new blades
- ASICMINER hashrate doesn't keep up with the quick difficulty rise
- no info about new chip design

well, I think this doesn't tell the whole story.  The drop in price times perfectly with the Labcoin bubble.  So, people are likely moving into riskier positions to try and make some profit on the hype.  As Labcoin drops back down, AM starts coming up, which to me, indicates that those who are profitting on the crowd are putting profits back into safer places to hold.

At the same time, USD/BTC is increasing, so I do think people are locking in some profits, there.

On top of all of that, the rebound from yesterday was erased almost signle-handedly by one trader.  The drop in price yesterday also was executed in the same way, with someone filling buy orders from 3.7 to 3.5 almost instantly.  So, there is a bit of market manipulation happening here, too (or maybe just ignorant traders).

I would like an update from FC regarding the recent hash decrease.  Typically, when we see hash rate moving like this, it means FC is moving things around.  They may be testing the lease program, new hardware, etc, but we just don't know.

AM definitely has a lot of hardware/TH on hand, so there must be a reason why the hash rate is not increasing.  I'm sure FC and team are working on it (they are not likely sitting around), but it would be nice to know the situation.

[SaintFlow]

one of the biggest reasons to sell is the lack of weekly update from fc

[velacreations]

one of the biggest reasons to sell is the lack of weekly update from fc

he's got better things to do that spend time on this thread, but it would be great to get some info.

If he does post on Thursday, do you think it will trigger a buying spree?

[velacreations]

I sold all my shares when it became clear Friedcat had no intention of honoring the .1 promotion for the USB erupters any time soon.  This may seem like a small thing, but to me it is a sign that something is wrong at ASICminer or he does not do what he says he will do. I would think it was the former, except I see these being offered for sale in bulk lots of 500, while many wait for the .01 promotion to be honored.  Either way, it is not a good sign to announce a promotion like that and then not follow through with it.

When did he say he wouldn't be honoring it?

[nubbins]

I sold all my shares when it became clear Friedcat had no intention of honoring the .1 promotion for the USB erupters any time soon.  This may seem like a small thing, but to me it is a sign that something is wrong at ASICminer or he does not do what he says he will do. I would think it was the former, except I see these being offered for sale in bulk lots of 500, while many wait for the .01 promotion to be honored.  Either way, it is not a good sign to announce a promotion like that and then not follow through with it.

When did he say he wouldn't be honoring it?

He didn't. Guy sold all his shares in AM because they're maximizing profits instead of subsidizing hardware to shareholders.

Only in bitcoin-land...

[tkone]

panic sell panic sell,
lets drop price even lower, this way we can buy back more shares!?
lets do it?
how low think we can go? i want more shareS?!?!?!