ASICMINER: Entering the Future of ASIC Mining by Inventing It

[chriswilmer]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

You are ignoring hardware sales, which can increase the bitcoins above what is mined (essentially what ASICMiner is doing right now, making more profit from hardware sales than from mining).

Also, I fully expect transaction fees to become significant. Right now transactions fees are ~0.3-5 btc per block, and I am expecting the number of transactions per second to increase by 2-3 orders of magnitude over the next decade (as anyone who is bullish on bitcoin would). Since the value of BTC also go up, the transaction fees will go down, but not in a way that would equally compensate. Obviously we can't know how that dynamic will play out exactly, but seeing transaction fees adding up to 10-20 BTC per block is entirely reasonable to me.

More to the point, however, is that bitcoin mining hardware is certainly going to be in demand 10 years from now (assuming bitcoin has not died) and so if ASICMiner is still selling hardware then, that might be a very significant source of revenue (above bitcoin mining). Don't start telling me "you can't predict what's going to happen 10 years from now" because that is just what you are doing, and I am suggesting an alternative (and in my opinion more likely) scenario.

[Vycid]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

You are ignoring hardware sales, which can increase the bitcoins above what is mined (essentially what ASICMiner is doing right now, making more profit from hardware sales than from mining).

I am not ignoring hardware sales. They are just a suboptimal business decision when you have 5% of the hashrate. People will not intentionally buy hardware at a loss, so it is a better deal to run your own hardware.

FC is leveraging sales at the moment because the margins are insane and he knows he'd better cash in before the competition squeezes him out. Plus he needs the operational cash to make more hardware.

Going forward the prices will drop, margins will thin, and price wars will ensue (we have already seen how much AM has already slashed prices; that is all lost profit per unit).

Also, I just looked at the last 7 blocks. All tx fees between 0.01 and 0.4. I suspect you are full of shit with "0.3 - 5 BTC"

[chriswilmer]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

You are ignoring hardware sales, which can increase the bitcoins above what is mined (essentially what ASICMiner is doing right now, making more profit from hardware sales than from mining).

I am not ignoring hardware sales. They are just a suboptimal business decision when you have 5% of the hashrate. People will not intentionally buy hardware at a loss, so it is a better deal to run your own hardware.

FC is leveraging sales at the moment because the margins are insane and he knows he'd better cash in before the competition squeezes him out. Plus he needs the operational cash to make more hardware.

Going forward the prices will drop, margins will thin, and price wars will ensue (we have already seen how much AM has already slashed prices; that is all lost profit per unit).

Also, I just looked at the last 7 blocks. All tx fees between 0.01 and 0.4. I suspect you are full of shit with "0.3 - 5 BTC"

Sorry, I thought it was clear that I meant 0.3 - 0.5 btc per block (which is in line with what you found).

[Vycid]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

You are ignoring hardware sales, which can increase the bitcoins above what is mined (essentially what ASICMiner is doing right now, making more profit from hardware sales than from mining).

I am not ignoring hardware sales. They are just a suboptimal business decision when you have 5% of the hashrate. People will not intentionally buy hardware at a loss, so it is a better deal to run your own hardware.

FC is leveraging sales at the moment because the margins are insane and he knows he'd better cash in before the competition squeezes him out. Plus he needs the operational cash to make more hardware.

Going forward the prices will drop, margins will thin, and price wars will ensue (we have already seen how much AM has already slashed prices; that is all lost profit per unit).

Also, I just looked at the last 7 blocks. All tx fees between 0.01 and 0.4. I suspect you are full of shit with "0.3 - 5 BTC"

Sorry, I thought it was clear that I meant 0.3 - 0.5 btc per block (which is in line with what you found).

Let me document it this time: prior 7 blocks starting from this one (newest as of right now)

http://blockchain.info/block-index/414784/00000000000000040d3bd18e95ccb4c089bafaa4667f70efec145ae517e73e77

0.07420021 BTC
0.2445046 BTC
0.33552803 BTC
0.25201038 BTC
0.19562 BTC
0.18380026 BTC
0.19215369 BTC

Only one of those is even in the 0.3-0.5 range.

If someone would write a quick script and find the average over the past month that would be much appreciated.

[penta]

hm at current prices AM looks really strong. 40% APY 2btc price 0.014divs , with room for growth(1000ths)
JD is around 35% atm with around 5k avg wagered and 50k invested, and their wagered has been declining.
 
any better place to invest your btc?

[Vycid]

hm at current prices AM looks really strong. 40% APY 2btc price 0.014divs , with room for growth(1000ths)
JD is around 35% atm with around 5k avg wagered and 50k invested, and their wagered has been declining.
 
any better place to invest your btc?

It's not going to stay at 40% APY. Next week's dividend is shaping up to be the smallest in a long while. AM controls a shrinking portion of the hashrate and hardware sales are tapering off. Competition is gearing up everywhere.

There's a lot of speculation about Gen 2 hardware but it's just that: speculation.

You could easily lose much more in share price than you get in dividends. Do you feel lucky?

(Do your homework, by the way. There's lots of information out there, you shouldn't trust me.)

[eb3full]

ASICMINER's future is to self-mine, as the current growth of difficulty will discourage anyone from buying hardware. friedcat expected this environment from day one and it's encouraging that he priced his hardware properly the whole way down.

friedcat was smart to pick 55nm/65nm 2nd gen node size; chip efficiency won't matter until China runs out of cheap electricity and space or the difficulty increases much, much more. friedcat can probably produce more hashrate at 55/65 than any competitors can produce in 22/28, for at least some time. Mining is a very parallel operation and any companies working on efficient tech (like the absurd quad core miner which makes zero sense) are preparing themselves for mining in very tight margins some 12 months in the future.

I have my horses on friedcat no matter how many people decide to sell. I agree that it's much riskier now and that warrants a lower share price. I think friedcat has made some very calculated decisions and was clever with how he invested. He also has a ton of money he can spend on virtually whatever he thinks is necessary, and he wouldn't have put so much effort into 2nd stage business planning if he wasn't serious about the next steps he was taking. I also have no reason to doubt him considering what he has already achieved.

What a fascinating market. Good luck to friedcat and everyone else holding.

[helixone]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

Vycid,

Will you commit to selling me shares of AM in 6 weeks at 2.0/share? Since, this isn't an option but more of a futures play, you don't need to pay me a premium, and I am willing to escrow btc if you can prove ownership of shares, or are also willing to escrow a good faith btc deposit, with an agreed escrow agent.  Thinking we each would put up 25-33% of the position, since btc assets are so much more volatile than other assets traded on futures markets.

-helixone

[Vycid]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

Vycid,

Will you commit to selling me shares of AM in 6 weeks at 2.0/share? Since, this isn't an option but more of a futures play, you don't need to pay me a premium, and I am willing to escrow btc if you can prove ownership of shares, or are also willing to escrow a good faith btc deposit, with an agreed escrow agent.  Thinking we each would put up 25-33% of the position, since btc assets are so much more volatile than other assets traded on futures markets.

-helixone

runeks has been offering fairly generous premiums for put options, so I don't see why you would offer this to me for free.

You would be obligated to buy the shares at 2.0, in 6 weeks?

[helixone]

TLDR; I think they are about to absolutely crush it.

"Guys, where's the money for 0.04 per share gonna come from?"

"Volume!"

Hahahahaha.  

Quoting this for the future.

I do. That's why I'm a buyer again.

Remind me, when were you not a buyer?

Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.

At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.

This is an ABSURD statement.

2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).

The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.

But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.

If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.

Vycid,

Will you commit to selling me shares of AM in 6 weeks at 2.0/share? Since, this isn't an option but more of a futures play, you don't need to pay me a premium, and I am willing to escrow btc if you can prove ownership of shares, or are also willing to escrow a good faith btc deposit, with an agreed escrow agent.  Thinking we each would put up 25-33% of the position, since btc assets are so much more volatile than other assets traded on futures markets.

-helixone

runeks has been offering fairly generous premiums for put options, so I don't see why you would offer this to me for free.

You would be obligated to buy the shares at 2.0, in 6 weeks?

No premium, however, both of us puts up equal escrow. (BTC puts suck from the seller point of view as one has to escrow the entire amount, and can't use ones portfolio as escrow.) Let me know privately or publicly:

a) what percentage of the position we should each escrow. I am proposing 25-33%, and if the position moves against either of us more than the escrow deposit, we either need to put up more, or forfeit the escrow. (traditional futures margin call).
b) how many shares you are looking to commit to selling.
 
-helixone

[GodHatesFigs]

6 weeks is a little soon - I'm sure he'd take that bet on a 12 month timescale.

[Vexual]

6 weeks is a little soon - I'm sure he'd take that bet on a 12 month timescale.

He does come accross a little funny, but i don't think he's that stupid.
Imagine what the prez is doing with his days, and decide the value from your imaginition.
This is bitcoin, not the nyse.

[GodHatesFigs]

I'd be very surprised if these shares were trading as high as 2 in a year's time.

[Vexual]

I'd be very surprised if these shares were trading as high as 2 in a year's time.

Had to quote that.
I'm not sure about the share price in a year.
Friedcat is a class act.

[Vexual]

The game that the prez invented got coin moving. good for bitcoin.
And if you think he's hitting up the casino and banging whores, you've got another think coming.

[stripykitteh]

I'd be very surprised if these shares were trading as high as 2 in a year's time.

If they stick to mining and hardware sales only I think you're probably right. A year in bitcoin-time is like 10 years. It is possible there is no dominant player in mining at that stage. A valuation that high might be fair if transactions do start to become significant, and AsicMiner remains a player. My guess is that the next year or two will be about regulatory hurdles and business infrastructure, and while that is happening transaction fees will remain low and margins on mining will drop significantly through increased competition.

If bitcoin commerce *does* take off, by 2016 there could be some mining companies with fair valuations in the millions. It's far too early to say that this will happen of course, and even if it does we don't know whether AsicMiner will be one of the winners.

[Vexual]

If bitcoin commerce *does* take off, by 2016 there could be some mining companies with fair valuations in the millions.

Are those millions in bitcoin or old money?
We really should be in the speculation thread.

[ex-trader]

Transaction fees are not growing.

http://blockchain.info/charts/transaction-fees.

Right now they don't even meet the cost of electricity to process them.

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

[Vexual]

Transaction fees are not growing.

http://blockchain.info/charts/transaction-fees.

Right now they don't even meet the cost of electricity to process them.

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

Hey you're right, the block reward is still more than transaction fees!
good info

[Mabsark]

Also a lot of future growth will be off-chain transactions, which result in no fees to miners.

Which don't need to be processed by miners.