ASICMINER: Entering the Future of ASIC Mining by Inventing It

[explorer]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Looks like that's the plan. How else would FC pay for those massive batches?

You guys sound pissed, but let's think about this. Mining is an arms race, so you can only sell these chips for so long before the demand is gone and with another company. We can see that demand is currently there based on the multiple companies who are using AM Gen3 chips. We need to push these batches out as fast as possible, then reap rewards later.

Presumably some of the costs of the first batch will not be there with the second and third - CAD Design and device samples stick out, but obviously I do not know the inner workings that well so I may be mistaken on this.

It would also seem that a lot of the costs will be upfront with the first batch and that it should be cheaper to make batches 2 and 3.

Just my thoughts - not looking for an argument, just a discussion.

IIRC, it was implied that production costs were in hand from previous sales, hence the aggressive dividends.  Lost in translation, or simply a change of plans?  Either way it has not been directly addressed.  This is nothing new or panic worthy, but an explanation would still be welcome.  May the aggression begin in the coming weeks as sales increase and mining ramps up!

[jimmothy]

Seems people are not happy that this months divs went towards next months production costs.

You don't say...

What those people don't realize is that even if we did get divs this month, next months divs would be much less.

In other news AM has now sold enough hashrate to power about 10% of the bitcoin network and has ~20PH left to sell (before buying more wafers).

[jimmothy]

IIRC, it was implied that production costs were in hand from previous sales, hence the aggressive dividends.  Lost in translation, or simply a change of plans?  Either way it has not been directly addressed.  This is nothing new or panic worthy, but an explanation would still be welcome.  May the aggression begin in the coming weeks as sales increase and mining ramps up!

AM only had about 5500btc + $1,000,000 in cash. That wouldn't even be enough to cover wafer costs. (maybe for the first batch but definitely not the next)

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

[eiprol]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

I think the question is, have we entered in an infinite loop of reinvestments, or someday those gains will be paid as dividends?
What happened to those aggressive dividends?

[Korbman]

Having just caught up on the last few pages in this thread, there seems to be an interesting dichotomy between established members and newbies on how they view the recent news. I can't say I have a reasonable view on it all at this point, but I'll still grab the popcorn and watch it all unfold.

[jimmothy]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

I think the question is, have we entered in an infinite loop of reinvestments, or someday those gains will be paid as dividends?
What happened to those aggressive dividends?

It wouldn't really be an infinite loop of reinvestments in my made up scenario since the reinvestment amount would be doubling per batch.

[explorer]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

I think the question is, have we entered in an infinite loop of reinvestments, or someday those gains will be paid as dividends?
What happened to those aggressive dividends?

Of course, as time ticks on, and BTC ticks UP  the later the div the lower the BTC denomination.  Maybe even to the point that $10M in BTC NOW will be worth more than $25M in BTC 3 months from now.  Speculation.  But worthy of thought.  Since we don't have all of the information, we can believe that friedcat has maximum shareholder (himself included) benefit in mind, or we can sell to those that do.

[bitcoin.newsfeed]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

I think the question is, have we entered in an infinite loop of reinvestments, or someday those gains will be paid as dividends?
What happened to those aggressive dividends?

It wouldn't really be an infinite loop of reinvestments in my made up scenario since the reinvestment amount would be doubling per batch.

about that infinite loop of reinvestments, how can you explain this (one month ago) :

The dividend schedule will be aggressive, as AM will not require large sums of retained capital. The rationale is that AM doesn't need to invest large sums into infrastructure and that the majority of chip production costs will be covered by the business partners on a contract schedule. The new round of dividends are scheduled to begin as soon as the first large purchases have concluded and should precede or coincide with the publication of the updated financial statements.

Let's just write another round of questions. FC said, that he will glad answer them.

[dmcdad]

Let's just write another round of questions. FC said, that he will glad answer them.

Yes, lots of unanswered questions and uncertainty now. My questions for FC if someone is collecting them:

1) On the Balance Sheet, approximately how many chips does the current Inventory (Products + Materials) represent?

2) How many months of inventory do you estimate that represents?

3) On the Cash Flow there was significant expenses for gen3 production (~6mil USD). Does that represent the bulk of gen3 expenses, or are the expenses for gen3 going to continue (additional wafer batches ordered, etc.)?

4) When will dividends start, and how frequently will they occur?

5) What is the status of gen 3.1 (shipping to customers, I think?)? How much does it help with energy usage -- do we have final chip performance numbers yet?

6) What is the progress on gen4?

7) What is the status of self mining? What is the rollout schedule for the data centers?

[jimmothy]

about that infinite loop of reinvestments, how can you explain this (one month ago) :

The dividend schedule will be aggressive, as AM will not require large sums of retained capital. The rationale is that AM doesn't need to invest large sums into infrastructure and that the majority of chip production costs will be covered by the business partners on a contract schedule. The new round of dividends are scheduled to begin as soon as the first large purchases have concluded and should precede or coincide with the publication of the updated financial statements.

Let's just write another round of questions. FC said, that he will glad to answer them.

This is just speculation but I think FC was expecting the chips to arrive 1 month earlier and with much better specs which may have cost us our "aggressive dividends".

However I think the "no large sums of retained capital" is somewhat of a misunderstanding. It is simply impossible to sell $25 million worth of chips without spending a few million to produce the wafers.

But yes I do agree it would be a good idea to write up another round of questions.

[bitcoin.newsfeed]

1) On the Balance Sheet, approximately how many chips does the current Inventory (Products + Materials) represent?

2) How many months of inventory do you estimate that represents?

3) On the Cash Flow there was significant expenses for gen3 production (~6mil USD). Does that represent the bulk of gen3 expenses, or are the expenses for gen3 going to continue (additional wafer batches ordered, etc.)?

4) When will dividends start, and how frequently will they occur?

5) What is the status of gen 3.1 (shipping to customers, I think?)? How much does it help with energy usage -- do we have final chip performance numbers yet?

6) What is the progress on gen4?

7) What is the status of self mining? What is the rollout schedule for the data centers?

+1

8 ) What is the status of franchising partners? When can we expect to see income from them?

9) Can you please clarify this sentence from 21st April : "The dividend schedule will be aggressive, as AM will not require large sums of retained capital." < is this still actual, or meanwhile something changed?

10) What is the average selling price of AM gen3 chips (price per Gh/s)?

11) Can we please get weekly, bi-weekly or monthly updates about progress, plans, sales etc. for preventing FUD in this thread?

* What is that ~4M CNY in financial report/expenses at exchange?

* Can you please care more about your shareholders ?

[bkminer]

Wow of course Havelock pics today to not show my deposits after 9 confirmations and be so slow as to lose my two price marks on buying AM1....

[Franktank]

Until more information is provided, all of this is conjecture based on partial information. He has not stated that the funds from the first batch of May chips would be used future batches and the assumptions made after the financial post clearly conflict with the previous info from Jutarul. It's advisable to wait for correct information than to panic from the sporadic postings of a few.

Here's the direct shareholder list (current as of March 30th):

https://docs.google.com/spreadsheets/d/1Dy2BQlPn8cd9tyq9wQv7dciZCiWEjNzNvCgmaIcJAA8/edit#gid=0

If things were in complete disarray, would not the larger shareholders (who have significant BTC invested) actually voice their opinions and concerns to friedcat? Unlike the speculators here (hoping to catch cheap shares), they're still waiting. That should say something to the rest of us.

[xhomerx10]

so he just paid all income from batch 1 for producing batch 2, and all income from batch 2 will be used for producing batch 3 etc?

Yes, that is how I am guessing it will happen. If we guess batch 2 is 20PH being sold at $0.5/gh that would earn ~$10,000,000 which would be enough to purchase 50PH worth of wafers which could then be sold for $25,000,000.

Basically turning $4 million in to $25 million.

*Numbers are extremely approximate but I think it shows why reinvestment is a good idea.

I think the question is, have we entered in an infinite loop of reinvestments, or someday those gains will be paid as dividends?
What happened to those aggressive dividends?

It wouldn't really be an infinite loop of reinvestments in my made up scenario since the reinvestment amount would be doubling per batch.

about that infinite loop of reinvestments, how can you explain this (one month ago) :

The dividend schedule will be aggressive, as AM will not require large sums of retained capital. The rationale is that AM doesn't need to invest large sums into infrastructure and that the majority of chip production costs will be covered by the business partners on a contract schedule. The new round of dividends are scheduled to begin as soon as the first large purchases have concluded and should precede or coincide with the publication of the updated financial statements.

Let's just write another round of questions. FC said, that he will glad answer them.

 I don't profess this to be an explanation but the simplest answer would be: There were no business partners who wished to cover the production costs or contract the chip production.

[murfshake]

The king is dead.  

After reviewing the financials I can't see how they can ever come back after letting themselves sink for so long.  How do you go from being the only person with the technology in the world and constant 25% of the hash power to essentially a worthless junk stock in a matter of months.

How sad.  

Glad FC and friends got rich but he should be ashamed of himself for letting it slip so far before trying to bounce back.

[freedomno1]

I can see why the market recoiled with only 20 BTC and conversions being incredibly difficult this is a problem.
AM would have an easier time just mining instead of reselling chips to distribute dividends, in a sense the Fiat restrictions directly affect the ability of the company to make distributions.

ASICMINER HAS 100,000 BTC equivalent (Convert at $600=1 BTC) of Materials also known as 6 million dollars and almost 2500 BTC or 14.2 million in Products with that much liquidity the value of AM is significant to say the least.

Fair Market Value of around 0.41 BTC

Challenging
I am concerned though about the companies owners equity

Tentative Conclusion
This is a company flush with cash inventory and supplies not something that is on the dredge of destruction, with NO LOANS and PURE EQUITY
The main problem being that equity is held in Fiat and not Bitcoins

Need to read these numbers more

[jimmothy]

The king is dead.  

After reviewing the financials I can't see how they can ever come back after letting themselves sink for so long.  How do you go from being the only person with the technology in the world and constant 25% of the hash power to essentially a worthless junk stock in a matter of months.

How sad.  

Glad FC and friends got rich but he should be ashamed of himself for letting it slip so far before trying to bounce back.

So selling 10% of the network hashrate and having another 20PH worth of hardware to sell along with loads of assets = worthless?

[MrTeal]

I can see why the market recoiled with only 20 BTC and conversions being incredibly difficult this is a problem.
AM would have an easier time just mining instead of reselling chips to distribute dividends, in a sense the Fiat restrictions directly affect the ability of the company to make distributions.

ASICMINER HAS 100,000 BTC equivalent (Convert at $600=1 BTC) of Materials also known as 6 million dollars and almost 2500 BTC or 14.2 million in Products with that much liquidity the value of AM is significant to say the least.

Fair Market Value of around 0.41 BTC

I am concerned though about the companies owners equity

Tentative Conclusion
This is a company flush with cash inventory and supplies not something that is on the dredge of destruction, with NO LOANS and PURE EQUITY
The main problem being that equity is held in Fiat and not Bitcoins

Need to read these numbers more

I think you need to read your numbers a little more.

[bitcoiner49er]

[arnuschky]

Well, it all depends on the worth of the inventory and the processes already paid for.

If I understand correctly, the NRE (masks) are all paid for.
Furthermore, AM produced a bunch chips.
We sold 1 batch of these, which paid for the whole production.
Now the key question is: how many chips are left?

What people don't realize: for gen3, the majority of the cost occurred already, and have been paid for with the first batch.