ASICMINER: Entering the Future of ASIC Mining by Inventing It

[furuknap]

Ah, so this is the root of it. You have provided us with a giant wall of text, while rudely responding to Aureum_Coffee, in some unrealized attempt to convince yourself you did the right thing by taking your money and running. It's okay, and a very sound strategy to realize your profits when you are comfortable with your gains, but your actions do not limit ASICMINER from being more creative, diverse, and industrious than you can predict.

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The dividend that AM paid this week is 50% of the theoretical possible limit they can get from mining. They can kill Bitcoin to maintain this level, yes, but I don't think they will. All their competitors can fail, but I don't think they will.

Let's be crazy, then, and say that they generate dividends equivalent to 30% of the network for the next 44 months. At that rate, we'll see dividends at 0.018 per week, which would give us an ROI of 21 months. Great, right? 50% yield per year?

Except in 2016, at a known and predictable time, poof, 50% of the possible income and dividends disappear and thus the share value drops to 50%. Now you've lost 0.85 in a day. Or around a years worth of dividends at 30% hash rate.

It's still a profit, sure, but it's not even close to what people think at present, and it assumes that AM pays 30% of all coin production on average.

Can they maintain 30% for that long? I don't know. Their 262 TH will be a spit in the ocean in a year. AM needs funds to finance the next big thing, which needs to come on top of those 30%. Can all their competitors fail? Yeah, but I doubt they will.

Remember that hardware sales isn't really a factor here because that hardware needs to come from the maximum limit AM can produce. Whether they hash from it themselves over time or realize that hashrate immediately by selling isn't relevant except in temporarily boosting their dividends. Their customers will run the math when more purchase options are available. Selling hardware is at most a way to realize short-term capital, but doesn't really increase their long-term profitability when they pay sales out in the form of dividends.

Actually, screw all this, I'll publish my numbers and you can argue against those.

.b

[furuknap]

I own shares because i see it as an investment. I doesnt care about the shareprice because its the dividend im interested it. I would buy the best paying stocks in normal share too because im no speculator. I wouldnt care about Asicminer when it is only a company that earns money for itself. I invested because i get a reward.

This is probably one reason why you will fail as an investor.

And this ASIC-Business is something different from real world businesses. In real world there are many opportunities to invest in. A mining company doesnt have much areas to invest in. What should they buy? Solar panels? It would be a loss in fact because of the low ROI. So a normal mining company might be comparable, when they mine with GPUs or FPGAs because the profit is way lower.
So whats the investment tha AM could do now that would lead to even higher returns? Because thats whats investments are for. Not for stockpiling money without a plan. Im with you with a financial cussion for bad times... but collecting bitcoins without common sense... i dont see why.

That is probably a second reason why you will fail as an investor.

I think you dont see the enourmous profits AM is making. You speak like AM has to collect many weeks of money to buy something. In fact AM collects each week so enourmous much money that it can pay nearly everything with it.

That is probably a third reason why you will fail as an investor.

In fact, this isn't even about investing, it is about basic math. There is a very fixed limit to how much money AM can generate because the inflow of new coins is finite. For AM to yield the 100% in a year that some people think they can, they need to have 50% of the network hashrate continuously throughout the next 12 months.

Those 262 THs will not be enough by far to accomplish that. Already we know that Bitfury has 200 THs in the pipe. Avalon has finally started shipping and at some point over the next 12 months, BFL may actually get their shit together and send out something too. The swedes is a complete unknown. 262 is peanuts if even one of these ventures manages to deliver.

Even though I had shares during the dividend yesterday, I was seriously disappointed in the huge dividend because it has severely limited AMs ability to survive.

There is no theoretical way, barring AM doing a 51% attack and killing Bitcoin, to make back what the current share price is before the halving of block reward kills 50% of the share price. At that point, AM will have half of their current income to stay in the race, a race, I might add, they are only leading now because they are the only friggin horse running.

Let's imagine, hypothetically of course, that one mining company ACME Mining had a huge order for next-gen chips in production, paid for, but not delivered, and then went belly-up for whatever reason. With a few piles of cash, ASICMiner would snap up the order and possibly make a killing.

Why should AM buy a new ASIC-Company? First there would be competitors that would like to buy this company too and second... AM wouldnt have a gain from it. They already have ASICs, they can bring 1TH of hashingpower only for $10000 only. So buying another ASIC-Company would be a waste of money for AM. Or what do you think would be worth it to outbid other interested parties?

Read my argument again, please, and try to understand that as of right now, AM do not have the best chips, they have the only chips. The next company to bring chips to the market won't use antiquated 130 nm processes. Even Avalon doesn't use that.

AM currently has Pentium III chips. The swedes are talking about making an i7.  

BTW, you're arguing that because you don't think my examples are good, then there are no unforeseen circumstances in which AM could genefit from having cash at hand. That's just silly.

Because there is roughly 40ish months left until the halving, the share value will be, in a perfect equation, reduced by 1/80 every month. At the current price of ~฿1.7, that means 0.0215 per month of 0.0053 per week, but note that this is share price, not value. 

Start deducting 0.005 from your dividends each week and see how much is left, if AM gets its expected 10% of the network hash rate on average throughout 2013. I guess the ROI looks somewhat different then.

Despite this, I am still bullish about AM. I'm just not as certain at these prices if the extreme dividends people expect are paid out.

I'm going to write an article and publish my numbers. At these rates, AM needs to exceed their own goals by 200% to beat NASDAQ over 5 years.

.b

[stripykitteh]

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

[freedomno1]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

[ThickAsThieves]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

DDOS attacks, they are working hard to get back up!

[furuknap]

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

This is a very good thought, and exactly why I still have confidence in AM. Not just that, but AM can commit its vast financial power to ensure longevity of their operation in a way that ensures that the halving, which right now is the single largest cost to the share and something that nobody apparently accounts for, will not ruin shareholder value.

They need to stop this dividend madness. The herd doesn't sit down and carefully calculates profitability long-term. I fear a lot of people may get burned badly.

.b

[freedomno1]

On a sidetopic TAT was wondering if you knew why btct.co is down usually just watch that exchange but it seems down from here

DDOS attacks, they are working hard to get back up!

Ah guess I'll just hang out on the forums more today as I use that as a basis for whats a fair price on havelock hehe I wonder how many people refresh that page to do that woops
Thanks for the info

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The only thing I can think of is to do something outside of Bitcoin, especially something that would increase the value of bitcoin relative to fiat.

This is a very good thought, and exactly why I still have confidence in AM. Not just that, but AM can commit its vast financial power to ensure longevity of their operation in a way that ensures that the halving, which right now is the single largest cost to the share and something that nobody apparently accounts for, will not ruin shareholder value.

They need to stop this dividend madness. The herd doesn't sit down and carefully calculates profitability long-term. I fear a lot of people may get burned badly.

.b

Diversification is a good idea the question is what to diversify into
I would say that is the responsibility of the future board that will be established sooner or later and then a shareholders quorum and vote
If we follow Warren Buffet it would be something that's a staple and easy to understand but has potential for growth
What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange
Since I have no idea what that will be I suggest the obvious one Graphics Cards and an ASIC company to sell to manufacturers if they can be competitive in that industry in a few years

[TiuraZ]

What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange

Global chain of chinese restaurants where you could pay in Bitcoins! 

[furuknap]

Diversification is a good idea the question is what to diversify into

The nice thing about Bitcoin is that it doesn't inflate, so we should nto be in a rush to spend whatever money we have. If you want to follow in WB's footsteps, you'll realize he can sit on billions upon billions of dollars for years, waiting until the right opportunity comes along. The thing is that if AM pays out everything they have or even a large part of it, they will not have the ability to move on those opportunities.

.b

[freedomno1]

What that is when we relate it to bitcoin is a puzzle, unless the board decides to convert bitcoin and they make a company using real assets and invest that into something when the blockchain halves, which would be interesting as it would mean that we are moving into real exchanges from a virtual exchange

Global chain of chinese restaurants where you could pay in Bitcoins! 

I can see that working ha-ha promote the bitcoin and get my chow mein delivered worldwide Bwahah Xd

[freedomno1]

Diversification is a good idea the question is what to diversify into

The nice thing about Bitcoin is that it doesn't inflate, so we should nto be in a rush to spend whatever money we have. If you want to follow in WB's footsteps, you'll realize he can sit on billions upon billions of dollars for years, waiting until the right opportunity comes along. The thing is that if AM pays out everything they have or even a large part of it, they will not have the ability to move on those opportunities.

.b

Also true assuming they want to buy a company or if they want to make another one or extend the current one guess it depends on a long term strategy plan that needs to be discussed sometime May as well start it in these threads that said if they ever decide to do so can always sell some of the bitcoinfoundation shares not just the dividend profit

[furuknap]

Also true assuming they want to buy a company or if they want to make another one or extend the current one

Those are only a few examples, but the defining characteristics of a unique and unforeseen opportunity is that it is unforeseen and unique :-)

.b

[freedomno1]

Also true assuming they want to buy a company or if they want to make another one or extend the current one

Those are only a few examples, but the defining characteristics of a unique and unforeseen opportunity is that it is unforeseen and unique :-)

.b

Hmm Facebook Bitcoin Ebay guess twitter and even groupon all the IT opportunities tougher question is recognizing one of them and investing early, or making and creating a new one
Of course these are all online examples not physical ones lot of routes

Ah Either way sometimes as proven with ASIC cheap and efficient beats fancy and takes forever to do and still is not around
BFL superior non delivered stuff vs something on batch 2

[Aureum_Coffee]

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

I'll happily admit I've sold most of my AM holdings after running numbers again that show me there is no possible way to recouperate a share price of ฿1.7, much less yield a profit, when you think beyond 2016.

At these price levels, investors have a negative ROI of 8% per year if friedcat manages to get his projected 10% of the total hash rate on average and only manages to sell ฿1000 worth of hardware per month. Even at 15% of the total hash rate, the annual yield looks like around 1%. At 20% of the hash rate on average, AM yields slightly better than a NASDAQ composite index fund.

.b

I get you don't like where ASICminer is going.  Would you sell me 5 shares of your ASICminer stock for $1.5 BTC each?  Use John K. as escrow.  Thanks.

[furuknap]

I'm sorry to say, but with the latest dividend payout, my confidence in AM has fallen dramatically. I think it is irresponsible of them to pay out the equivalent of ฿60K in dividends per month, the equivalent of almost 50% of the entire Bitcoin coin production.

I get you don't like where ASICminer is going.  Would you sell me 5 shares of your ASICminer stock for $1.5 BTC each?  Use John K. as escrow.  Thanks.

Yeah, sure, I'm so stupid I'll give money away when I can sell them for more than that at an exchange.

I need to clarify that I don't like what AM did this week, and the previouc couple of weeks before that. I like AM in general. I think friedcat is great, but the company needs better financial management.

.b

[muyuu]

Ah, so this is the root of it. You have provided us with a giant wall of text, while rudely responding to Aureum_Coffee, in some unrealized attempt to convince yourself you did the right thing by taking your money and running. It's okay, and a very sound strategy to realize your profits when you are comfortable with your gains, but your actions do not limit ASICMINER from being more creative, diverse, and industrious than you can predict.

Try to be creative about this: The world has 10 coins. AM is currently paying 10 coins per cycle in dividends. How can you be creative, diverse, and industrious to get more than that?

The dividend that AM paid this week is 50% of the theoretical possible limit they can get from mining. They can kill Bitcoin to maintain this level, yes, but I don't think they will. All their competitors can fail, but I don't think they will.

Let's be crazy, then, and say that they generate dividends equivalent to 30% of the network for the next 44 months. At that rate, we'll see dividends at 0.018 per week, which would give us an ROI of 21 months. Great, right? 50% yield per year?

Except in 2016, at a known and predictable time, poof, 50% of the possible income and dividends disappear and thus the share value drops to 50%. Now you've lost 0.85 in a day. Or around a years worth of dividends at 30% hash rate.

It's still a profit, sure, but it's not even close to what people think at present, and it assumes that AM pays 30% of all coin production on average.

Can they maintain 30% for that long? I don't know. Their 262 TH will be a spit in the ocean in a year. AM needs funds to finance the next big thing, which needs to come on top of those 30%. Can all their competitors fail? Yeah, but I doubt they will.

Remember that hardware sales isn't really a factor here because that hardware needs to come from the maximum limit AM can produce. Whether they hash from it themselves over time or realize that hashrate immediately by selling isn't relevant except in temporarily boosting their dividends. Their customers will run the math when more purchase options are available. Selling hardware is at most a way to realize short-term capital, but doesn't really increase their long-term profitability when they pay sales out in the form of dividends.

Actually, screw all this, I'll publish my numbers and you can argue against those.

.b

It's quite possible that mining is a lot less profitable in 2016, due to the nature of the reward. Since we cannot anticipate this, it would be reckless not to set aside some of the short term profit and give it as dividend (a lot of which is owned by the board) so people can work out how to reinvest their coins.

[freedomno1]

To sum up some parts
The question is if the dividend should be distributed to maximize shareholder wealth leaving less funds for investment, or some held in reserve to diversify investments to expand into other industries since we know that when 2016 comes the income may decrease. Since we can anticipate this and to some extent mitigate that transitional effect as we have 3 years to do so, the question then becomes what industry's would ASIC be strong in and what would be a good or optimal place and location to diversify expand or relocate/build new assets to ensure long term wealth creation and growth. How much we should save and how the board should decide what industry ASIC should move into as a hedge to the decreased mining revenue in a couple of years.
Sort of a conflict over short term vs long term goals
Simply what makes me and you the most money not just now but later and builds on the wealth of the company over the long term outlook
Real economic growth

In other news Satoshidice is either having panic selling or really is removing USA gambling noms shares lol

[TiuraZ]

Also, one note regarding all this jabbing about how much divident should be paid out: None of us isn't going to decide it. Friedcat (and his team, maybe, I don't know) holds over 50% of shares, so we can argue here until the last block is mined and it's not going to have any effect. About all these people who have made lenghty comments saying this and that about Apple or Microsoft or any other unrelated company, is there anyone who owns even 5000 shares that entitles to a seat in the board?

[stripykitteh]

On the topic of other businesses AM could pursue that would increase the value of Bitcoin v fiat.

Assume that AM achieve this by leveraging their expertize in designing integrated circuits and producing them in low cost and in volume.

We know from history the value of Bitcoin will rise if more people use it. So put a chip in many hands that rewards people to own it but requires them to use Bitcoin to realize its value. I'm not thinking mining-related like the Erupter Blocks, something else. Something that billions of people could possess. I'm thinking whatever the 'it' is, it could live in a mobile phone.

[furuknap]

On the topic of other businesses AM could pursue that would increase the value of Bitcoin v fiat.

Assume that AM achieve this by leveraging their expertize in designing integrated circuits at low cost and in volume.

We know from history the value of Bitcoin will rise if more people use it. So put a chip in many hands that rewards people to own it but requires them to use Bitcoin to realize its value. I'm not thinking mining-related like the Erupter Blocks, something else. Something that billions of people could possess. I'm thinking whatever the 'it' is, it could live in a mobile phone.

PocketMiner! Great idea!

USB-powered, but with internal battery and wifi. Put it in when you're home to charge battery and mine at higher speed, put it on your keychain and mine whenever you are near an open wifi-zone :-)

.b