Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It - page 1217. (Read 3917543 times)

The price of the shares shouldn't really be impacted by BTCUSD. While there are operational costs in USD, they are pretty negligible right now. ASICMINER mines bitcoins, not USD.

How I see price of share floating around $56.

Here's some background reading on this topic that may be helpful:

http://en.wikipedia.org/wiki/Treasury_stock

because the same sort of thing happens to real-world companies.

Obviously I can't speak for the founders, since I am only an investor myself. Furthermore the original contract is a bit fuzzy on that point, to say the least. But merging unsold shares with the ownership of the founders after the fact would be rather unconventional. Usually any fund raising or IPO is undertaken by third parties (e.g. underwriters), which also commit to eating the stock if the offering is undersubscribed. Now one could argue that the IPO was not undersubscribed but closed early (due to meeting the USD target, not the bitcoin target), which changes the dynamic. It's a legal mess, but given that the company was heavily undervalued in hindsight should ease the pain.

Nevertheless, bitfountain has to decide how they want to handle the issue. Putting the unsold shares on neutral ground (i.e. make it retained earnings dividend) would be the diplomatic solution.

Try to consider how long it will take to make a significant impact in the margins...

Consider... what percentage of their income from the current 10% of the network they hold do you think go to overhead? I suspect it's a very small percentage...

Consider how long it's taking the competition to ramp up and distribute hashing power. And how long it will take once the network is stable at say 650THash/s... (that's a BIG jump from where it is today). That would allow ASICMINER to mine at 10% capacity with the 12THash they have (not all deployed) now, and the 50THash they have bought and paid for at the foundry being ramped up through April...

So beyond that, how long until say that hashrate doubles? requiring them to double their capacity, and how long/hard will it be for them to double the capacity? How much will it cost considering they pay under a dollar a chip I believe I remember friedcat saying (now that they have done the initial R&D and proven the chips).

Lets say operating costs are 10% of the current income (I think it's much lower). In that case how much would the global hashrate have to increase before the net income is halved? To drop the 90% rate to 45% rate, would require an additional 45% overhead. Meaning the overhead must be 5.5x the base rate of 10% (again I know I'm guessing at the 10% but I think it's a conservative guess). So that means the hashrate would need to get up to 5.5x 650THash/s... Which would mean a global hashrate of 3.5PetaHash/s... That's a LOT of hashpower... And how long do you think that will take to achieve? I suspect AT LEAST another year (likely longer)

And if ASICMINER is smart, they will begin transitioning before that to mining gear sales. Using their market lead to sustain development of next-gen hardware to compete and keep competitive in that market. Bolstering their bottom line.

Will the mining game eventuall approach zero sum? Yup, that's how it was designed. It naturally gravitates towards razor thin margins. But in the event of a major tech shift, the leader can likely ride the wave for quite some time in this case. And if done right, they can adjust their business model to compensate for any changes as they happen.

I Highly suspect ASICMINER will be able to sustain more than 10% of the network if done right. But the above only really requires them to maintain their 10% estimated... And that allows lots of breathing room...

So... 0.75 sounds like a fantastic deal now doesn't it

The cost of maintaining 10% network power will increase as new players enter the market. Once (if ever) BFL enter the network, more avalons and new players with newer technology will place negative pressure on margins that AM shareholders currently enjoy.

IMHO it may be naive to expect AM to scale with the network in an open competitive environemnt without a significant hit to the marginal earnings capacity, and possibly also naive to talk of PE ratios needing years of earnings to break even when,  tbh we have only seen earnings over a matter of weeks (with a significant, but eroding first-to-market advantage)

Too funny!

While I agree standard P/E ratios are normally way out of whack from the "real world" when looking at bitcoin. That said I still think ASICMINER is heavily undervalued right now. The only reason I'm selling now is because I have to. (though 0.7 is too low, I'm selling at 0.75, but even that only begrudgingly... I wanted to sell at 1.0 or higher, which I feel is easily attainable).

So all of you who are agreeing with me that the current price is a steal... Why don't you buy my shares at 0.75?

Possible, but also possible that people just can't/haven't done the math.  Also P/E ratios in the bitcoin world tend to be much higher because there is no SEC regulation, so there is always a higher risk someone could just take the money and run.  Still, assuming asicminer doesn't get killed by BFL/Avalon shipping, a 0.7 valuation is pretty cheap IMO.

Imho that is a market maker. Look at the trade history. Look at how many of the initial 940 shares for sale @ 0.7 were actually sold (or even for less), and how many are left...

Chill out! ^^

A quick back-of-the-envelope valuation: imagine they reach the goal of 10% of the network hashing power, meaning 360 BTC/day, then annualise it and apply a P/E ratio of, say, 10, and you should end up at 3.285 BTC/share.

So it appears slightly undervalued in the market today... (or people in general don't believe ASICMINER can keep 10% of total hashing power)

If this is in fact the position of the company, awesome.  It is good to finally have clarification on that point.

I think exactly the same. The rumours spread that now its not only half the dividend but maybe even a fourth only because of kept investment money is probably the reason for this. Plus the long lasting 6TH/s isnt advantageous. So i expected a drop. But im astonished how low it fell. I think that will go up soon again. At least in 8 days, when the next real dividend is paid.

Right now you can get up to 940 shares at 0.70 each just based on the asks.  Seems like a bargain to me.

this is because some of the investors are short-sighten in my opinion. They can only see the projected lowering in dividends and can't think long-term enough to wait for deployment of the 50 Thash/s batch

the price is falling because people (like me) are taking their profits.
should've sold them earlier.

let me show:

bought 150 @ 0.1 (BTC was at what, like 5€?)  INPUT: 450€.
got 15 BTC dividends (BTC AT 55€) OUTPUT 1: 825€
sold the 150 at 0.7 (BTC at 60€) OUTPUT 2: 6300€

DUCY?

   The price is falling because of all the confusion about the extra 35k shares!

As a service to the community I will accept them in a selfless act of charity, relieving everyone of the stress from worrying about their fate.   

Thank you for this.

I thought they were trying to confuse everyone in good faith of getting some shares :-p

It's amazing how long this confusion lasts. The blame must lie somewhere between the unorthodox nature of this investment (i.e. self-managed) and the fallout from GLBSE. Normally all equity has to be clearly distributed BEFORE fund-raising, and this was stated in the original contract. That's why in principle 200k shares are associated with the founders (bitfountain) and 200k are associated with the equity ASICMINER.

The fact that not all shares were sold doesn't automatically upgrade the share holdings of the founders. The 35k shares are unsold equity and owned by the "company" bitfountain and can be used in future fund raising. All dividends payed to these 35k shares goes directly into retained earnings, which may make its way into dividend payments again. (Thus in effect the "dividend" payed to the 35k gets redistributed in a 200k:165k fashion between the founders and the ASICMINER shareholders). The recursion here can be a bit confusing at first, but is only important when dividends are payed.

Thus the proper distribution for dividends is 200k:165k, and NOT 235k:165k. However, for simplicity bitfountain may decide to pay dividends according to the 1/400,000 rule, at which the distribution becomes 200k:200k, and the 35k dividends to the unsold equity makes it into the next dividend payment or company financing, because they act as retained earnings...

friedcat may want to clearly make a statement on how he wants to implement this (200k:165k or 200k:200k with delayed dividend), before he prepares the next dividend payments and signs off the financial statements.