I am starting to doubt the basic sustainability of ASIC farms. It has been a concern for a while for me. This podcast covers the topic superbly well. What are the views of fellow ASIC investors?
https://soundcloud.com/mindtomatter/e20-2-mining-the-forest-for?in=mindtomatter/sets/episode-20-lets-talk-bitcoin
Topic: ASICMINER: Entering the Future of ASIC Mining by Inventing It - page 877. (Read 3917468 times)
Already, people selling goods denominated in bitcoins peg them to the USD/BTC exchange rate. www.bitcoinstore.com is an example.
This is pretty obvious, since they don't pay their goods with BTC.It shouldn't surprise anyone, really.
The interest in ASICMiner options still seems pretty limited, so I wanted to restate this offer here:
I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.
3 BTC limit.
With the share price near 2.75, I think you'll find this is a pretty attractive bargain.
(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)
I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.
3 BTC limit.
With the share price near 2.75, I think you'll find this is a pretty attractive bargain.
(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)
Vycid,
You have been Bearish on Asicminer, and buying puts at a strike price of 1.8BTC. Your prognostication of the price going down was eventually right, but only after it was incredibly wrong. Frankly, when the share price was at 2.75 Asicminer was an absolute steal and you were wrong to try to bet against it then. You may get back your losses if enough people are willing to sell puts at 4, but I'm not sure you're going to find so many takers. And your intensely active talking down Asicminer is due to either or both of your interest in seeing the shares go down and your own insecurity about having been wrong before.
Don't be so fast to conclude I will not be able to exercise those options. I still have months left - I did not expect, in fact, that AM would start dropping already. Things are ahead of schedule, although there was more of a price runup than I had expected.
Besides, I bought a healthy spread of options on the way up while I was holding shares. It is a poor assumption that my strategy was entirely bearish simply because I was buying puts; I was buying puts because I appreciated a significant potential for disaster. I'm sold out and already in the black, so it's all gravy from here.
Certainly, don't take my prognostication any more seriously than anyone else's. But my strategy has been successful, after all.
The interest in ASICMiner options still seems pretty limited, so I wanted to restate this offer here:
I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.
3 BTC limit.
With the share price near 2.75, I think you'll find this is a pretty attractive bargain.
(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)
I will immediately purchase ASICMiner puts expiring in 90 days, with a strike of 1.8BTC, and a premium of 0.14BTC. BTCT preferred.
3 BTC limit.
With the share price near 2.75, I think you'll find this is a pretty attractive bargain.
(If you have to ask what a put is, please do not sell any to me! Valuing options is very difficult)
Vycid,
You have been Bearish on Asicminer, and buying puts at a strike price of 1.8BTC. Your prognostication of the price going down was eventually right, but only after it was incredibly wrong. Frankly, when the share price was at 2.75 Asicminer was an absolute steal and you were wrong to try to bet against it then. You may get back your losses if enough people are willing to sell puts at 4, but I'm not sure you're going to find so many takers. And your intensely active talking down Asicminer is due to either or both of your interest in seeing the shares go down and your own insecurity about having been wrong before.
Honestly, though, I see Bitcoin more and more as a platform than a currency. Bitcoin over and over proves its unsuitability as a long-term store of value. Perhaps it is a good investment, but nobody would treat it as cash if half their value could be gone in a month.
This derails the thread - but I want to comment on that. It seems you got it backwards. Bitcoin over the longterm is a superior store-of-value medium (conditional on that the internet and the bitcoin network itself is sustainable). Don't confuse valuation with store-of-value features. Valuation of an asset depends on the cost of capital and the political environment. Store-of-value is a feature of the medium itself and is mainly determined by it's scarcity. Gold served as a superior store-of-value, because it can hold the purchasing power over thousands of years. Try that with paper.addendum: Time horizons matter. For an individual an undervaluation of an asset for 20 years maybe dramatic. For nation states this is not the case, which is why gold traditionally is mainly interesting for maintaining the wealth of countries or for hedge funds.
No, instead what I imagine is Bitcoin powering transactions without the need to suffer the unstable and deflationary currency. Regardless of what the exchange rate is, you can move from, for example, USD (party 1) -> BTC (party 1) - BTC (party 2) -> USD (party 2) with little effort. I am sure companies will soon offer cheap services to do exactly that. Imagine a company that can do what Western Union and Visa can do - for less. That's disruptive.
Perhaps, in the long term, the use of Bitcoin as a transaction medium will stabilize its currency as well.
Yes - but we don't need the scarcity of bitcoin for this. Any "predictable" money supply will do - which is the idea of freicoin and the like. Perhaps, in the long term, the use of Bitcoin as a transaction medium will stabilize its currency as well.
Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.Accepted.
Right, and it's not hard to see where the breakdown of global economics emerges from the refusal to lend. New businesses will disappear with no capital; individuals will struggle to buy their own houses; and - perhaps the part that many await eagerly - governments must shrink or default.
But, clearly, credit crunches are bad for the economy. Deflation introduces a permanent sort of credit crunch.
Ideally, in my mind, inflationary currencies and deflationary currencies can coexist. Inflationary currencies could remain the currencies in which tax debts must be settled, among other things; deflationary currencies like Bitcoin will offer a haven, not unlike gold. The new feature is that it will enable cheap and effortless transactions.
Honestly, though, I see Bitcoin more and more as a platform than a currency. Bitcoin over and over proves its unsuitability as a long-term store of value. Perhaps it is a good investment, but nobody would treat it as cash if half their value could be gone in a month.
No, instead what I imagine is Bitcoin powering transactions without the need to suffer the unstable and deflationary currency. Regardless of what the exchange rate is, you can move from, for example, USD (party 1) -> BTC (party 1) - BTC (party 2) -> USD (party 2) with little effort. I am sure companies will soon offer cheap services to do exactly that. Imagine a company that can do what Western Union and Visa can do - for less. That's disruptive.
Perhaps, in the long term, the use of Bitcoin as a transaction medium will stabilize its currency as well.
Block Erupter infographic: http://bitcoinexaminer.org/asic-miner-infographic/
Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.Accepted.
Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed.
I guess technically this is true but nobody would do it. If you take a risk you want a premium over just keeping it.
Lending in a deflationary currency has fundamentals that tend to strain common sense. One could technically lend at a zero percent interest and still make a tidy profit, since every unit of currency paid back in the future would have a greater value than those originally borrowed. In fact, if it is deflating rapidly enough, profit could still be realized lending at negative interest rates.
Comparing the returns of investing in AM with the returns of loansharking may lead one to assume the better value will be returned by loansharking. While this is possible, all investments follow the same basic risk/ reward paradigm we are all familiar with. If you believe the risk /reward is better for AM than loansharking, then Buy AM. Otherwise, you can certainly lend to your heart's desire. But these are personal investment decisions, and it is of course possible to lose in either case. The risk premiums should reflect the risk. If you believe them to be skewed, you will find a good place to invest.
The potential for AM to grow nearly indefinitely should be obvious, as it is for most industries. Even if every computer on Earth was running Windows 95, and Microsoft had 100% market penetration and adoption, they can still roll out Windows 98 and do it all again. Likewise, while AM mining has practical caps, their hardware does not. The caps on hardware are only temporary, and increases in global hash are simply opportunities to sell the next generation of eruptors. And the next... and the next... each generation contributing to a higher hash, enabling... another generation of eruptors.
As I said in a previous post, they welcome the competitors. They have no desire to become Standard Oil, it would not be in their self-interest. Constantly predicting that other companies will spell the demise of AM only plays in their hands. The competitors are necessary for AM to continue with it's business model, and they would quickly become stagnant without them.
Comparing the returns of investing in AM with the returns of loansharking may lead one to assume the better value will be returned by loansharking. While this is possible, all investments follow the same basic risk/ reward paradigm we are all familiar with. If you believe the risk /reward is better for AM than loansharking, then Buy AM. Otherwise, you can certainly lend to your heart's desire. But these are personal investment decisions, and it is of course possible to lose in either case. The risk premiums should reflect the risk. If you believe them to be skewed, you will find a good place to invest.
The potential for AM to grow nearly indefinitely should be obvious, as it is for most industries. Even if every computer on Earth was running Windows 95, and Microsoft had 100% market penetration and adoption, they can still roll out Windows 98 and do it all again. Likewise, while AM mining has practical caps, their hardware does not. The caps on hardware are only temporary, and increases in global hash are simply opportunities to sell the next generation of eruptors. And the next... and the next... each generation contributing to a higher hash, enabling... another generation of eruptors.
As I said in a previous post, they welcome the competitors. They have no desire to become Standard Oil, it would not be in their self-interest. Constantly predicting that other companies will spell the demise of AM only plays in their hands. The competitors are necessary for AM to continue with it's business model, and they would quickly become stagnant without them.
It's easy to get confused by deflationary economies: you must think the other way around.
Since I can sit on my money and be happy, I will obviously ask for something more if you want a loan.
Let's say I factor in 2.5% default risk plus 2.5% profit, I'll still ask you a 5% interest on your loan.
People should stop thinking that "deflation is magic": it isn't. Absolute values don't matter: what matters are how much you are rich relative to other people... if money deflates for everyone, then it's not an issue. And since people want to try to get richer, they will still try to invest them, hoping to get more than they would get just thanks to the deflation.
Complete bullshit
Look at those guys in the loan section of this forum. They are going to bankrupt. Lending an deflation money is a Ponzi scheme!!!
BullshitLet's suppose we're now using a currency with 10% deflation. Joe wants to lend Bob 100 currency units. In order to make a 5% profit, this means Joe must lend at -5% APR.
Wait - that doesn't work! Bob could borrow 100 units, sit on them for a year, and return 95. Joe has made a 5% profit, but Bob has actually come out ahead!
So Joe could simply sit on his currency for a year, and make 10% profit instead of the 5% he'd make from a loan with 5% inflation-adjusted APR. In the inflationary scenario, Joe would have been willing to lend out his money at 0% inflation-adjusted interest just to avoid losing money from inflation!
It's easy to get confused by deflationary economies: you must think the other way around.Wait - that doesn't work! Bob could borrow 100 units, sit on them for a year, and return 95. Joe has made a 5% profit, but Bob has actually come out ahead!
So Joe could simply sit on his currency for a year, and make 10% profit instead of the 5% he'd make from a loan with 5% inflation-adjusted APR. In the inflationary scenario, Joe would have been willing to lend out his money at 0% inflation-adjusted interest just to avoid losing money from inflation!
Since I can sit on my money and be happy, I will obviously ask for something more if you want a loan.
Let's say I factor in 2.5% default risk plus 2.5% profit, I'll still ask you a 5% interest on your loan.
People should stop thinking that "deflation is magic": it isn't. Absolute values don't matter: what matters are how much you are rich relative to other people... if money deflates for everyone, then it's not an issue. And since people want to try to get richer, they will still try to invest them, hoping to get more than they would get just thanks to the deflation.
Cool. Sell me some puts, then. I'm beating the dividend APR by quite a bit.
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
Without jumping into the rest of the to-ing and fro-ing, just a point of interest: this option would be severely undervalued relative both to pricing based on historical volatility and to other options currently up for grabs on BTCT. Assuming for the sake of argument a dividend yield of 30% and 5% cost of capital, this comes out to around 80% implied volatility. By contrast, most of the options available on BTCT run into triple digits -- 250%, 300% or more. In other words, if you were to persuade someone to sell you these options, you would, theoretically, be getting a great bargain.
To be fair, nearly all options pricing I've noticed on the exchanges has bordered on ludicrous. Maybe a realistic level would be somewhere between the bargain you've suggested and the nosebleed levels seen on the exchanges.
I own dozens of these options at price points similar to the one I've just described. Suffice to say: the BTCT options are generally enormously overpriced.
It is true that my Black-Scholes calculation is quite a bit out of date; it should come as little surprise that all of my options were purchased prior to the events of the past few days.
Seeing that the events of the past few days were probably manipulation, and that I've already reached a satisfactory options portfolio, I am not motivated to raise my premium. If nobody is interested, that's okay, but the offer stands.
Markets are hard to predict short-term. But, long-term, I am very confident that the current valuation, based on the current value and potential for growth, is unreasonable.
False contextualization. The potential mining revenue for a bitcoin-denominated company can already be fully realized (and already is for AM). Sure, it's hard to predict what will happen to Bitcoin, but it's really not so hard to analyze what happens to the mining 'industry'. There's a fixed number of coins, very clear barriers to entry for competition, and lots of information about anticipated deployment timelines (like the half million Avalon chips that are due in a couple of weeks).
If we were talking about Coinbase, or Bitpay, or whatever, I'd agree 100%. We're not - we're talking about a much simpler business model that has no more growing to do. In other words, this is a mature company; it's just the economy that's immature.
Mature companies with simple business models are not so challenging to value.
Cool. Sell me some puts, then. I'm beating the dividend APR by quite a bit.
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
Without jumping into the rest of the to-ing and fro-ing, just a point of interest: this option would be severely undervalued relative both to pricing based on historical volatility and to other options currently up for grabs on BTCT. Assuming for the sake of argument a dividend yield of 30% and 5% cost of capital, this comes out to around 80% implied volatility. By contrast, most of the options available on BTCT run into triple digits -- 250%, 300% or more. In other words, if you were to persuade someone to sell you these options, you would, theoretically, be getting a great bargain.
To be fair, nearly all options pricing I've noticed on the exchanges has bordered on ludicrous. Maybe a realistic level would be somewhere between the bargain you've suggested and the nosebleed levels seen on the exchanges.
Competition is not sleeping : https://bitcointalk.org/index.php?topic=250249.0;topicseen
Well they wouldn't be competition if they were sleeping would they
What's with this "we can only ship to EU" from them about?
Totally wrong threat for this, but I answer anyway. I think it's because they are based in Finland and keeping the business inside EU is just so much easier. No hustling with customs or VAT or "declared values of packages" or anything like that. http://en.wikipedia.org/wiki/Single_market
True enough back to speculation have to spam the link once in a while 
https://bitcointalksearch.org/topic/asicminer-speculation-thread-235763
https://bitcointalksearch.org/topic/asicminer-speculation-thread-235763
Cool. Sell me some puts, then. I'm beating the dividend APR by quite a bit.
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
a 90 day put is unreasonable when we saw the market dip from 4.7 to 3.6 just yesterday.
Regarding your already calculated valuation of AM - You should proceed to act in accordance with your beliefs and sell whatever you own. Then buy when it is all below market price. Right now, you're spreading FUD - these days everyone has a hidden agenda right? I mean this belongs in the speculation thread, and I really think we should take it there to stop the CLUTTER that the last few pages have been.
(even though I agree regarding issues in the current valuation I'd like to remind everyone that AM can sell hardware continuously and can provide continuous divs - we are not limited by the total # of BTCs, or TX fees to value the company. This is the beauty of Bitcoin, the network recycles itself yet autoregulates worth-wise: less coins circulating = more worth)
Markets are hard to predict short-term. But, long-term, I am very confident that the current valuation, based on the current value and potential for growth, is unreasonable.
False contextualization. The potential mining revenue for a bitcoin-denominated company can already be fully realized (and already is for AM). Sure, it's hard to predict what will happen to Bitcoin, but it's really not so hard to analyze what happens to the mining 'industry'. There's a fixed number of coins, very clear barriers to entry for competition, and lots of information about anticipated deployment timelines (like the half million Avalon chips that are due in a couple of weeks).
If we were talking about Coinbase, or Bitpay, or whatever, I'd agree 100%. We're not - we're talking about a much simpler business model that has no more growing to do. In other words, this is a mature company; it's just the economy that's immature.
Mature companies with simple business models are not so challenging to value.
Wrong wrong wrong. "already fully realized for AM" - give us a break:
1) Yes, a fixed number of coins, but we don't know, nor does AM, nor does its competitors know what % AM will mine. That is unknown.
2) Transaction fees. Again, complete unknown. Could be very small or very large in a few years time.
3) Hardware sales. Again, unknown in future.
3) "Lots of information about anticipated deployment timelines" from competitors - yep, been hearing them for the last year now.
There is nothing simple about the business or the business model, only your evaluation of it. Of course its risky, we all agree on that. Its your "I can predict the future renveue of AM with great accuracy" line that is the only bogus thing around here.
Cool. Sell me some puts, then. I'm beating the dividend APR by quite a bit.
Strike: 3.5 BTC
Premium: 0.32 BTC
Exp: ~90d
But if you want my thoughts about 1-4:
1) AM targets 20%, and can't go higher than 50% without destroying trust in bitcoin.
2) A dramatic increase in tx fees is showing no signs of materializing, and there is no real reason to believe that it will before AM stagnates and is out-competed - and so AM valuation shouldn't have the expectation of high tx fees in the future priced in like it does.
3) It's really not unknown. The number of BTC that can be mined is fixed, so there's no motivation for people to spend more than they already do on hardware, and the profit margin per unit MUST go down as AM's monopoly is broken. There's not much room for argument there.
4) You've been hearing that from BFL. There are now many competitors, and acting like NONE of them are going to deliver is probably a bad position to take.
Competition is not sleeping : https://bitcointalk.org/index.php?topic=250249.0;topicseen
Well they wouldn't be competition if they were sleeping would they
What's with this "we can only ship to EU" from them about?
Jump to: