Topic: [BTC-TC] Deprived Mining Speculation (DMS) - page 67. (Read 198958 times)

You've understood the rule fine - correct dividend under the contract IS what you calculated above.

What you miss is that I previously promised that if difficulty changed prior to midnight (but after previous day's dividend) then I'd pay the difference between old and new dividend myself - so MINING investors never got a smaller dividend than investors in TAT.VM.

Report will show the correct new dividend in it - and I'll refund DMS for the difference between the two (that calculation will also be in the report - as it was the previous time this happened).

So for SELLING holders no need to worry that you're paying extra to MINING than you should.  MINING WILL be getting more than contract says they should - but the extra comes from me personally.

I can see a dividend queued for DMS.MINING for 0.00009611/share, i.e., the same as yesterday before the difficulty change.

Difficulty increased before midnight last night GMT time, didn't it?

I was expecting today's DMS.MINING dividend to be

5,000,000 * 25 * 86,400 * (65535/2^48)/31,256,960.72776893 = 0.00008045/share

Sorry if I've misunderstood how this rule works.

If he was a simple user I'd say he's just trolling: he's a troll, he trolled in AM threads too before, he's like one of the first persons I've put into ignore here.
But now it's more than trolling.
That's deliberately misleading the audience, tricking them into buying his crap.
I'm not sure if there's a specific term for such a situation, maybe "sabotage"?

The J-D house stake can vary quite a bit. It was around 20,000BTC a few days ago, the last time I looked it was over 30,000BTC. Most of this is not profit/loss, but investment/divestment. A bigger house stake obviously lowers returns in the long run, but also tends to reduce volatility.

Yeah I answered before - we deposited a total of 160 BTC.

But you don't need to know that to work out our % of house - what matters is what we currently have there as a percentage of total investment there.  I don't particularly want to start giving increasingly detailed financial reports on J-D as the more info I give the more I can get wrong and lead people to act incorrectly.

You can see what our investment is in each report and what house profit was at that time.  You can see how the house profit/loss has changed since that report.  If you divide that change by the total invested in J-D then that will give a pretty decent indication of how our investment has changed in value.  It won't be accurate - and there's nothing I can provide to allow an accurate calculation.  That's because amount invested there total changes a lot - with people investing/divesting when whales show up etc (ours always all stays invested).  So in theory house profits can rise whilst we take a loss or vice-versa (though the change would have to be pretty small for that to be likely).

It's a situation where if I provide more information it doesn't actually allow a more accurate calculation - it just misleads people into believing they can calculate something more accurate.

I already mentioned the reason this isn't the case.  But here it is again.

When I talk about mining being profitable I'm talking about it making enough operational profit to repay capital costs before the equipment fails.  With GPUs the situation was nearer to what you indicate - as when operational profit (coins mined - cost of mining them) fell low the GPUs could be sold off for use in gaming computers etc.

With ASICs there's no such second use for them.  So the ASICs will continue to be used to mine all the time doing so costs less than the coins they generate - even when it's unprofitable to mine if capital costs are taken into account.  So as soon as an ASIC is bought you can pretty much rely on it mining until either it fails or the cost of the power used in mining exceeds the coins generated.  And that latter point is WELL below the point at which mining has ceased to be profitable.

Your example appears not to understand the difference between operational profit and 'true' profit.  People can (and will and do) mine where they mine more coins than it costs in power but still end up with a loss due to never recovering what they paid for the hardware.  That scenario is especially common when BTC rises strongly vs USD (and moreso if profit is measured in BTC rather than USD).

He must have been busy; he couldn't even answer my simple question (which I understand as I gave him no economic incentive to do so; and it also might have been a little too personal). No wonder he didn't spend his valuable time trashing your article if that is something anyone can do. If you are still unsure about what is wrong with it, I suggest you go over Deprived's posts in the last day again. He pointed to your mistakes on several occasions. The reason why I don't understand his assets as well as he does is simple: I don't need to do precise calculations and can be off by a percent here and there. The reason why you don't understand it is a mystery to me.

Actually, Deprived reviewed the article over the weekend to point out factual errors and corrected only the fact I hadn't included the reinvestment benefits from funds held in DMS.Purchase.

I'm sure you understand much better than him how his asset works, though, so I invite you to comment on what you believe is factually wrong.

.b

He wants to promote his own stock which is sitting at no volume after a failed IPO.

furuknap, I have to ask several questions. Why do you write articles about stuff you don't understand? Why do you talk about economic principles if you have no idea about them? And finally, why do you contribute to Deprived's threads with the only intention to confuse people who already have hard time understanding Deprived's securities?

I am assuming Deprived cannot answer my PM as he doesn't have time because of ignorants who are trying to dissuade people from investing into his securities, stating blatantly inaccurate claims and writing articles full of errors. That is a big shame as there are few sources about Bitcoin economy in my country (I am pretty much the only one that writes on a regular basis) and our community could really use answers from Deprived as he is one of a few people around who understands it.

I suggest you delete your article altogether as the majority of it is simply wrong. Go over the DMS contract again, read more carefully and write something that makes sense. I am not saying it is easy to understand; English is not my native language and it took me two hours to get it, but your conclusions are so off it is hard for anyone to select seperate parts that are wrong as most of it is. Deprived was quick with a very nice explanation why, I won't bother repeating it.

On a more positive note, in competitive markets that is precisely what would happen. Marginal costs equal marginal revenue in the long run. Bitcoin mining was a nearly perfect example of a competitive market, however, Asics have some barriers to entry (high costs, know-how), so that might have changed a bit. In the short run, mining will be experiencing losses because of people who fail at math. In the long run, it may become a kind of oligopoly where all participants do make some profit (similar to laptop processors manufacturers for example). Mining is specific enough though that there will probably still be some minor miners whose profit is close to zero, effectively making your statement true.

That is true only as long as those willing to take a loss outperform those that would not.

Miner A will stop mining at 10% profit
Miner B will stop mining at 0% profit
Miner C will stop mining at -10% profit

All miners have the same capacity.

In a perfectly balanced world, mining would drop 30% when profits drop below 10% and 50% when mining drops below 0%. This will increase profitability again (~67% after the first drop and 100% after the last drop).

Only if you have more miners C than miners A will the difficulty stay low when profit demanding miners drop out. In other words, the more profit-demanding miners are, the more it will take for mining to not remain profitable over time. 

.b

Because there are, and probably will always be, people that are willing to mine at a loss, you can't assume that mining will be profitable in the long run.

My belief, as I have stated before, is that in the long run (and given a rational market) Bitcoin mining will tend to be marginally profitable. New technologies will create volatiilty but not cancel out the long-term profitability.

The big killer in any of this is the halving effect because it is a fixed reduction in all mining profitability that is completely independent on difficulty, profitability, or adoption.

.b

sorry if I missed it, but Deprived, did we get an answer to how we've put in to JD total?  House profit/loss is useful, but I don't know how much our % of the house stake is.

Furuknap- I'm hesitant to get into this with you, but I'm curious- what are your thoughts on the following statement? (in general, not specifically as regarding this security)

"In the long run, the marginal cost of bitcoin mining will approach and eventually become equal to or less than the marginal reward from bitcoin mining."  Agree? Disagree? Rephrase in a way you agree?

New Difficulty 31,256,961 (+19,5%)

Seems those big jumps are going to become perpetual... 

Sold   822
Swapped   0
Total   822
Price   0.039477
Total   32.450094
Less Fee   32.38519381
Man Fee   0.971555814

BTC Balance (BTC-TC)    1,413.11867946
11293 LTC-ATF.B1    112.93000000
Coinlenders CD 29/7    203.05744413
Coinlenders CD 13/8    100.53928541
Just-Dice Balance    159.03998806
TOTAL ASSETS    1,988.68539706
   
Outstanding MINING   50854
Outstanding SELLING   50854
Outstanding PURCHASE   1979
Effective Units   52833
   
Block reward   25
Difficulty   26,162,876
Hashes per MINING   5000000
   
Daily Dividend    0.00009611
50 days (Min Liquid)    0.00480554
100 days (Forced Close)    0.00961107
365 days (Buyback)    0.03508041
405 days (IPO)    0.03892484
400 days (Post SELLING div)    0.03844428
410 days (Pre SELLING div)    0.03940539
   
NAV Post MINING Div    1,983.60757993
NAV/U Post MINING Div    0.03754486
Days Dividend Post Div   390.64
SELLING Dividend    -         
NAV Post SELLING Div    1,983.60757993
NAV/U Post Selling Div    0.03754486
PURCHASE selling price    0.03942210
PURCHASE buy-back price    0.03679396
   
J-D House profit at report   -286

Difficulty-adjustment will happen today, in a few hours. So SELLING will get its dividend tomorrow.

The size of the dividend is looking to be just a bit north of 5 mBTC, but that can still fluctuate depending on return from investments and new PURCHASE sales.

Mining isn't "designed" with any sort of consideration of profitability at all - any more than gold is "designed" with profitability in mind or any other commodity is "designed" with profitability in mind.  Mining exists - and profitability or otherwise depends on how it is used, not on any other aspect of its design.

Mining IS designed to produce fairly stable coin generation.  That DOES impact on profitability - but isn't why it was designed in that fashion.

You say :

"Thus, by the same argument you are making, difficulty will cease to rise until such a time where mining operations again are profitable. "

No.  At no stage have I ever argued that mining needs to be profitable.  My belief, in fact, is that if technological advances didn't occur it would cease to ever be profitable at all (and would end up sat at a level of difficulty that didn't move much at all).  That's because there ARE various classes of people who will mine even if doesn't make a profit:

1.  Those doing it for fun or to support the bitcoin network, where profitability isn't a factor of importance to them.
2.  Those with 'free' electricity - where although the mining isn't making a profit overall it IS making a profit for them.
3.  Those who fail at math.
4.  Those who buy mining hardware then sell shares in it to others who fail at math/common-sense.

Add that to those locked into hardware already - whose loss is already mostly fixed - and difficulty will happily stay above the level where mining is at all profitable.

Technological advances break that - and mean that, for short periods, mining is decently profitable (but with ASICs that decent profit isn't reaching the general public).  And ongoing advances on a smaller scale (decreasing cost of unchanged hardware) can keep it marginally profitable.

And even if it's not profitable at all, you only need to find some suckers willing to pay 5,10 or 20 times the cost of hardware plus add a favourable buy-back clause for issuers to make a profit from mining (even though the profit doesn't actually come from mining - but from giving back investors a lot less than they invested).

And there's one HUGE way in which DMS.Mining isn't like PMBs/mining contracts (ones which pay out on PPS or similar).  Even if mining becomes unprofitable DMS.Mining still has proven backing in place to meet its contract.  If mining output falls such that cost of operation eats up a large chunk of mined coins then most PMBs have no established backing from which dividends will be paid - they just have to rely on the operator digging into his pocket for funds he may or may not have (history suggests quite a few won't have it or will be unwilling to part with it).

I believe mining is designed to balance profitability in a way that makes it, over a long enough time, marginally profitable. Right now we are in a position where new mining operations are not profitable if the current situation continues. Thus, by the same argument you are making, difficulty will cease to rise until such a time where mining operations again are profitable.

However, like with mining investments now, this change isn't sudden. There is a significant lag in the market's perception of long-term mining viability and investments turning into real mining efforts. During this time, as we see now, mining is incredibly profitable thus driving future investments further up.

Even now, long before the full force of the previous months of mining investments have started operating, we see a rapidly rising skepticism of any mining investment (not just assets). Just look at how skeptical people are of PMB style assets or ASICMiner hardware and how slow the new Bitfury and KnC miners are selling.

Thus, when mining becomes barely profitable or even factually unprofitable, hardware prices may drop rapidly to make mining profitable again. This assumes that hardware vendors have large markups now or can continue to sell current generation hardware indefinitely to avoid NRE.

However, unless hardware vendors stockpile huge amounts of ASICs, we'll see the same lag in turning investments into mining operations, perhaps as long as we've been waiting on ASICs to make mining unprofitable now. This lag will cause mining to be very profitable for a long time before new hardware arrives.

In short: For every day of vastly unprofitable mining we'll see (or have seen) one day of vastly profitable mining. Over time, it is designed to balance out and the question is not if this will happen (because if it doesn't, Bitcoin is doomed) but when.

.b

Ahh damn, that's disappointing.

Maybe instead of randomly checking for transfers you could set up a daily schedule like once every eight hours so purchasers of DMS.Purchase would be able to time their trades with maximum efficiency. This would probably end up being both more convenient for yourself as well as for those buying the security.