Topic: [BTC-TC] Deprived Mining Speculation (DMS) - page 78. (Read 198958 times)

I did consider doing it that way (so no payments at all for SELLING until the end).  I decided against it for a few reasons:

1.  It increases the amount of capital exposed to me with no benefit in return.  That's actually harmful for ME - as some of whatever limit of capital people will trust me with is being used up to generate no income.
2.  Whilst it may appear to give more cover to MINING in practice it doesn't (SELLING would vote to close before any such extra cover actually came into play).
3.  It unduly pushes SELLING towards closure when they'd prefer not to - were it not for the unused capital diluting their effective returns.
4.  It's wasteful - all of the above combine to mean its capital tied up for no benefit to anyone and direct harm (cost) to myself and SELLING holders.

But yeah - in theory DMS could run exactly the same without ever paying a dividend to SELLING until closure.

Oh, true, thanks for the explanation!

If SELLING paid no dividends, then there would be a point at which SELLING would vote to close the fund and receive a distribution of the remaining assets. Either way, you will receive the same amount.

Considering SELLING dividends as an income stream seems odd to me since the total amount is finite (ignoring the fund's investment activity).

The scenario I discuss is one where difficulty stops rising or rises slower than dividends are paid out to MINING.  In that circumstance the number of days cover after each difficulty rise would be LESS than after the previous difficulty change - meaning no dividends ever again for SELLING.  In that situation SELLING has to (rationally) vote for closure before the number of days (of dividend payment) cover reduces below 365 and they receive absolutely nothing.

As capital can never exceed 410 days cover (or it would have been dividended out) the maximum SELLING can receive on closure is 45 days of MINING dividends (with MINING receiving 365).  That would mean SELLING received just under 11% of remaining capital - hence my reference to MINING receiving at least 90% (as in practice it's unlikely that a maximum payment for SELLING would occur).

Under current conditions that seems highly unlikely - but if/when ASIC adoption nears saturation we could easily go back to sub-3% growth where it becomes a reality.  In practice I'd expect such a change to be gradual - and evident from a gradual increase in MINING's value (as a percentage of PURCHASE).

Short version is that if you look at what happens on closure you'll see that MINING always gets most (or all) of what's left.  Unless you believe the fund will run forever that means at some point MINING will receive most (or all) of what's left.  If you believe that end point is in the short/mid term then it should have a significant impact on how you value the securities.  If you believe it won't arise until difficukty is order(s) of magnitude larger then you can discount it for practical purposes as the residual capital (per share) by then will be trivial compared to current value.

If SELLING paid no dividends at all, what would be the point of buying it?

This bit always confuses me.
If MINING would get the bulk of the liquidation, why would SELLING vote for closing the fund?

Unless you imply difficulty would have skyrocketed so much that 365 days of dividends would be a negligible part of the capital, and in that case SELLING would still get most of it...

I don't know why there should be a need to calculate SELLING. Like Deprived wrote in the asset description, the easiest way to calculate the value of SELLING is to calculate the value of MINING and substract it from PURCHASE. Current MINING prices at 0.02 are guessing an average future difficulty jump < 8%, otherwise there's no profit. So if you come to the conclusion, that diff jumps will be lower than 8% average, you will buy MINING, otherwise you will buy SELLING (or buy PURCHASE and sell one of the components).

Valuation based on dividends is an interesting concept - and my personal calculation of value DOES take it into account (as one of 3 seperate calculations of value I use).  Dividends are, however, only part of the story.  Valuation based on dividends WOULD be accurate were the following assumptions ALL correct :

• Income from investments/sales of PURCHASE will remain the same (as a percentage of current capital).
• The fund will run forever.
• Future difficulty rises will remain the same as the average of past ones (since the fund started).

If those were all true then the fund could be considered as gradually returning all capital in a ratio able to be calculated from past dividends.  In practice it's likely NONE of those assumptions are correct.  It has to be remembered that if/when difficulty levels off the fund will likely end with a final distibution in which MINING will receive at LEAST 90% of remaining capital (it's essentially impossible for it to be less than that - due to only holding at most 410 days' dividend and MINING received the lower of 365 days' dividends or the whole balance).  IF you believe that point is likely to be far enough in the future that the vast majority of capital would already have been returned then valuing on dividends DOES work reasonably well NOW (but will cease to do so if/when the rate of difficulty increase slows down).

I have my own views on what's likely to happen in terms of difficulty - the assumptions you (anyone trying to value PMBs) make in terms of future difficulty are by far the main factor deciding the valuation you reach.  Obviously different people have different views - or we'd have no trade occurring (just walls of bids/asks seperated by the minimum return people wanted to accept) other than where people needed to cash out urgently.

Yeah, this is the case. Essentially, the MINING/SELLING securities are a zero-sum game. With all assets eventually being paid out as dividend, it becomes a matter of predicting which security will get how much in order to get the correct price. Of course, the matter is complicated slightly by the investments that Deprived made with part of the BTC, the returns from this benefit SELLING, but not MINING.

Other than the long-term plan of predicting which part of the total assets are being paid out to SELLING and MINING respectively, you can profit from more short-term speculation. Earlier someone mentioned buying MINING after a difficulty change and exchanging it for SELLING just before the next one. If you can make this work without losing too much on the trades, you can benefit.

I don't agree with the valuation based on dividends because the value of SELLING would be the same even if it paid no dividends. But I do agree that SELLING is worth more than its price.

And perhaps the only way to sway people looking only at MINING dividends is to compare those dividends to SELLING dividends.

Depends on the point of view. Eventually, 100% of the asset will be given back as a dividend. So if Selling keeps on giving back more than double the amount than Mining it should be priced accordingly. Let me know if I got sth wring with this thinking.

I think you don't quite understand how this works. It doesn't make sense to compare the dividends. While the value of MINING is based on its dividend payments, the value of SELLING is not.

Sold   635
Swapped   0
Total   635
Price   0.049181
Total   31.229935
Less Fee   31.16747513
Man Fee   0.935024254

BTC Balance (BTC-TC)   1180.544338
13100 LTC-ATF.B1    131.00000000
Coinlenders CD    200.97626972
Just-Dice Balance    104.18817092
TOTAL ASSETS    1,616.70877890
   
Outstanding MINING   33860
Outstanding SELLING   33860
Outstanding PURCHASE   638
Effective Units   34498
   
Block reward   25
Difficulty   21,335,329
Hashes per MINING   5000000
   
Daily Dividend    0.00011786
50 days (Min Liquid)    0.00589288
100 days (Forced Close)    0.01178577
365 days (Buyback)    0.04301806
405 days (IPO)    0.04773236
400 days (Post SELLING div)    0.04714308
410 days (Pre SELLING div)    0.04832165
   
NAV Post MINING Div    1,612.64292433
NAV/U Post MINING Div    0.04674598
Days Dividend Post Div   396.63
SELLING Dividend    -         
NAV Post SELLING Div    1,612.64292433
NAV/U Post Selling Div    0.04674598
PURCHASE selling price    0.04908328
PURCHASE buy-back price    0.04581106

Why get paid from one of them when you can get paid from both? I think you'll find that selling will shoot up in price as dividend day approaches and people switch from holding MINING to holding SELLING.

Sold   959
Swapped   0
Total   959
Price   0.049263
Total   47.243217
Less Fee   47.14873057
Man Fee   1.414461917

BTC Balance (BTC-TC)   1154.302956
13100 LTC-ATF.B1    131.00000000
Coinlenders CD    200.84834856
Just-Dice Balance    103.93539478
TOTAL ASSETS    1,590.08669961
   
Outstanding MINING   33501
Outstanding SELLING   33501
Outstanding PURCHASE   362
Effective Units   33863
   
Block reward   25
Difficulty   21,335,329
Hashes per MINING   5000000
   
Daily Dividend    0.00011786
50 days (Min Liquid)    0.00589288
100 days (Forced Close)    0.01178577
365 days (Buyback)    0.04301806
405 days (IPO)    0.04773236
400 days (Post SELLING div)    0.04714308
410 days (Pre SELLING div)    0.04832165
   
NAV Post MINING Div    1,586.09568467
NAV/U Post MINING Div    0.04683861
Days Dividend Post Div   397.42
SELLING Dividend    -         
NAV Post SELLING Div    1,586.09568467
NAV/U Post Selling Div    0.04683861
PURCHASE selling price    0.04918054
PURCHASE buy-back price    0.04590183

I'm in the UK, so currently GMT+1.

I've considered automating it but there's not really enough volume to justify it at present.  I'm currently mainly working on my website which should be up in about a week (it's already functional just needs content added and some tidying up).  Once that's done I'll be focussing back on interacting with the sites (to pull data for my website, to do some basic trading/price maintenance for me and also to automate transfers - as there's other things I have planned which could also use similar automation).

So when do you usually sleep? What time zone are you in? Also, have you looked into automating the process?

Depends whether I'm awake or asleep.  I check regularly for transfers in and do transfers out soon as I notice.  You sent whilst I was asleep - so had a longer wait.

Hi!

How long does it typically take to convert PURCHASE?

Sold 500 more LTC-ATF.B1 at about 10-15% over face value (about as low as I'll sell ours).  Just-Dice has made good profit as well.  Those two together (plus slight gain from a few sales of PURCHASE) almost covered today's MINING dividend.

Sold   437
Swapped   0
Total   437
Price    0.049273
Total   21.532301
Less Fee   21.4892364
Man Fee   0.644677092

BTC Balance (BTC-TC)   1109.555951
13362 LTC-ATF.B1    133.62000000
Coinlenders CD    200.71804498
Just-Dice Balance    103.75225179
TOTAL ASSETS    1,547.64624747
   
Outstanding MINING   32473
Outstanding SELLING   32473
Outstanding PURCHASE   431
Effective Units   32904
   
Block reward   25
Difficulty   21,335,329
Hashes per MINING   5000000
   
Daily Dividend    0.00011786
50 days (Min Liquid)    0.00589288
100 days (Forced Close)    0.01178577
365 days (Buyback)    0.04301806
405 days (IPO)    0.04773236
400 days (Post SELLING div)    0.04714308
410 days (Pre SELLING div)    0.04832165
   
NAV Post MINING Div    1,543.76825805
NAV/U Post MINING Div    0.04691734
Days Dividend Post Div   398.08
SELLING Dividend    -         
NAV Post SELLING Div    1,543.76825805
NAV/U Post Selling Div    0.04691734
PURCHASE selling price    0.04926321
PURCHASE buy-back price    0.04597900

Sold   623
Swapped   0
Total   623
Price   0.049338
Total   30.737574
Less Fee   30.67609885
Man Fee   0.920282966

BTC Balance (BTC-TC)   1086.891966
13862 LTC-ATF.B1    138.62000000
Coinlenders CD    200.58256134
Just-Dice Balance    101.29424563
TOTAL ASSETS    1,527.38877305
   
Outstanding MINING   32066
Outstanding SELLING   32066
Outstanding PURCHASE   401
Effective Units   32467
   
Block reward   25
Difficulty   21,335,329
Hashes per MINING   5000000
   
Daily Dividend    0.00011786
50 days (Min Liquid)    0.00589288
100 days (Forced Close)    0.01178577
365 days (Buyback)    0.04301806
405 days (IPO)    0.04773236
400 days (Post SELLING div)    0.04714308
410 days (Pre SELLING div)    0.04832165
   
NAV Post MINING Div    1,523.56228744
NAV/U Post MINING Div    0.04692649
Days Dividend Post Div   398.16
SELLING Dividend    -         
NAV Post SELLING Div    1,523.56228744
NAV/U Post Selling Div    0.04692649
PURCHASE selling price    0.04927281
PURCHASE buy-back price    0.04598796