Topic: [BTC-TC] Deprived Mining Speculation (DMS) - page 91. (Read 198700 times)

Ok, I get what you are saying, the return from investments would still increase the real value.
I know the dividend of 0,01x doesn't mean that this is your profit, the return will be from the Btcs DMS.Mining doesn't get due to difficulty increase + returns of any investments. So you will only profit, if you haven't paid too much for DMS.Selling.

No mistake.

Change in the price of SELLING should occur through trading.

You're confusing price with value.  Let me give an entirely different scenario.

Say there's an IPO selling shares at 1 BTC each.

Those shares HAVE a fixed value - noone likely knows what it is but they have one.

When you buy a share, the share hasn't changed in value.  But immediately after the IPO sells out (or fails to sell out and the remaining Ask is taken down) the price at which they trade will often change - even though there has been NO change in value.

Value is what something is worth.
Price is the point which a seller and a buyer decide to agree represents a definition of value that they'll both accept for the purpose of conducting a transaction.

You make a profit on SELLING by buying it (or buying a PURCHASE and selling the MINING from it) at a PRICE which is below its VALUE.

Over time, if you bought it at below VALUE then the market PRICE will adjust to reflect the real VALUE (as dividends are paid - either to MINING or to SELLING) and narrow the range in which VALUE can actually lie.

Those changes occur due to a change in the perception of those involved in the market (which CAN be a real change in value or CAN be just a better understanding of what an unchanged value actually is).  Dividend payment (the actual payment of one) SHOULD have no impact on that perception - other than changing where a portion of that value is held (and hence causing an immediate drop in price in the PRICE of the security receiving the dividend post-dividend).

EDIT: The above is slightly simplified and intended to be a general description of a concept (how value and price are distinct things and shouldn't be confused).  There ARE circumstances where a change in price DOES cause a change in value (rather than just reflect a changed view of value - but there's no point discussing those if the fundamental difference between the two isn't understood.

I don't expect SELLING to drop in price as much as the dividend payment. And I expect the price to rise in anticipation of the next dividend payment (and consequently the price of MINING going down). In fact, the SELLING price has already risen a bit in anticipation of tomorrows payment.

edit: But yes, in a fully rational market where there is no growth of capital, MINING and SELLING would be at exactly the right price-point and the value of both assets would get eaten up by its dividend payments. But since the market isn't fully rational and we don't know the right price-point for both assets, there are gains to be had.

There has to be a mistake, because otherwise by this defintion you couldn't get more out of your Selling purchase than you've invested in it.
Aka the dividends would be exactly the selling price -> selling would be worthless after that.
This would be in total oblivion of the price of Mining shares and if they were priced exactly the right spot, disregarding other growth and new DMS.Purchase purchases.

Yes.  Payment of a 0.01 dividend to SELLING definitely means that SELLING is worth 0.01 less immediately after payment of the dividend than it was worth before it.  The same will also be true for PURCHASE.

That doesn't mean that the market prices will change in the same way - they would if everyone was acting in an entirely rational manner but it isn't safe to assume that will be the case.

It's likely that the current very large wide spread on SELLING reflects people being cautious about not placing Bids if they aren't certain they'll be around to cancel them before the dividend payment.

Note that the dividend is NOT necessarily going to be .01 - but it'll certainly be somewhere of that general size unless something major happens in the next few hours.

one more question..

If the Dividend of SELLING is 0.01   then the Value of the SELLING share Decrease by 0.01 after the Dividend was paid?

I just transferred 2500 LTC-ATF.B1 into the fund.

In return I received 377 each of SELLING and MINING plus .0618 BTC in change.

I'll take LTC-ATF.B1 in return for shares from anyone else as well (you get SELLING + MINING or PURCHASE equal to the full face-value price of the LTC-ATF.B1) - so long as it's 500+ (5 BTC worth) at a time.  PM if you want to do this - as I'll need your LTC-Global AND BTC-TC usernames before you transfer to make sure I send to right person.  Any such trades will be disclosed - but not the name of the person trading in (that's only disclosed if it's me).

That brings our total LTC-ATF.B1 to 12500 - which will generate slightly over 0.75 BTC per week for the fund.

Votes on (two) other assets for investment will go up later today.

NAV/U and the selling price of PURCHASE rose very slightly due to decent sales of more PURCHASE and the LTC-ATF.B1 dividend payment.

Sold   1936
Price   0.066116
Total   128.000576
Less Fee   127.7445748
Man Fee   3.832337245

Management fee of 3.832 BTC paid.

BTC Balance (BTC-TC)    756.83177809
10000 LTC-ATF.B1    100.00000000
TOTAL ASSETS    856.83177809
   
Outstanding MINING   13014
Outstanding SELLING   13014
Outstanding PURCHASE   552
Effective Units   13566
   
Block reward   25
Difficulty   15605633
Hashes per MINING   5000000
   
Daily Dividend    0.00016113
50 days (Min Liquid)    0.00805649
100 days (Forced Close)    0.01611298
365 days (Buyback)    0.05881238
405 days (IPO)    0.06525757
400 days (Post SELLING div)    0.06445192
410 days (Pre SELLING div)    0.06606322
   
NAV Post MINING Div    854.64589117
NAV/U Post MINING Div    0.06299911
Days Dividend Post Div   390.98
SELLING Dividend    -         
NAV Post SELLING Div    854.64589117
NAV/U Post Selling Div    0.06299911
PURCHASE selling price    0.06614906
PURCHASE buy-back price    0.06173913

Yes - that's where Bitcoin investors have historically consistently got it wrong.  They focus on whether something is a 'good' or 'bad' investment when (other than for scams) there's no such thing.  In the context of investing 'good' and 'bad' aren't absolute concepts - they're relative concepts that only have useful meaning when discussed for a particular price-point.   Most Bitcoin investors' efforts to determine a price for a security don't go beyond looking at what it's being sold for and assuming that must have some correlation to its value.

Yes that looks likely (and has done so since Wednesday - before that it looked likely change would be after midnight).  A fairly small drop in hashing power and/or bad luck could still push it back - but it looks increasingly less likely.

I will NOT be able to announce the exact dividend in advance - as it's impacted slightly by any sales of PURCHASE, so can't be calculated at all until after I've taken down the PURCHASE Ask wall.

In other words, "price is paramount".
Anyone who isn't familiar with this concept would better at least read this article (though this post by Deprived is already a good explanation).

42 blocks left until the difficulty readjustment, so it's looking likely that it will happen before midnight GMT (since blocks are coming in faster than every 10 minutes, hence the need for a diff readjustment) and the SELLING dividend will pay out tomorrow.

Was going to make a post after today's dividend and explain the math of predicting a SELLING dividend - but I see someone else has explained it already.

That's the correct way to work it out - and would be almost the correct dividend (dividend is paid AFTER a MINING dividend so you'd need to take off today's dividend AND tomorrow's).  Note also that if the difficulty doesn't happen until after midnight (GMT) tonight then tomorrow's dividend for MINIGN would be at al old rate - so the first MINING dividend at new rate (and SELLING's first dividend at all) wouldn't happen until Tuesday.

IMPORTANT : DO NOT LEAVE BIDS UP ON SELLING BEFORE THE SELLING DIVIDEND IF YOU DON'T KNOW WHAT YOU'RE DOING.

Why SELLING not MINING?

In theory, whenever a dividend is paid the price of that share AFTER (post) dividend should be exactly the amount of the dividend lower than it was before (pre) dividend.  With MINING dividends being small and regular that has no real impact.  But the SELLING dividend is likely to be much larger (unless a LOT of the network stops mining in the next few hours).  If the dividend is around .01 then payment of the dividend represents a transfer of .01 of the value of SELLING from being held by the fund (me) to being held by those holding SELLING shares.  That should have ZERO effect on the price of MINING (their VALUE hasn't changed) but should cause a drop of about .01 in the price of SELLING (and also of PURCHASE).

I do NOT intend to clear market orders on SELLING.  I WILL clear market orders on PURCHASE if there are any bids placed above the new selling price of PURCHASE (as those clearly wouldn't be intended to stay up).  The only time I'd clear market orders for MINING or SELLING would be if something unexpected occurred.  This dividend is NOT unexpected - it could be calculated and predicted with  great accuracy for at least 3-4 days now (from before any shares were sold at all in fact).

Any changes to the price of MINING are NOT due to the PAYMENT of the dividend - but could well be due to people recognising the existence of the dividend (in which case they SHOULD be priced in well before the dividend is actually paid).

As ever, dividend payments for MINING will continue to mirror those of 'PMBs' very closely.  In the short to medium term it is almost certain they will be exactly the same - and will only ever fall below if difficulty stops rising, falls, or rises very slowly for a protracted period of time.  None of those are likely this year.  So ANY conclusions you make about the value of MINING do very much apply to ALL 'PMBs'.  Potentially MINING will have total life-time payments (assuming payments forever) of 5% or less below 'PMBs' (and MORE than any PMB-type offering which has a lower buy-back clause).  Do NOT fall into the trap of believing that MINING is somehow going to pay out a lot less than PMBs - if they pay more then the extra will be a small amount given out in tiny dividends over a period of many years once MINING has been bought back.

MINING is a BAD investment if bought at too high a price (and PMBs bought for much more per MH/S are even worse).  It is a GOOD investment if bought cheaply (and PMBs bought for much more per MH/S are worse) .  The same is true for SELLING - whether it is a good buy or not depends on what you pay for it.  This fund is about allowing investors to effectively bet based on where they believe the correct price split lies - in the process the market is also defining what it believes the cost of 5 MH/S of PMB to be worth.

PMBs are NOT inherently a bad investment by design.  They're a bad investment if bought at too high a price.  Nearly all PMBs have been sold at prices where investors will not ever make back what they paid.

Keep in mind that DMS.SELLING dividends work just like stocks. Dividends are not like interest -- you don't gain anything by receiving dividends. A dividend just converts share value into cash. Assuming the value of DMS.MINING is unchanged (it is unaffected by the DMS.SELLING dividend, after all), then the NAV of a DMS.SELLING share will drop by the amount of the dividend because the dividend is paid from the capital that determines the share's NAV.

For example, suppose the NAV of a share is 100 BTC (because it is backed by 100 BTC of something). Paying a dividend of 1 BTC will lower the NAV to 99 BTC because it is now backed by 99 BTC of something. After the dividend, you still have 100 BTC -- 1 BTC plus a share worth 99 BTC.

Also, keep in mind that mining dividends are different.

There are other factors in play here, so although this is a fundamental concept, the results could be different.

and this is crucial if no one buy your higher offer because SELLING only has 0.037232 bids, and MINING has 0.026003 bids .
Better to buy PURCHASE after the diff adjustment, so you will start fresh.  Just my opinion.

True, but converting takes time, and during that time the prices might have already adjusted.

Who buys SELLING @ 0.044? Better buy PURCHASE, convert and then sell MINING, this way you can get SELLING < 0.04 at current rates...

Well shit, after seeing the math worked out I was clearly trading the wrong side. Time to cut my losses on MINING before the value tanks. It will be interesting to see how this will affect the already more expensive PMBs.

What a trading game.
Now I fully understand and set my strategy plan to the next difficulty. Hope it works.