Topic: [BTCT][BFMINES] - Mining Contracts Now Available - Bonus Divs First Months - page 4. (Read 26395 times)

True, but I'm assuming that a share yielding less than 1 satoshi per week in dividends will be worth effectively 0BTC at that time.

There's a chance that the share/bond price could increase short term, but the increasing nature of difficulty will only result in a decreasing share price over the long term.

You have to add the remaining shareprice to the sum of all received dividends to calculate the overall profit or loss (not that this would make it significantly better for the investors).


The PPG term is rather idiotic. 1% average increase per jump qualifies as "PPG" too, and then a mining investment would make very, very much sense. For every specific statement ("difficulty will be 200,00,00 at the end of the year") you can calculate the average increase per jump. After about a year the mining equipment (or the PMB) will be worthless anyway, so we don't have to think about difficulty jumps in the far away future (and in Bitcoin country, 12 months is far away).

What a silly statement. I've clarified, several times as well, why I'd rather sell this as an asset than mine myself. You may chose to believe that or not and based your decisions on that belief.

.b

Clearly furuknap believes as we do that nobody who invests in BFmines will actually make their money back, as this is how he profits in the first place. He has to make a face in public in order to trick people into wasting their money on his bond. Arguing with him is pointless.

Yes I can, and I've explained why and how several times now.


And like I've also explained several times, if you believe in the PPG theory, no mining investments will ever make sense.

.b

I don't like any of the PMBs. In any case, you can't compare them to BFMINES based on price if you aren't even mining yet.

Even with a 15% difficulty increase, with you receiving the equipment on 10/1 (which is optimistic), each share will only produce 0.00087677 BTC before 1/1/2015! 

Actually, I explicitly avoided any price speculation as including that would create another assumption; that of a rational market.

I can't predict what people will pay for anything; they surely aren't judging a mhs as a mhs when comparing assets (AM's price per mhs is 10x that of BFMines, TAT.VM, and DMS.Selling, without any upgrades for months, and months behind on deploying the 62TH they claim to have in March)

The comparison does not deal with price, long-term difficulty evolution, or profitability at all. If prices on mining assets were to crash, it is likely that it will crash across the board, so it is irrelevant in terms of comparing assets to each other. There can, of course, be exceptions like we've seen with 100th today, but I'd rather hold the assumption that the operators competing for the lowest price (yours included) are rational, honest, and try their very best for achieve fairness. I may be gullible.



I did address this is the article. The bonus will be anything in excess of expenses, which is guaranteed at 20% minus operating expenses. I've used 5% as a max estimate for that, thus the 15-20% range.

However, it is likely that the hardware will overperform like all other ASICs. AM blades and sticks, for example, overperform by around 30% from specs, which would lead our hardware to run at 156% of guaranteed rate. If so, the bonus would be 51% each of the first six months.

I don't know, though, so as an assumption, I've countered the increase in difficulty against any overperformance and used the low end of the estimate at 16.6% at the September rate. This makes the calculations easier because that means that the bonus will be exactly 100% of September dividends.



Again, I don't speculate in profitability beyond saying it won't give you 500% and it won't give you 0%. The ROI was added to show that a change in difficulty impacts overall mining profitability by orders of magnitude more than it affects comparison between assets.

Also, I should mention that the limit to Metabank impact on the hash rate is less than 50TH as that is everything they sold. This does mean a 25% increase from today's numbers, but that is also easily countered by the estimated 30% increase per month (or a higher number, which still does not affect the analysis). It affects overall profitability for all miners only.


I'm hoping you can see why I avoid the terms PMB now and rather use mining contract.

The approach with zero TX fees is only a benefit if Bitcoin does not gain adoption. If Bitcoin succeeds and TX fees increase, the loss to investors will be far greater than the downtime estimates. If TX fees reach 8%, for example, our miner can be down one full month of the year before the downtime outweighs the loss in transaction fees from a virtual contract or PMB.

I'll address the payout in a later article to clarify because I see that the contract does not make it entirely clear, but BFMines pays out based on actual mining. In case the hardware is permanently damaged, the contracts will be rebought at market+10%.

That said, for temporary or short-term issues, I bear the risk and guarantee mining. Payouts from that will come from my pocket, which is why I need the surplus of the mining output (whatever is above 1mhs/contract) after the hardware warranty. I was thinking that I should use either an average of reported TX fees or an average of previous X days TX fees, whichever is most beneficial to contract holders.

I'll clarify this later, though.


BFMines is the exception, but it's not really a PMB either. I do, however, keep the commitment to payout, even if the hardware fails or is stolen, with the caveat that I'll buy out the contracts with a 10% bonus of market if there is permanent damage.

.b

So I doubled it. Results were the same, like I said.

I quardupled it. Results were the same, like I said.

At 250% growth per change, guess what, the result were the same, and I use 'the same' as being within 2%.

In fact, if I ran the extreme examples of one million percent, it favored BFMines compared to the others by 'more', being defined as 4%.

I'm wondering when people will realize that there are other people that aren't just out to scam everyone, but who actually builds something meant to benefit all in a fair way.

.b

When will people learn that buying mining IPO's is riskier than dancing with a grizzly bear.

Unfortunately, ASICMINER is just way too well run.

No matter what, 15% estimated difficult increase is far too low, probably by a factor of 2, like Deprived said. This next difficult increase is going to be around 15% just by itself!

This is just to quote myself in a few months:

I bet that IPO investors will at no time be profitable (in this case profitability is defined as the sum of the current bid price and all collected dividends subtracted by the IPO price 0.004).

profitability = (current bid price + all collected dividends) - 0.004

We're not speaking of yield in the 15..30...100% range, we're speaking of ever receiving a single satoshi in profit for IPO investors...

You haven't even check the links provided by me.
The first one enlarged is a link to pure mining operation ("each 2.25 BTC share buys 11GH/s").
The second one is a link to two services - the first is a buying proxy, but the second is a mining operation ("The minimum price is 1,04 btc/5 GH").
As you see, there exist mining operations with honest prices.
Compare your operation to them.


I will stop for now, but don't repeat again your old arguments at 100TH thread.

I don't think you understand the analysis. There is only supposed to be one adjustment. This is not an analysis about whether mining contracts are profitable, it is a comparison of the mining investments out there. To ensure a fair comparison, a price adejustment is required, but one is sufficient.

Whether you believe mining assets can give a reasonable return is up to you to predict.

.b

Where do I find the other price adjustments? I can see only one adjustment from 0.004 to 0.003582. Price adjustments have to be made for every future difficulty increase, for dividends and for the asset itself.

On thursday we'll likely have another diff increase by > 15%. To maintain the same yield to new investors, the price for your asset have to drop the same. So after a few days, you won't sell any more IPO shares at 0.004 and the IPO investors will already see the prices of their shares dropping. How do you think this will look for IPO investors in September, when you probably start mining? They will suffer from big losses in shareprice drop they will never recover through dividends.

I don't think comparing your asset to other "PMBs" is helping here. It's just a "my asset is not as shitty as your asset".

Question is, could investors profit or not.

*¤&%&%&!!!

I just spent three hours writing a full response, and the browser crashed. *sigh*

OK, here we go again, luckily most of the work was in validating the numbers...

I checked again, and you are wrong. However, by forcing me to recheck everything, you pointed me to a mistake I had made in my first model. I'll explain that and post the updated numbers, but let me first explain why you're wrong, and let me do so with the extreme example you had.

In my model, I am deducting the dividends earned by the competing contracts from the prices of contracts currently mining. This means that in the analysis, any dividend earned works in favor of the competitor. I believe you mentioned this wasn't fair and that one couldn't compare minig with a non-mining asset, but you may have misunderstood the model as it already accounts for this.

However, If difficulty goes up 1 million percent then no dividends will be earned at all, so no price deduction takes place.

Of course, this also means that everyone loses everything, so the question really becomes who pays more for their shares because that determines how much an investor will lose. Because BFMines is priced lower than competitors per mhs, that means investors lose less with BFMines (they would lose 0.00468 with TAT.VM and 0.00400 with BFMines).

To be accurate, this depends on when the difficulty goes up by a million percent. If that happens next week, then dividends earned until next week will reduce the loss.

To err on the site of caution, for my model, I have actually assumed that no difficulty changes happen in July at all. This favors competitors, due to the balance between the BFMines bonus being lower and the decrease in reduction from the competitors, the effect isn't too great (a percentage point or two). If I include the changes during July, it favors BFMines.

Now to my error.

In my first model, I had wrongly reduced the dividends by the same rate as the hashrate increase. In other words, if hashrate increased 15% then dividends would decrease 15%.

This is obviously wrong, because if the difficult went up 100%, the dividends would then be zero, when they should be 50%.

In the fixed model, I now correctly use the growth in difficulty to calculate the returns. Although not entirely correct for a physical mining operation, I have used the formula from DMS.Mining, as I'm sure you'll approve of that being correct (or at least equal for all).

I should mention that when designing the contracts, I used the correct method.

So, the results...

My statement from the article is that the chosen difficulty shouldn't affect comparing the assets 'too much' (only mining investments in general). The 'too much' is of course a relative term, so let me show you what it means in practice.

Here are the results from the updated model using 15% as the monthly change:



Here are the results from the updated results using 30% as the monthly change:



As you can see, the change from 15% to 30% affects TAT.VM competitiveness by 1% point only. This is due to the reduced price reduction countered by the reduced bonus. I'm thinking this is within the limits of what you can call 'not too much'.

The overall effect on mining profitability, however, is reduced by just over 14% for all assets.

I had spent a long time describing the formulas before my browser crashed, and I can't be bothered to rewrite it all again, so I've uploaded the Excel sheet to Google Drive so you can verify the formulas yourself.

https://docs.google.com/spreadsheet/ccc?key=0Am7kSNaxKrIMdGg1WnI1ZFp2RTh1ZXp2NVpCNkxIVGc&usp=drive_web#gid=0

I should point out that if updated with today's prices and the reduced dividend payout time for competitors until September 1 (still not accounting for price drops), BFMines is again the cheapest mining investment per mhs on BTCT:



This does not include any transaction fees, however, which would further favor BFMines by a percent or two, depending on what the transaction fees are. Of course, if the transaction fees goes through the roof, that further increases the benefit to BFMines contract holders, as unlike TAT.VM at least, the dividend is based on real mining rather than a return formula.

Speaking of which, and slightly off-topic; does DMS.Mining pay out transaction fees?

The effect you mention with your extreme example slightly affects the analysis if the increases are within normal expectations only, but the effect is so small that I call it, with good conscience, 'not too much'. For a doubling from my chosen numbers, the effect is around 1%; for a quadrupling, the effect is another percent.

However, from there on, the effect is turning around and is eventually cancelled out, so if there's an increase of 240% per change, BFMines is faring better again, and with a change of 1 million percent, the effect is all but cancelled out. In other words, BFMines, with its lower price and bonus is effectively priced at the same level as TAT.VM was when I wrote the article.

With the price rise on TAT.VM today, BFMines is the cheapest mining contracts on BTCT, regardless of whether you include any of the factors that would further favor BFMines.

.b

My last post on this - just want to be clear what I AM saying and what I'm NOT saying.

I'm NOT saying it's certain BFMINES will make a loss.  It IS possible that the manufacturers are stupid enough to sell hardware that will mine more than 20 times the price they sell it for (or couldn't get funding for less than 1950% interest from a source other than pre-orders).

I AM saying that the rate of difficulty change from now until the hardware arrive is CRITICAL when comparing to assets laready mining.

I AM saying that furknap's figure for those short-term difficulty changes is wrong - and unduly favours his own asset.

I AM saying that by actually claiming BFMINES will be profitable for investors furknap is putting his reputation on the line where most others avoid doing so.  It's highly likely some people WILL buy because he said it would (or was very likely to) be profitable who wouldn't have otherwise bought.

I have no interest (in fact a definite disincentive) in trying to actually define a likely range of returns for this security (or ANY mining 'bond').

That one's an interesting strawman - as you appear to be saying that there's something automatically bad about an investment that will never return 100% ROI.

Side-note: For those who don't understand what ROI is (furknap DOES know what it is - and is using the term correctly) it refers to Return ON investment (profit) not (as often misused here) Return OF investment (getting your initial investment back).

SELLING can never (or almost never) return a 100% ROI at current prices - that is correct.  But got no idea why you'd believe that is any way a bad thing.

I regularly buy shares and sell them for a 10% -20% profit.  I NEVER feel bad when I make 10-20% in a few days because it's less than 100%.

If someone offered a bond paying 30% dividends/year and ending in a year then it could NEVER give a 100% ROI.  But would that make it bad?  Of course not.

So it's not actually very generous of you to refrain from bashing SELLING for something which isn't of itself a fault anyway.  An investment can be great whilst never being able to achieve a 100% ROI and can be horrible whilst theoretically being able to deliver well over 100% ROI.  ROI without a time-scale is meaningless - and bashing something because of its max ROI without an associated time-scale would be stupid.

I didn't quote rest of the sentence - but if you DO want to bash SELLING investors or those selling SELLING to them they feel free : the whole point of DMS was, however, to let people do the bashing with BTC rather than with words.

I know you said that - and you were wrong the first time you said it.

That number is VERY important when comparing a security not mining yet (yours) to ones already mining (the ones you compared it to).  Saying it a second time doesn't make it true.

Easiest way to explain why it's relevant is to consider an extreme example - a ridiculously extreme example.   Imagine that difficulty rose by 1 million % at every difficulty change from now until delivery of your hardware.  You say that doesn't matter for comparison purposes - yet it rather obviously does.  As the income mined before the next difficulty change for things already mining would exceed what yours would mine from now until you died peacefully of old age.

When comparing yours to ones already mining the key to consider (as you can't compare them purely on price) is how much extra will they mine compared to you in the period before your hardware arrives.  Rather than considering it in terms of difficulty it's easier to explain when considered in terms of earnngs (those are inversely proportional to difficulty so conclusions drawn are valid).

If earnings/day now are X
Earnings per day at delivery now are Y
days to delivery are Z

Then we can approximate earnings (by assumign a steady change in difficulty or earnings) extra from a competitor before yours arrive as being  Z*(X-Y)/2 - i.e. the number of days times the total change/2.  Rather obviously as Y gets smaller (difficulty increases more so earnings reduce more) that number increases.  But not only does increasing difficulty make Y smaller (and the difference in earnings greater), it also makes the starting difficulty for YOUR mining higher - meaning your bonus is smaller AND is competing against a larger deficit.

I'm not seeing how you could possibly reach the conclusion that difficulty change BEFORE your hardware arrives doesn't matter for comparisons.  It's CRITICAL when comparing.  Difficulty changes AFTER your hardware arrives are, indeed, not all that relevant for comparisons - but that's NOT what you were asserting as you were specifically referring to difficulty changes BEFORE your hardware arrives.  And those are the ones that are obviously wrong - and in a direction which unjustly favours your own security in comparison to ones whose hardware (or virtual hardware) is already mining.