Topic: Gigamining / Teramining - page 112. (Read 216459 times)

1 and 2 easy, it's the third one that's hard - hence my starting a credit rating discussion to actually collect those ideas.

Where can these numbers be found? Also, you're bullish on them?

Oh, there has been some thorough number crunching analysis which has been done. They are largely depleting assets and somewhat like an oil well.

The three main variables are (1) BTC:USD exchange rate, (2) network difficulity and (3) counter-party risk.

I had lunch with a couple attorneys last week and we discussed securitizing bonds. Just goes to show that there are all types of interesting opportunities available with this nascent economy.

I wouldn't think that 5mh/s will be worth as much in a year as it is now. I just think that over the next few months, the dividend payments will be greater than the asset depreciation--i.e. the mining difficulty will rise more slowly than the dividend yield.

Let me attempt to simplify this whole debate.

Let X = time

Let Y = Total dividends paid out per bond in BTC



Notice how over time X the bond will decrease its weekly payout. It's weekly payout will approach zero. But its total payout Y will approach some unknown amount of Bitcoin. Nobody really knows how many Bitcoins each bond will put out over its entire life. Right now the current price of a bond is something like 1.35 BTC.

Each individual has to ask themself "do I believe the total payout of this bond in its life will be less than or greater than 1.35 BTC?"

If you believe the total dividend paid per bond will be less than 1.35 BTC then do not purchase the bond. If you think it will be greater than 1.35, you then have to ask yourself by how much? That how much will determine whether or not you think it's a wise investment.

Nobody knows for sure.

If you're interested in MY two bitcents. I'm bullish on the bonds. I think they'll pay out far more than their current price. But I could be wrong. It is a gamble.

I do think, eventually, somebody will do a very thorough number crunching analysis of fixed bonds ROI, which will help to set the price of these sorts of bonds in the future. Then the only real differences in the price of bonds will be credit rating, also to be determined by reputable Bitcoin credit agencies.

Edit: And then there is also resale value to the bond which will shift the graph a certain amount. So that'll need to be factored in as well.

difficulty changes - more likely increasing with more fpgas coming on board and potential asics,
mining rewards halving in december
good luck making that 127% roi in a year

But its the annual rate of it being nuts that matters.

edit: and yes, I'll be investing/reinvesting some into MOORE--I like the idea

Its nuts to be buying a fixed mining bond that doesnt allow for growth in the difficulty. Take a look at something like MOORE which accounts for this at least.

Not to mention that whoever is "borrowing" your bonds is apparently going to deliver your dividends as well...hfgl w/ that

You are absolutely right about the price of the bonds being heavily discounted due to counter-party risk, but 100+% yield, where the mining math adds up, is good for even the junkiest of junk bonds.

GLBSE rating agency business opportunity, perhaps?

gigamining: 1.38btc
dividend/wk: 0.022btc
weekly yield: 1.59%
annual yield: (1+0.0159)^52-1 = 127%

Its still really high. I'm assuming compounding returns.

Well, just looks like price discovery at work. Based on my analysis a 1 Mh/s bond from a strong credit risk counter-party, which I would consider both GIGAMINING and BITBOND to be, should be valued around .2-.22 BTC which would put the GIGAMINING bond at about 1-1.1 BTC plus a slight premium based on the NPV of the PPS bonus.

Perhaps most investors, or should we say gamblers, are just not able to do a very competent discounted future cash flow for their valuation or even rudimentary financial analysis for that matter.

What is worse are these people lending out their GIGAMINING and BITBOND shares to counter-parties of questionable financial capability posting minimal collateral.

For example, in this thread we see: 30 BITBOND with 1 BTC collateral, 100 GIGAMINING with 1 BTC collateral and 30 GIGAMINING with 1 BTC collateral. Based on 5 day trading volume for the underlyings that is about 184 BTC in the notional with 3 BTC collateral or 61.33x which means if the price rises by a mere 1.63% then the collateral is gone. There is a reason for the Regulation T initial margin requirement being about 50% and not 1.63%. Good luck collecting on a margin call.

But we are getting to see what is so often the case with investing: You make money when you buy not when you sell.

Just curious: how to you get the annualized yield of a gigamining bond to be anywhere near 200%? A 5Mhps bond yields 0.10 BTC/month (http://www.alloscomp.com/bitcoin/calculator.php). That's 1.2 BTC/year at the current difficulty. But the bond cost you, say, 1.4 BTC.

So after a full year of dividends, you still haven't paid that bond off. Which indicates a yield closer to 85% (not 200%). And keep in mind that difficulty is, in general, increasing, so you'll likely find that a year of dividends will be LESS than 1.2 BTC.

Consider this: a BFL Single hashes at 830Mhps and costs 110 BTC. 830Mhps worth of gigamining bonds is 166 bonds. For a cost of 1.3 BTC/bond, you're paying 215 BTC for the equivalent of a device worth 110 BTC. You could buy TWO Singles for that price and get TWICE the income the bonds would give you.

EDIT: As sunnankar points out below, a more reasonable 'value' of a 5Mphs mining bond in the current mining environment is closer to 1.0-1.1 BTC/bond. I agree with that assessment.

LOL at the price action on gigamining due to this thread

Mining bonds are an interesting investment, since you should expect the price of bonds to depreciate as mining capacity increases. But the annualized yield of something like gigamining is somewhere around 200%, so you are still making a lot of money in the dividends.

The idea is that depreciation of face value will be more than offset by your dividend payouts, which you can then reinvest into higher Mhash/BTC bonds as mining efficiency improves.

mhash: 5 bid: 1.310 ask: 1.375
bid/mh: 0.262 ask/mh: 0.275

Not a bad deal at all?
Yes, YABMC looks really nice at ask/mh: 0.265 but this is only because div payment has caused a small sell off.

"they are going to sell millions of ASIC chips"  Where?  To the millions of miners out there? 

IM sure they will; but that doesnt change a whole lot, because maximizing revenue for BFL will mean initial high prices followed by endless price drops to keep selling hardware. And even those high initial prices may not deter all that many miners, I bet a lot of people will be lured by the better GH/W rating even if BFL prices them on par with FPGAs per GH. A few months worth of "pre orders" may be all that it takes to get this snow ball rolling and once it does, there is no stopping it.

Now I dont know when those things will hit the market,other than BFLs stated "sooner than you may think",  but a few months later it will basically be game over for gpu and fpga miners - not too mention, bond holders. Oh, and people buying those asics wont be off much better, because unless BFL artificially limits their sales volume, early customers are gonna get caught in the same avalanche as everyone else.  At least the smart ones will sell bonds so that gullible GBLSE investors will be the ones left holding the bag.


Likely a drop on a hot plate. Unless BFL come out with something very disappointing and/or a shared mask solution, you are looking at something with a silicon production cost significantly bellow $1 per GH.  This will make the switch from cpu to gpu look positively benign, and how long did that take?

IOW, someone come up with a good way to short all these mining bonds, and Ill pour all my bitcoins in it.

Unless the guy doesn't sell his first million of chips, but just use them to mine himself.
Though, logistically this would be pretty much of a challenge
But quite doable for a big company, like IBM or Samsung.

What I want to add, is that it will still need time for the difficulty to rise as crazy after ASICs are mass produced. Because the producers of ASICs will not price them based on the cost, they will control the supply and find a optimal price to maximize their profits. And the replacement of hardware will make many old miners quit and hence lighten the increase of difficulty for a while.

Yes. ASIC consumes a lot of initial capital, but the cost of mass production is negligible. So the question is when will the Bitcoin economy be large enough for people to make a large commitment at once.

OK - then I was wrong, sorry.
There is no SHA256 computing ASIC yet, that we would know of.

So you know the stuff.
And you can confirm that, if you have enough money (like a million dollars, or so) you can turn any FPGA application into a silicon - which takes how long... about a month?
And then you can manufacture your chips in millions, for less than a dollar each - right?
And this is the moment which, as you nicely phrased it, gets the difficulty into the stratosphere - and makes all the non-adjustable mining bonds worthless.
It may as well happen tomorrow