Topic: [Havelock] Bitcoin Difficulty Derivative (BDD) - page 46. (Read 290305 times)

BDD has an "End Game"; go to page one and read it for yourself. Once the bitcoins runs out the BDD fund manager will buy back all units at no cost and BDD will NO LONGER exist. I admit it is a great short term investment....but short term only. So you can complain about AmHash all you want; but as of Dec 20, 2014 it is the only mining fund that is actually paying good ROI. Peta sure sucks; even though they switched to Slushpool instead of Ghash they still suck. And Scrypt will soon be deleted and converted to AmHash3 units; and then will no longer exist.

So for a longer term investment I suggest AmHash as of Dec 20, 2014. Just remember anything and everything in bitcoin eventually changes; so what is best today may not be best 6 or 9 months from now.

As of Dec. 20, 2014 AmHash is the only mining fund I am making any money on. I am still making some with the mine fund, but it has an "End Game" and won't be around for the long term. So AmHash is the best option for longer term investments with good ROI as of this day.

Period 27, Day 3 Report - December 20, 2014

Balance Post Divs: BTC 194.97845481

Total Units: 22032

NAV/U: BTC 0.00884978

i learn more thr this forum than i ever did in school.  right on for the  free lessons.

Think of MINE as a bond.  

A bond is essentially a loan contract that pays 'coupon' payments at a fixed, stated "yield" of the principal capital that is tied to some metric (in this case, the theoretical, cost-free mining output of 5 Gh/s at a given difficulty).  This bond's payout is on a daily structure, so your profits compound very quickly if you can reinvest, and since it only holds 200 days' worth of funds max, it acts as a relatively short-term bond, making it easier to evaluate how much the bond is really worth since you don't have to look too far ahead.

In the international world, the interest rates on bonds are set by the central bank to attract people to hold the currency, as well as mediate the banking/financial system's behavior.

SELL only gets paid if mining equipment depreciates - if the difficulty suddenly spikes, those holding hashing power will suddenly find it worth much less than they expected.  The "yield" on the bond will have dropped.  

For a long time, this bond had a negative yield growth rate: the yield dropped every 2 weeks, but people saw that would be the case, so most who followed the market priced the bonds accordingly.  I think the difficulty finally dropping, and reversing the falling yield trend, really shook up the market because I don't know that most were expecting this type of difficulty correction.

If MINE could have held more than 200 days worth of dividends, it could "build the pot" in a sense and overvalue compared to its theoretical yield, but these funds instead take that surplus and pay it off to SELL, which is what gives SELL an expected value.  So the market-clearing bid is the market's prediction of the bitcoin futures (i.e. mining) price.

As long as miners can make a profit, they usually mine.  From supply economics, you'll keep your hardware running as long as the marginal revenue from running it (paid in BTC) is greater than the marginal cost (electric cost, which isn't cheap for that type of computing), with demand for BTC setting a market-clearing, or equilibrium price.

Also for a long time, miners had good margins on hashing, making probably in the 1000's % return on variable costs, which allowed ASIC manufacturers to charge obscene prices for their SHA-256 ASIC chips.  But then global demand fell compared to the near-constant rate of supply growth (which is what we're betting on here with B.MINE, and with payouts in BTC), where mining margins have essentially hit zero, as shown by the very thin discounts on the expected value of MINE.

Now the price has show to have fallen sort-of below the marginal cost point that's been set before as the "pinnning" point for the market (the electric cost) at marginal cost = marginal revenue.  Those with smaller margins (older, less efficient equipment or higher electric costs) are getting pushed out, as evidenced by the falling network hashrate.  Difficulty falls - guess who's suddenly expected to make more money?  (Miners.)

It's the same thing that's going on with oil right now in world markets.  Replace "oil cartel" with "Bitcoin mining cartel", and you'd have had the state of the BTC market.

Finally, when the next halving hits, the BTC exchange rate is going to skyrocket.  Look up the Gartner adoption/hype cycle as an idea of how the price should behave in the coming years.

for the b exch bid sides , do the orders  actually get hit. how come the bids are so much lower than sell side. is there an reason for that or people just hoping to get lucky. by the way, thanks for the answers mr dub.

It essentially increases when one or a pair of people decide that the bid for SELL and MINE, conversely, are overvalued for the asset and buy EXCH to knock off the bid. 

does the NAV/U   , increase when more people buy in.

BDD has 0 hashing power. Mining does more than just earn money, it secures the network and processes transactions. BDD is an interesting gambling game, but it's not a mining solution. You're probably aware of that but I thought I'd point it out just in case you're not.

so in lamens terms, what's the limit, the amount of available units purchased only?

Thanks for the heads up.  Dumb me, I forgot to take into account the NAV/U value.

Period 27, Day 2 Report - December 19, 2014

Balance Post Divs: BTC 179.77704512

Total Units: 20175

NAV/U: BTC 0.00891088

True, you do get more hashrate per BTC, but you do have to remember that the total amount that can be paid out to MINE holders is roughly the NAV/U at the moment - the maximum return on MINE right now is about 10% as jjddub7 said.

Since the PBMining disaster, I've been looking for other mining solutions. So far BDD (B.Mine) seems the best for "right now".

Just looked at Amhash and can not believe anyone would invest in them. Their price is ~25% less than BDD as of this posting, but they charge a maintenance fee that's ~32.5% of payout. So to save ~25% on purchase price, you lose ~32.5% of what you mine daily.

As an example: If you purchased 250 ghashes from Amhash and after the maintenance fee, in effect you would only have the mining power of 167.5 ghashes. Where with BDD, if you purchase 50 units your mining power (even though its not true mining) is 250 ghashes. That's 82.5 less ghashes!!! At today's difficulty that's a lost of 0.03200507 BTC a month.

I guess most people only look at the purchase price, and I agree 0.0012/gh looks better than 0.00161/gh. But, you have to look at the total cost involved.

Has anyone found anything better than BDD?

The reason its priced low should be obvious.  If the next generation of mining hardware causes a spike, the mining bond will become worthless as EVERYONE that owns those 20175 bonds runs the market as soon as the hashing power shows up on the network...there's only downside to the bond anymore: ~10% upside on B.MINE at the lowest ask vs. potential ~800% upside on SELL (with an existentially lower probability of paying out, yes)

Now...SELL on the other hand...enormous risk, but well, well worth it if it pays out

me 2  but , but at the same time i see so much more hype surrounding amhash, its clearly stealing   bdd's thunder.

to me bdd  is the real  pbmining.   this is how ur suppose to run a pbmining. maybe u guys should advertise ,"the real pbmining" ahahh.

Period 27, Day 1 Report - December 18, 2014

Balance Post Divs: BTC 180.54216320

Total Units: 20118

NAV/U: BTC 0.00897416

You're absolutely right, that's what it was - I had put up the EXCH ask for the Period NAV/U plus 3% instead of the NAV/U after dividend plus 3%. This will now be corrected as I post the new one today, thanks-

I am surprised the trade activity for this is so low. With the decreasing price of bitcoin maintenance fees are rising. This security does not have maintenance fees so pays much better currently.

Nav/U 0.00903750 * 1.03 != "New EXCH Sales Starting Price          0.00937426"

Is it off by one dividend?