Topic: [Havelock] Bitcoin Difficulty Derivative (BDD) - page 8. (Read 290008 times)

Round 3, Period 10, Day 13 Report - July 4, 2016

Balance Post Divs: BTC 20.25247785

Total Units: 380

NAV/U: BTC 0.05329599

Round 3, Period 10, Day 12 Report - July 3, 2016

Balance Post Divs: BTC 20.10326844

Total Units: 373

NAV/U: BTC 0.05389616

You're welcome; always happy to answer questions - I know that this is complicated! B.EXCH is listed at NAV/U + 3% so it won't be affected by the halving; the MINE payouts will drop by ~50%, depending on the next difficulty change, but the NAV/U backing those MINE units (and SELL units) will remain the same - same amount of funds backing them, slower payout.

Round 3, Period 10, Day 10 Report - July 1, 2016

Balance Post Divs: BTC 20.16542215

Total Units: 366

NAV/U: BTC 0.05509678

Round 3, Period 10, Day 11 Report - July 2, 2016

Balance Post Divs: BTC 20.16122894

Total Units: 370

NAV/U: BTC 0.05448980

I was looking into buying a S9, my calculation told me that it would never earn a profit due to rising difficulty and my electricity cost. i know some one who "mined" before using the b.mine half of this product. Since owning b.mine requires no electricity I was comparing their hash rates per btc and found that it is cheaper to buy hashrate from the purchase of b.exch than it is to buy from antminer(they are almost the same price per hashrate only antminers need electricity). I understand how the fund works and was just pointing out that it is cheaper to buy b.exch and "mine" with the b.mine side than it is to buy an antminer and would probably yield more btc by the time the fund runs out vs when the electricity cost exceeds profits from the S9. However you are right since both will probably result in a loss of overall btc maybe i should buy b.exch and just keep the b.sell side. But now this will require more calculations and thought as to the true value of a b.sell contract. Thanks for taking the time to respond and keep me thinking.

Oh and what happens to the cost of the b.exch after the halving? will it still continue to lose value equal to the last dividend payout of of b.mine per day or will there be a sudden drop in price?

Round 3, Period 10, Day 9 Report - June 30, 2016

Balance Post Divs: BTC 20.05088506

Total Units: 360

NAV/U: BTC 0.05569690

Round 3, Period 10, Day 8 Report - June 29, 2016

Balance Post Divs: BTC 20.26698641

Total Units: 360

NAV/U: BTC 0.05629718

This statement means that you do not understand this fund. Purchasing and holding B.EXCH (which is just one MINE and one SELL) will net you zero profit. You need to hold MINE or SELL and sell the one that you don't want. MINE could net you a profit, or SELL could (depending on the difficulty), but holding EXCH never will.

Don't purchase MINE or SELL above the NAV/U and don't purchase and hold EXCH - you will have no profit from this.

When I run a Bitcoin mining profitability calculator on the s9 at my electricity cost with a conservative 6.5% difficulty increase it tells me that it will never earn a roi. It looks as though with the current volume on b.exch, holding b.mine should earn a roi before the fund depletes. Since one share of b.exch cost about the same as buying a comparable h/s from antminer and comes with a built in hedge incase the difficulty skyrockets, it looks to be a better option. I'm not proposing that somehow buying b.exch will make you rich with a risk free investment, I'm just saying it looks like a better option than buying a antminer s9 at their current cost and at a lower cost of entry. I could invest over 3 btc for an antminer that will never earn a roi or I can put up .06 btc and hope for a return from the fund.

First off, Buying EXCH and holding it will result in a loss - you're paying a 3% premium over NAV/U, so you'll come out behind if you just sit on it. You need to choose to hold either MINE or SELL and sell the other (or simply just buy one or the other outright).

If you look at my halving calculations above, you'll see that there will likely be no divided because there will still be less than 180 days of dividends. Also, you're assuming that each purchase of EXCH doesn't up the total number of contracts, which it does - you can't just divide .05945 by the current number of contracts - it adds to the number of contracts.

Round 3, Period 10, Day 7 Report - June 28, 2016

Balance Post Divs: BTC 20.42619733

Total Units: 359

NAV/U: BTC 0.05689748

Just crunching some numbers let me know what you guys think.

Mining with an antminer S9 vs buying B.Exch:

Antminer hashrate is 12.93 Th/s, one B.mine contract is equal to .25Th/s, so one B.mine contract is equal to 1/51.72. The S9 cost 3.05 Btc; if you divide that by 51.72 you get .05897. So that would be the bitmain equivalent cost of .25Th/s, only you don't need to buy a psu, pay pool fees, or pay the electricity cost to run the miner.
   Currently you can buy the B.exch contract for .05945 which gives you one B.mine contract and one B.sell contract meaning you are paying .00048  premium for the B.sell contract and getting the B.mine contract for a discount to bitmain when you consider the cost of electricity and set up.
    It looks as though when the block reward halving comes the fund will have just about 180 days of mining dividend in it (the threshold for the sell dividend payout). So any new purchases of the B.exch should result in a payout for the B.sell holders. Each purchase of B.exch will add .05945 to the fund if you divide that by 358 (contracts outstanding) you get a .000166 divided payout for each share of B.sell you own if difficulty stays the same. If this raises then the payout will be higher.
    In closing it looks to me that if you want to earn BTC from mining then you are better off buying B.exch then buying an antminer S9, it's cheaper when you consider pool fees and electricity, and comes with a built in hedge in case the difficulty rises.

    

Round 3, Period 10, Day 5 Report - June 26, 2016

Balance Post Divs: BTC 20.56644095

Total Units: 354

NAV/U: BTC 0.05809729

Round 3, Period 10, Day 6 Report - June 27, 2016

Balance Post Divs: BTC 20.46820035

Total Units: 356

NAV/U: BTC 0.05749494

Round 3, Period 10, Day 4 Report - June 25, 2016

Balance Post Divs: BTC 20.72049276

Total Units: 353

NAV/U: BTC 0.05869827

Round 3, Period 10, Day 3 Report - June 24, 2016

Balance Post Divs: BTC 20.75461570

Total Units: 350

NAV/U: BTC 0.05929890

Round 3, Period 10, Day 2 Report - June 23, 2016

Balance Post Divs: BTC 19.82650560

Total Units: 331

NAV/U: BTC 0.05989880

Round 3, Period 10, Day 1 Report - June 22, 2016

Balance Post Divs: BTC 19.66215939

Total Units: 325

NAV/U: BTC 0.06049895

Round 3, Period 10, Day 0 Report - June 20, 2016

Balance Post Divs: BTC 19.73502698

Total Units: 323

NAV/U: BTC 0.06109915

Round 3, Period 9 End Report - June 9, 2016

Previous Units              289
EXCH Sold                   34
Less Buybacks              0
New Total Units        323

Previous Balance          20.11086199
Gross Sales of EXCH      2.21269689

Less Fees                    0.00885079
Less Dividends              2.45153698
Less Buybacks              0
Less Mgmt Fee              0.12331207
Net Balance            19.73985904

End of Period NAV/U     0.06111411

New Difficulty                  209,453,158,595
New Daily Dividend         0.00060026
New Reserve per Unit        0.10804680

NAV/U less New Reserve = 0.06111411 - 0.10804680 = -0.04693269

SELL Dividend                 0 (Because there are less than 180 days of dividends on hand)

Days of Dividends On Hand   101.81

Not a stupid question! I've actually been meaning to make a post about this - thank you for asking.

The MINE daily payout is determined by the following formula:
B.MINE Hash Rate * Block Reward * 86400 * ((65535 / 2^48 )/Difficulty)

Up until now, the Block Reward has been 25 BTC per block; this will be halving to 12.5 BTC per block, so the MINE payout will decrease by half!

However - this does not mean that MINE is necessarily worth half of its current value. See below for why.

At the estimated next difficulty to be set tomorrow (appx 209,538,114,804), the MINE payout per day will be just about dead on .0006 BTC. The halving is happening in about 19 days, so there will be one more difficulty change before then, but we'll just assume that difficulty is going to stay at that level for simplicity's sake.

At the current NAV/U, 0.06152229, this gives us just over 102 days of dividend at that MINE payout per day (.06152229 / .0006 = 102.53). Assuming that the difficulty stays around the same point, that gives us 102-19 days = 83 days of MINE dividend days left on the day of Halving.

At this point, the MINE payout per day will be halved, which will automatically give us double the amount of days left! Here's the math:

On the estimated halving date, the NAV/U will be .05012229. Pre-halving, this is .0512229 / .0006 = 83.53 days of MINE payouts left at .0006 per Day. With the payout being halved to .0003 per day, this give us .05012229 / .0003 = 167.08 days of MINE payouts left!

The threshhold for SELL to receive a dividend requires that there be in excess of 180 Days of Dividends at the difficulty change, so there would still need to be decrease in difficulty for that to happen.

This is why MINE isn't necessarily worth half of its current value when the halving occurs - assuming that difficulty keeps doing what it's been doing for a while now (which is NOT guaranteed), decreasing or increasing slowly, then MINE would still pay out all of the NAV/U value, albeit at a slower pace.

TL;DR: The MINE payout, since it's determined in part by the block reward, will be halved at the Halving. However, this just means that MINE will pay out at a slower rate, not that it's value is halved.