The reason dividends were going up was due to initial deployment not because reinvestment could keep up with difficulty rise. Leaving the reinvestment rate alone means investors lose less, and you still make a healthy profit.
Spot on! In the case of 65/35 dividend/reinvestment we cannot keep up with difficulty. This is why we are doing this IPO and changing our strategy, so we do keep up with difficulty and be able to grow large.
But this new reinvestment plan can only keep up with difficulty until August 4, 2014, as seen in your forecast in the prospectus. After that date we are in the exact same situation with not being able to keep up with the difficulty using just reinvestment funds. The only way it can sustain is if there is a big price spike in BTC before that date to buy much more miners with reinvestment funds when the reinvestment is largest and network hashrate is lowest, but then a different problem arises.
Are there any plans to to tackle this issue when it comes up again?
thats only 1 view based on one projection
you can generate thousands of multifactor exponential projections
when considering everything i think they can keep up, because they have the ability to adapt, unlike your projection
individuals miners have the same problems, yet we persist
That is not an exponential projection, it is a linear network hashrate projection. This is also not my projection it is the projection done by CryptX in the prospectus. Individual miners have the same problem but they have the ability to reinvest 100% and not worry about splitting income with other people so it is more sustainable in the long run as a solo miner. The reason I bring CryptX's projection up is because his business plan is derived from how he thinks the project will do. And it can be seen in the forecast that his own plan will start to fall apart August 4, 2014 leading us back right to this issue.
Also one issue with what you say is "..i think they can keep up.." You are putting faith into this mining operation because you are invested in it, not looking at what is laid out in front of you in the mine operators own forecast.
If you are going to be posting silly projections that CryptX's business plan isn't based off of then there is no point in talking to you, lose all of your investment. There is also one fatal flaw in the chart you just posted it assumes a BTC price of $4,000 by the end of this month.
The fatal flaw is hardly predicting $4,000 at the end of the month, we know that's not going to happen, it's only an example for dramatic effect..who is really looking at this chart and assuming the project will payout 3x more bitcoins than will ever exist in dividends? or that we will control a fair bit more than 100% of global hashrate just because BTC goes up 8x in value. you see any issue there??
As someone above asked; with 500$/btc instead of $450 : the sheet reports 2220 BTC extra. breakdown: 650 BTC from extra value of hardware, 1568 from extra dividends year 1. What happens when bitcoin price increases -- Interest towards mining also increases. The more valuable each coin is the more resources will go into digging them.
According to exponential diff increase till end of 2015 you would earn more, short and long term from 0% reinvestment than 35% or 80%. So will you make a case for paying 100% in dividends? Because the formula on the sheet tells you? No. because it's not profitable in reality nor congruent with the success of the operation long term.
Take a look at the BFSB site, you see a used 2.5TH machine being sold at discount, buying 400 assembled machines individually comes to about 8,700 BTC. You already know the price Cryptx has negotiated. Individual home miners are slowly being relegated out the game, it's an inevitability over time. in exahash ages how many will be running tens or hundreds of TH at home?. It's only thanks to certain manafacturers delivering in-stock hardware that they are holding on for now and not getting brutalised by pre-order financing.
In future only large scale operations with ability to rapidly expand and either manafacture own chips or negotiate attractive bulk pricing with those that can will be able to keep a foot in the door. Mining has been heading in this direction and can't be stopped. If PETA is established as a key player in mining space and does indeed manage to continue growth for, let's say 1 year people will be no longer expecting 80% yields. It's like this now because trust hasn't been established and investors are nervous and cynical, rightly so.
Yet Cryptx has had numerous situations in the past where they've stopped, re-evaluated the bp and made changes for the long term success of this project, despite there being some whinging at the time, the complaining quieted down once that became clear. It's not the first time dividends have been withheld in order to boost the project. And it's not the first time cryptx could of just let the project wither but chose to expand it instead, unlike clowns over at icedrill, and all numerous other hosted mining ops which have failed in the past Look at AM. 0.72% yield. everyones waiting for the BIG boom for 109ph worth of dividends.. good old days where friedcat isn't just paying shareholders lip-service. Imagine if investors had the same confidence in peta trickling divs in order to give an earth shattering update; we'd be at 10btc per share..yet instead the announcement of withholding divs causes panic.
The reality is: We are at 500TH now. up to 1PH of Hardware is due to be deployed beginning in less than 1 week bringing capacity to as much as 3x the size.
You can come up with your own pessimistic outlook of maintaining (not expand) approximately 1% of the network. That allows slippage from peta's goal of 2%-- if during a period where cryptx is actively reinvesting, peta's hashrate drops behind that disproportionally, and the source of the spike is not variance or other transient surge then you can consider liquidating. until then (and *especially* if you got in early) you can work out the yield despite that is attractive.. That doesn't factor in: increased BTC price (if you are investing you should be assuming this), potential sales of hardware, previously accumulated dividends nor the value of the shares themselves.
Guys, why argue about this? I can see if people could sell their shares, but they can't. Seems kinda cruel.
shareprice is up 20% from what it was averaging before, when mine is due to increase 300% capacity in short time.
what kind of long term investor would sell shares at below current PO rate they must be nervous.. price peaked above 0.1 prior to any of the recent announcements.
