Topic: Weekly loss of N% guaranteed - Enjoy perpetual loss with fixed Mh/s mining turds - page 12. (Read 14723 times)

He's pretty much talking about all of them. He's been posting this crap in all the threads including mine. He's just trying to piss people off. First he wants to buy them, then calls it bs. He's a idiot.

OP is correct in his analysis, but this does not apply to every mining bond. Some are fantastic, but the vast majority are indeed, as he puts it, "turds."

The trick is to have a method of buying gems and selling turds. It's not rocket science, but I would never, ever invest a penny into any market without a well defined objective investment strategy.

Hydrobonds has an upgrade policy. Thanks for validating everything I said. I am more looking at YABMC. Reinvesting into something overvalued will only magnify your overall losses.

It's highly profitable even with the dividend returns likely lowering over time. Hydro bonds has been paying out almost 2.5% weekly. This will most likely increase when butterfly delivers the new ASIC's. I keep the price about $1.45 -$1.50 per mhash or currently .13 btc. Apparently you need to brush up on your math, because that is a highly profitable return rate. If you want your payouts to increase every week you need to reinvest some of your dividends. The same way miners reinvest into their farms. You can't have your cake and eat it too. Also calling something a bond or a share has little relevance. The contract is all that matters.

I must say this EskimoBob. You are the most annoying TROLL I have seen on this forum. If you can't figure out how a investment that gives a full return in a matter of months is profitable, there is little hope for you. You seem to be under the impression that by calling something a share, it will sprout a higher return rate. My mining equipment only earns so much. I basically charge 15% initially for maintaining equipment. Calling it a share or changing the contract is not share is not going to generate bitcoins out of this air. Bonds will remain profitable so long as mining is profitable and there is no reason to believe that will change.

The whole point behind what I am saying is that if you do a discounted cash flow based valuation of current mining stocks, you will see that without an upgrade in Mhash per share, they are only worth about .11-.12 btc per Mhash.

The GLBSE Chrome extension will do that for you.

Come on bob. Don't educate the masses, take advantage of them. I was thinking of issuing a bond too so I could take advantage of this.

The main point that the OP makes is important - the value of 1 Mh/s is nearly guaranteed to drop over time. This is because as miners upgrade, more total Mh/s will be needed to get a constant (well, actually falling) amount of bitcoin.

Those disagreeing with the OP also make a good point: You can discount the falling value of Mh/s in order determine the real value of the bond, and compare that to the current price. I would like to make another point. In order to counteract the falling value of Mh/s, several miners are "upgrading" their bonds, increasing the Mh/s per bond. I don't consider these bonds to be "turds".

His point about "bonds" not being bonds is red herring. As long as everyone understands the terms of the security, it doesn't really matter what it is called.

Bonds in the traditional finance industry come in many flavors. One such flavor, are so called catastrophe bonds which operate nothing like the more typical (fixed or floating) sovereign, muni, or corporate bonds.

Furthermore, not all (traditional finance industry) bonds have a maturity. Perpetual bonds, or perpetuities, have no maturity date; some of which are actively traded. For all intents and purposes, century or 100-year bonds might as well be a perpetual bond in terms of pricing.

I think at the crux of this discussion, is that mining bonds have some unique pricing model parameters, foremost of which is that mining bonds are short difficulty. On top of that, there are the traditional factors, such as exchange risk (e.g., BTCUSD rate), counter-party and default risk (i.e., GLBSE, issuer), and what I would call exploit risk (risk that Bitcoin, and the implementations thereof, are exploited). Of course, regular bond pricing constructs, such as interest rates and duration, are applicable as well, although the concept of the "risk-free rate" is less well-defined for bitcoins than for traditional fiat currencies.

TL;DR: Mining bonds are certainly bonds, though they are fundamentally new and come with new pricing models

I find it interesting that your only recourse to Meni's comments is to tell him that he doesn't know what he is talking about when in fact he is the creator of mining bonds. I also find your comments about me quite distasteful and rather telling of your maturity and skill level at having a reasonable debate.

EskimoBob, why even post this stuff if you are unwilling to discuss them with people who disagree with you and resort to personal attacks to try and defend you position?

It is important to remember that mining bond prices took a huge hit after BFL announced and sold ASICS.  The returns of mining bonds would probably have outweighed the depreciation without unexpected news  of disruptive mining technology.

I would be interested in the results of this.  Might do it myself...

Right, debt and equity are not the same but the difference is irrelevant to the point I was making.

I agree with all.

OP, do you have a point besides that you think the mining bonds are overpriced? Would you buy GIGA at .01BTC even if you were somehow forbidden from selling it forever?

Are you high? You are mixing up debt and equity and some of your references make no sense at all. Obviously you have no idea wtf you are talking about. But keep at it. vps likes this crap because you help to confuse the issue.

gigavps,  +100?  LOL! No wonder.  As you are one of the biggest mining turd pedlar,  I did not expect anything less from you. Cheers!

I hear that if EskimoBob keeps whining and moaning while you keep laughing then EskimoBob will magically have a positive return on investment.

The real issue though is probably his inability to do a discounted future cash flow using multiple numeraires and assumptions.

+100

The OP is completely nonsensical.

Buying mining equipment has two components - choosing and operating hardware, and speculating on the future of price/difficulty ratio.

Having these two components as a bundle is inefficient.

Mining bonds allow each component to be carried out most efficiently - one side buys bonds thus investing in the concept of mining profitability without having to physically operate hardware, and the other side uses the money to buy equipment without taking speculative risk.

To say that buying (or selling for that matter) mining bonds is "bad" because the returns are not fixed in some arbitrary denomination reflects no understanding at all of economics. It's the equivalent of saying bitcoins shouldn't be bought because they're not backed by a specified amount of dollars, or that any commodity or stock shouldn't be bought because its future price is unknown. It's called "risky investment" and if one doesn't like it he can sit it out, as long as he doesn't complain about those who profit from thought out risky investments.

It's all a matter of the offered price. If the traded price of a bond is high enough it is a bad decision to buy it, if it is low enough it is a good decision, in the middle there's uncertainty and the one making the best decisions wins. The OP can argue that the bonds at some specific time are overvalued but it doesn't seem like that's what he's trying to do.

Mining bonds are called "mining bonds" precisely because unlike usual bonds they are not tied to some currency but rather to mining hashrate. But the OP can call them whatever he wants (except for the term he's used which is offensive).

What I did was try to project depreciating asset values and reduced dividends into the future, using a spreadsheet.  The fact of the matter is, as long as you're invested in ASIC-based mining operations, your dividends will outweigh your losses on the bonds well into 2013.  There are some difficult factors to predict, like how much the difficulty is going to increase, but as long as you trust that the owner of the mining operation is going to keep ahead of the difficulty curve (i.e. be one of the first wave to acquire ASIC), then you're golden.

All of my mining bonds are currently worth more than I paid for them.  Add dividend revenues to the mix and I'm laughing. 

Will the value of the bonds eventually drop to zero?  Well yes, they will, but in the short to medium term, they're still profitable.  The key is to not be the last bag holder.  I will probably start selling in a year from now, but a year in Bitcoin-land is a long time.

Just release a script that parses the GLBSE CSV file and calculates if one has actually made a loss or is still in the win-zone atm. with mining "bonds".

I agree. I hope this gets fixed soon and different instruments get grouped by the type. There is another thread for this: https://bitcointalk.org/index.php?topic=74049.260

I personally like zeros and those are excellent instruments to finance all sorts of stuff. Not just issuing a zero, but also by buying zeros.