Topic: Why are people buying asic mining shares? are they insane? (Read 9352 times)

I would posit that every member of the human race can be considered insane in one fashion or another by the majority. This comes with being human, all of our judgments are passed through a unique prism of our own specific experiences. No one (and I do mean no one) has the corner on the market for truth. Understand this and you will quickly understand that trying to impose your own unique rationality upon others is futile at best, and destructive at it's worst. At any time any of us is as likely to be wrong as right.

Those who fail to realize this generally resort to name-calling or labeling when they fail to convince others that their "reality" is the only logical correct one. This would appear to a contradiction;  the person attempting to persuade others believes he is doing so out of altruism, that is, he is helping his misguided fellow man by providing him with valid information, but then lashes out when the other person is non-receptive, showing contempt for those he had originally intended to assist. This is a difficult thing to realize, and a difficult behavior to learn to overcome.

I have done well on most of my mining and investment ventures. No amount of name-calling can change the past. Please, feel free to present your case in the most logical manner you are capable of. But do not degrade the choices others make, for they are every bit as valid as yours. That is the nature of freewill and choice.

But I could be wrong.

I rarely post in most koolaid threads. This has to do with not taking the time to talk to people like you, which is to say newfags that are being idiots, rather than anything substantial.

Do carry on, you're only the what, fifth generation of sheepsies to the slaughter.

Totally wrong.
Since they produce in-house the chips, they can cut a huge part of the costs you would have if you were ordering the hardware from there.
Also, electricity is much cheaper there.
So, BS.

No really, do you drink a bottle of wine then come troll the forums?

Shouldn't you be trolling the official AM thread?

You know most have read your bull there and pay no mind to you (you stopped coming after you made blatant hater predictions that ended up being wrong?). I really shouldn't bother, but...

It's directly relevant because the person to which he responded basis his calculations on BFL, Avalon, Bitfury, KnC, and 100TH all shipping and coming online so quick that AM can't maintain 20-25% network share. If X if BFL, then X sucks, and X is not shipping shit close to their estimate, therefore Y is AM, and AM has a proven track record on estimates and delivery, and based on Y's estimates, it can keep up X's actual delivery record.

Mabsark says AM needs 6500 TH/s. At 20%, that's an additional 32500 TH/s by October (ha!).

I don't know where he gets his fantasy numbers, but one thing is he seems to be calculating an AM share purely as a mining bond, which it is not. Reading what the manufacturers estimate, it's 1200 TH by October, but even that is laughable. If it were 1200 TH, AM would only need to put up 270 TH to maintain 20%. Which based on their track record, they seem fully capable of doing, unlike every other single one.

BFL: delayed (string along ponzi crap, sell product X pre-orders, delay, sell product Y pre-orders, ship some of product X, delay, sell product Z pre-orders).
Avalon: delayed and mining with your shit (so that's already part of the current network hash rate).
Bitfury: delayed and don't know they work.
KnC: canceled mars and expensive and who knows how fast they can manufacture those things.

MPOE-PR, newguy05, Mabsark, return to this thread in October for a learning experience.

This "X sucks therefore Y" nonsense....

stages of childhood:
1. Find out Santa Clause isn't real, cry, move on
2. Find out BFL isn't real, cry, move on

It's okay, kid.. some day you'll grow up to be big like us

Maybe not 2 weeks, but some day others will enter, so to dismiss that fact is equally foolish as the OP saying we're all fools for owning ASICMINER shares.

Sure they do...two weeks, right?

You are absolutely right... as long as we assume every other player meets their targets and AM decides to not make any more hardware after their current batch arrives.  Good luck with your assumptions.

You are totally uninformed about ASICMINER. The company (friedcat/Bitfountain/ASICMINER) has already invested heavily in next generation ASICs. They have been extremely open about how much has been and will be spent on developing and deploying next gen devices, and what their expected hashrate will be.

Either you are just trying to spread FUD, our can't tell a well-run and extremely transparent business from a ponzi scheme... either way that's almost ignore button territory.

This exactly. It's amazing and a little scary that people who don't understand the basics are actually investing their own money.

ASICMINER has already been one of the best investments in the history of mankind, and there is the potential for it to increase in value ten or 20 times again within a year... yeah us investors must really be NUTS.

I understand if you compare to a normal high dividend paying stock such as a reit etf that returns 6% a year this sounds like a great return currently as everyone who responded to my original post keep pointing out.

Lets even ignore reality and put aside the fact this is just a guy in the basement paying you whatever he wants and could disappear tomorrow and it doesnt even have a legal binding contract holding the person liable or backed by a us-based llc. Lets assume this is legit triple A rated corp that will not disappear, and freidcat is the most honorable man in the world who returns 100% of the profit to the share holders.

Even with those assumptions if you just look at the term structure, there is a static pool of hash power which generates btc and they are distributed to the share holders. If the difficulty increases as it has, the payout becomes less & less. Then the argument becomes new hardware will be added to counter that, so where do you guys think the $$ for the new hardware will come from? friedcat is not going to pay for those hardware out of his own pocket just so you can maintain your payout, only way to pay the new hardware will be from the dividend which means all share holder will take a hit to maintain their future income, rinse and repeat as difficulty continues to rise. It's a zero sum game without a winner aka ponzi, as the cash flow (or in this case btc flow will always be negative)

This is not rocket science, it's no different than mining on your own but forced to pay a dividend each week to your brother who gave you the money to buy the hardware initially...as difficulty continue to raise.

The bottom line is, the share holders are betting friedcat will be able to hold this up for at least 17 months to breakeven, then however much longer this operation lasts will be profit. Noone knows exactly how much income freidcat is actually getting, i am hoping he's getting significantly more income per share than the dividend paid, so he can maintain this 0.02 payout without much effort as difficulty continue to increase.  

Truly a game of musical chairs, and the last one left standing is the ...?

I suppose not everyone has hundreds or thousands of dollars to spend on such equipment.

I just bought $9 worth of mining shares with some BTC I wasn't using, I might only be making 3 cents a day, but thats 3c I didn't have this morning!

 

sorry to be rude, but let the mob doing same mistakes around anyway, I think short term is AM good choice and we will see later. It is better to have coins making new coins then just sit in some wallet and wait for capital appreciation. Graham is dead, I am not so much into conservative investing, prefer risky leveraged ETF trading for oil and silver

its not a direct comparison into buying mining hardware vs getting weekly dividends


you are missing the point that shareholders get huge weekly dividends which is an anomaly, yet ASICMiner does actually sell things and do things which people can verify up to an extent and are comfortable with


other assets dont offer that, anywhere across any markets

I find the certitude some posters display to be quite disturbing. There are a multitude of variables at play here when attempting to perform a reasonable analysis of the potential returns of the various available bitcoin investments. Most of those discussing this are limiting themselves to just a few, and by doing so provide themselves (and others) with projections of limited value.

The effects of the entire bitcoin ecosystem must be considered, and this of course also includes the fiat conversion rate of bitcoins. I find it odd that this particular variable gets ignored repeatedly, so perhaps it is worth exploring this aspect. Obviously many of the associated costs of mining and of hardware sales must be performed after a conversion to fiat. It is unlikely that Friedcat pays for the electricity in his farm directly with btc, nor does BFL pay their labor costs in btc. It should be safe to state that currently nearly all of those associated costs require a conversion to fiat. If one were to consider the values ONLY AT THE TIME OF CONVERSION you get an extremely different narrative. Imagine the following scenario:

Joe GPU is mining btc at home. He is making 1 btc per day. At $100/btc he makes $100/day.The difficulty doubles. Joe is sad, because now he finds that he is only mining 0.5 per day, for $50/day. But Joe does not need the money at the moment, so it just keeps going into his wallet. The difficulty doubles again. Joe is really pissed. Now it is only $25/day. You would assume at some point that eventually Joe's electricity cost would exceed his btc income, and then Joe will go extinct. All things being equal, you would be right. But all things are not equal. After all of these months of mining, the fiat conversion rate for btc has changed repeatedly. Suppose it is $500/btc when he is mining .02 btc /day. Amazingly, not only is Joe earning exactly the same amount (in fiat terms) as he was when he started, but the fiat value of his wallet has exploded in that timeframe. Miners who were running a GPU farms last year when the difficulties were low and the fiat value of a btc was $2 have seen this to be all too true.

Right now this scenario is being temporarily derailed by two factors, both related to ASICs. The first factor is the number of ASICs coming on line in a short time frame is causing btc to be mined at a rate higher than 6 blocks per hour. Although subsequent difficulty increases will stabilize the rate, the current supply glut is driving down the btc conversion rate driving down profits. This imbalance will inevitably self-correct with obvious consequences. The second factor is a desire by many miners to convert btc from ASIC mining to recoup the costs of the newly-delivered rigs in fiat form. Once these costs have been recouped, many miners will be more inclined to keep larger and larger potions of their btc in btc form, or to spend it within the btc ecosystem. Once the ASIC destabilization has corrected, the system should return Joe GPU (and now Mary ASIC) to the scenario above, wherein rising fiat conversions and rising difficulty rates work in sync to ensure stable mining rates (in fiat terms).

We have seen this relationship from another angle, that being the increase of share price (in btc) of ASICminer. In effect, we are all suffering from the Red Queen Syndrome when you look at it considering most of the variables. Miners are (in general) running as fast as they can just to stay where they already are. So are the investors in ASICminer. You may purchase a share of ASIC miner today for 3.0btc, which is $300 fiat. If in a year you may find yourself at a value of 3.0 btc, but a fiat value of $3000, with weekly dividends the same size today as measured in btc, but with a fiat value in excess of $100. Friedcat need only play the Red Queen in an environment of rising difficulty and rising fiat values, he needs only to maintain his share as the system grows and btc ecosystem expands. If you believe he can do so, then there is probably no better investment for btc at this time. But even if you believe he cannot, it is likely still a better investment than just sitting on coins or purchasing gear yourself.

No, you are talking nonsense because you haven't followed the conversation. The conversation was about dividends from hardware sales decreasing. So, selling out is completely irrelevant. The amount of hardware AM has for sale is limited. That is a fact. They have a limited number of USB miners and any other hardware sales come out of the mining operation, so they only sell what they no longer want. How many Blades did AM sell?

In AM and AMC. I'm just not fooling myself about AM though.

Get your articles right, they're important.

You are talking nonsense.

Unless you sold out and you are not able to produce more units, lowering the price might increase the profit.

So it's x and y and you are terribly misguided.

refer to #2.

Instead of BTC lets think in $'s for a moment. If there was an investment that you could put $50k into and it yields $3k a month...would that not be a sick yield? Yes..it would. So much so that the share price would run up at least 300% to bring down the yield a bit..still accounting for risk.

This is why people are buying ASICMINER...and we don't have to worry about our shiny new ASICS that become obsolete in 2 months

Great, so how will you be investing?

Exact dates of delivery are irrelevant, what's relevant is the fact that AM now have competition and that competition will be bringing online just as much, if not more, hashing power. Because of this, they cannot maintain their current share of the network.

The quantity available for sale is limited, so it is x and x.

sound like a sound investment

What this list shows is that BFL has delivered 130 of 4,085 orders, all only the Jalapenos.  The most recent order they delivered was placed August 14, 2012 - fully 10 months ago, and there remain as many unfulfilled orders from before then as they have filled.  Anyone buying a BFL machine now has almost 4000 people in line ahead of them in a line up that moves at about one person every other day.  We're looking at 30 years at the current delivery rate to get through that.  Maybe BFL will get their act in order, but so far it's promises that for the most part haven't delivered. 

If I could get mining power at BFL's prices I'd for sure invest in that over Asicminer, for the reason you cite, but these cannot be had.

Remember a $250 order for a BFL device a year ago is $250 sitting idle hoping for delivery, whereas a $250 investment in Asicminer last week has paid a dividend of over $3, and has had capital appreciation of about $25.  If you go back a whole year it's clear that Asicminer has been a profoundly better investment than waiting for Godot/BFL.

You little nit-picker!

Everyone knows that 10 apples (ASICs mining) are the same as 10 oranges (ASICs promised at some future date).

Your numbers are missing exact dates of delivery, the most pertinent detail.

Except it's not x and x, it's x and y. When cost goes down, quantity sold goes up.

The AM numbers come from Friedcat (initial wafer - 50 Th/s, second wafer - 200 TH/s).
The Avalon numbers come from 1500 63 GH/s units and 500,000 chip sales as reported by Yifu.
The BFL numbers come from this unofficial pre-order list.
The BitFury number come from 100TH.
The KnC number come from the 500 pre-order units.

This is the reality. You can pretend it isn't as much as you want, but it won't change the facts, it'll just lead to you making poor decisions.

So, let me get this straight. Friedcat has already told you that the price of hardware will be getting slashed, and you don't think that will cause a decrease in dividends from hardware sales?

Which is the bigger value, x*10 or x*20?

That's because those numbers are common knowledge.

hard to imagine i know ..... but not everyone here has the technical ability or cheap enough electricity to support the network. Perhaps another way to help strengthen it, would be to invest in trustworthy mining companies doing just that???

Some people pay several thousand dollars just to be able to trade on an online stock exchange. 

You forget that if you buy a Block Eruptor today you get 336 Mh/s in three days. If you order a Jalapeno today you will likely get it at the end of the year or next year.

336 Mh/s next week will make you more money than 5 Gh/s next year with increased difficulty.

The only people who get their Jalapeno's now are people who ordered last year.

ASICMINER can charge what they charge because they have no serious competition NOW for new customers!

Pretty early in the day to be drinking.

That said, I can't help but feel that BTC3 shares should come with a free pair of fireproof gloves.

Yeah well, people like to belong in a crowd more than anything else. A few hundred bucks is a small price to pay.

LOOOOOOOOOOOOOOOOOOOOL

So funny, thank you.

Claims have no bearing on reality.

You're not living in reality, are you?

Based on reality, AM is the only one with accurate estimates, so really that's more like AM will account for about 80% of the network share. You know, except, they need to hold back.

BFL, Avalon, and Bitfury *have all been delayed*

LOL, dude, friedcat already announced price cuts on his hardware (blades).

He can just keep doing this.

Create good shit, *actually ship good shit in a timely manner* and cut the prices when necessary until he creates more good shit.

Mabsark knows all the numbers before they happen!  Incredible! 

Because compared to BFL they offer extremely poor value (Mh/s per BTC). Why pay 1.99 BTC for 336 Mh/s, when you can buy 5 Gh/s for 3 BTC? Why buy 10 Gh/s for 50 BTC when you can get 50 Gh/s for 25 BTC?

Whatever happens, you're looking at reduced prices due to competition, leading to a decrease in income from hardware sales. The fact that their is competition will mean that the competition will capture network share from AM, making it harder for them to capture 30% of the network even if they wanted to. AM have purchased 50 TH/s already and have 200 TH/s incoming over the next few months. That's 250 Th/s maximum. Avalon also have about 250 Th/s from chips and the 3 batches, whereas BFL have almost 400 Th/s incoming according to that unofficial pre-order list.

With the competition set to match or beat AM's hashing power, they're not going to be selling as much hardware or their network share will slip further behind. The hardware they do sell will have to be sold for competitive prices. Both of those factors will reduce the dividends from selling hardware.

Me too.  As they keep on growing, one day I'll be able to get a whole share with it.

I love my poor man's TAT.ASICMINER 

Why is this obvious?

What you are saying is that the market leader in hardware sales is less likely to be competitive in future sales than newcomers?

BFL 5 GH/s = $274
18 Mh/s per USD
1.8 Gh/s per BTC @ 100 USD/BTC

1 AM share costs more than 2.74 BTC at the moment and the exchange rate is at 100 USD/BTC. Assuming that AM was at 2.74 BTC per share, then 1 share would need to provide 5 Gh/s in order to offer the same value as a 5 Gh/s BFL. At 5 Gh/s per share, AM would need a hashrate of 5 Gh/s/share * 400, 000 shares = 2,000 Th/s.

People claiming that AM continuously adding hashing power is a reason why share prices are currently undervalued need to take a serious look at the numbers. With a share price of 2.74 BTC, AM needs a hash rate of 2,000 Th/s in order to be competitive with a 5 Gh/s BFL. Their initial wafer order was for 50 Th/s. The current wafer order is for 200 TH/s in two parts. These should be coming online over the next couple of months. That's a maximum of 250 Th/s.

With the rate at which BFL is dispatching back orders, they should be shipping from the shelf by the time AM bring that 250 Th/s online. Going by this site's numbers, BFL have about 400 Th/s to bring online.

Avalon's 3 batches should be online by then as well, which is another 100 Th/s. Avalon chips should be shipping by then as well, so we'll see a number of new mining systems based on them. That's another 150 Th/s. 100 Th/s should come online in July and August from 100TH and 50 Th/s should come online from Metabank in August and September. In September and October, KnC should also be bringing 200 Th/s online.

The next gen chips from Avalon and AM are due in October and Yifu said said that Avalon would be using 55 nm. The BitFury chips used by 100TH and Metabank are also 55 nm and I'd assume AM will also be 55 nm. At this point, most of the hashing power will be coming from BFL products, and Avalon and AM having a similar amount at around 250 Th/s. BitFury and KnC should also have similar amounts at around 200 Th/s.

AM needs 2,000 Th/s to be competitive with a 5 Gh/s BFL, to be competitive with a Metabank BitFury 120, we have the following:

Metabank BitFury 120
120 Gh/s
2160 USD
55.556 Mh/s per USD
5.556 Gh/s per BTC

ASICMINER
6,500 Th/s
400,000 shares
16.25 Gh/s per share
2.93 BTC per share
5.556 Gh/s per BTC

It truly boggles my mind how anyone could believe that ASICMINER is undervalued.

The other thing to keep in mind is that not everybody has 50 BTC to spend on a miner.  I personally don't even have enough to buy a full ASICMiner share, but my TAT.ASICMiner is affordable.  In the few weeks that I've held it, I've received enough in dividends to buy another share.  I'll be buying another share next week.

Last week was ~0.017 from hashing, ~0.02 from hardware sales.

1) SEC Oversight:
Enron...
Worldcom...
Bernie Madoff...

2) "proper financial reporting"
I love getting reports from ASICMiner every week or two, and dividends every week. In the absence of a thick stack of regulations, information seems to flow much more freely and frequently.

3) "Just some guy...with a spreadsheet"
Ultimately, that's what everything is. Your point here amounts to double-counting SEC-oversight as two separate points.


To your implied point about risk/trust, yes, bottom line, investors DO have to trust the operators of ASICMiner. Why do we trust them? Well, history to date, both of terms of operational performance and meeting their word every step of the way. Note that in any investment where you hand your money over to someone else, you have to trust them to some extent. Yes, it's harder to get away with massive fraud in an SEC-regulated company, but I consider the upside to ASICMiner to far outweigh the risks. The PE and Div yield on ASICMiner crush anything in the traditional stock market. I've evaluated the risks, and I think it's a clear buy for a fraction of my portfolio.

I will gladly pay 2.9 Bitcoins for a chance (and a good one IMO) to receive dividend payments for the rest of my life. There is no doubt that the shares will pay for themselves many times over as long as Asicminer stays in business long enough. The question is how much you believe in them, but up to now I have seen only positive growth which I think has exceeded everyone's expectations.

I see that lol

I see, so most of you buying those shares are considering this similar to buying stocks in a publicly listed company with sec oversight and proper financial reporting, you are assuming you really own part of the asic miner "company" and all profits made by the "company" are reinvested in growth and shared among its share holders. And this is not just some guy in a basement with a spreadsheet that has your name on it and decide what he wants to pay you each week...

Ok now it's clear, i just couldnt figure out why people are buying those "shares".


It was a question, no need to be rude. Well aware of what value investing is, i work in the capital markets for a living. Maybe you should ask graham what he thinks about paying $250 for an asic miner "share"

I am good with 0.02X range. I went in at around 1.6 (now 3BTC) hoping for consistent .02 range. Needless to say, I've been pleased. 

I think it's going to break BTC3.0 Tuesday night before dividends and then drop quite a bit back down. To maybe 2.7. Hardware sales have sold out so I assume the dividend should be reduced. Maybe in the 0.02X range.

I love AsicMiner, but @2.9btc I think it is overpriced. Thats 1,200,000 btc for the whole company!!
And bitcoin changes really fast, you don't know what is going to happen. This starts to remember me before the bitcoin crash at @266$ all the people was greedy like now and just speaking how rich they're going to be.

I would counter that anyone selling Asicminer shares at the moment is insane. I bought in a few months ago and the share price has more than doubled. I don't see any reason why the share value shouldn't increase more. The thing most people are missing is that the shares never expire, so unless Bitcoin dies or Asicminer goes out of business, you will get paid the dividends until all coins have been mined which will definitely not be anytime in the near future.

there is a book called Intelligent Investor by Benjamin Graham... or Security analysis. Try before you write something, ehm, stupid

Your looking at this completely wrong.  Your comparing apples and oranges.  When you buy shares of a company on the stock market, I dont know anyone that asks how long until the dividends completely repay the investment 100%.  The shares alone hold the value.

You are not considering the capital appreciation if the share prices rises, which it most likely will.  At any time you can sell back the shares and get the initial investment (and more) back so you dont have to sweat "breaking even"

For a piece of hardware however you do look at it that way... You want to know how long until you repay the initial investment because you are not able to sell the hardware down the line at the price you paid for it.  13 gh a month does not get 12 BTC either.  The way that hashing is increasing, you will be lucky to break even in a year.  

 

Canada Savings Bonds: 1% return per year
High-interest savings account: 2-3% per year
Average stock portfolio: 9% return per year
ASICM shares: 60% return per year (@ BTC3)

what you seem to be missing here is the fact that you can sell your shares.

it's not a "17 month breakeven", it's DOUBLING YOUR INVESTMENT IN 17 MONTHS.

at the end of that 17 months, you have earned BTC2.5 in dividends, and you also have a share that's hopefully worth BTC2.5 or more.

only on bitcointalk will you find someone who says a stock with a 60% return is a terrible deal. i wonder what qualifies as a good deal?

you're missing the fact that you still have the value of the shares at the end.

if you buy a miner, you've lost that money (or it will depreciate in value until it is gone) and your hash rate is fixed - with an asic miner share, it can go up, (or down), and the hash rate you get will change upwards over time as they deploy new hardware.

if you buy ASIC hardware, you are fighting difficulty for a year without any chance of increasing your hashrate.  You would be right if difficulty was always going to be constant, but it's not.  Friedcat has a lot of money available to advance his technology, so he has the ability to fight a steep difficulty incline.  In 6 months, your hardware could be garbage as the 2nd generation of ASICS are ruling the network, then you will wish you had AM shares..

A weekly dividend of more than 1% is very good.
And if the performance continues like it is, the shares will probably increase in price.
So bottom line: good investment.

the only valid explanation i heard is that you also get one-off dividends from hardware sales...so let me ask how much have you "shareholders" actually received per share for the hardware sales so far?

I never got an answer. Just some first grade math here:

1) 2.5 BTC per share -> 0.036 weekly dividend = 0.145 btc a month = 17 month breakeven
2) 50 BTC (20 shares) = 3 btc a month
3) 50 BTC buys you a 13 GH asic card = 12 BTC a month  (factor in whatever difficulty increase it is still significantly better income, and keep in mind the mining shares dividend are also impacted by the difficulty increase).

So i really dont understand why anyone will buy asic shares? what is the point? the return on those are terrible, on top of absolutely insane counterparty risk dependent on some guy who is running a black box that tells you what dividend he will pay. 

Why would you not just have a physical card you own with no dependency on third party and make significantly more btc as income?  Yet so many smart people are buying those shares...there must be something i am missing?

waiting to be enlightened...