Are the Gigamining shares going to bounce back up in price? I just don't get it, unless I am missing something. I don't see any other security on GLBSE dropping so fast, that is the part that I don't understand. Is this all just continued effect from the Pirate40 scandal??
That was my first thought, but if Gigamining is a solid operation (which I believe it is), then its share price should recover, it should not continue plummeting. So my question is this, what is the psychological effect that is causing people to sell instead of buy? Gigamining pays outstaning dividends (though the yield is dropping slowly) so why aren't people snapping it up like candy? The price is based on demand, not on difficulty, correct?
The market, where able and willing buyers and sellers meet, will determine whether the price bounces back up or continues to fall.
Perhaps you have not done adequate due diligence as there are several reasons not discussed so far that could be causing the decline.
One reason is Gigavps has, with the buyback clause, a call option on bonds which acts like a short position. The lower the price goes the smaller his contingent liability. Consequently, there is tremendous financial incentive for him to drive the price down, even to worthless, and then execute the buyback clause to extinguish his liability.
Default is the failure to pay in full on time as agreed. A
second reason is the market may be beginning to price in a default which would go to your premise of whether Gigamining is a solid operation.
I
raised some questions to Gigavps previously about the financial condition of the GIGAMINING venture.
From his answers we are to understand there is
(1) 160Gh/s mining on GPUMax at 114% PPS (
Pirate's related pool which appears to have some problems).
(2) The 160Gh/s has been paid for and so has the upgrade which has not been delivered, So there is counter-party and performance risk with BFL along with the ability to actually deliver the product as represented and on time.
(3) We do not know Gigavps's expenses with running the mining equipment such as electricity, rent, insurance (if any), etc.
(4) We do know that some funds 'from the gigamining offerings were used to fund [Gigavps's] BTCST account.
Since there are only 160Gh/s of equipment producing at about 182.4Gh/s at 100% PPS, additional expenses and 200Gh/s at 100% PPS liability we can deduce that Gigavps's mining production capacity is in
deficit of about 18.6Gh/s to liability without accounting for electricity, rent, etc. Based on current difficulty and exchange rates this amounts to about $500+ of negative cash flow per week only taking into account the production deficit.
When asked how many bitcoins Gigavps has in his personal possession the response was 'I have spare coins to cover any short falls in the foreseeable future."
So the critical question is: How long can Gigavps continue to in full on time as agreed?
If the price rises then it indicates the market believes the 'foreseeable future' has a longer duration. As the price declines it indicates the market believes the 'foreseeable future' has a shorter duration.
The great thing about the market is those who correctly calculate profit and those who do not realize a loss.
I have no agreement, understanding or even communication with Gigavps about executing the buyback clause.
ANY BONDS TO BORROW?Nevertheless, I am considering taking a short position of about 1,000 to 2,000 units in GIGAMINING. If anyone is willing to lend them then please PM me so we can work something out similar to
ciuciu's short contract. I can easily provide sufficient collateral.