Post
Topic
Board Securities
Re: [BitFunder] [TAT.VIRTUALMINE] Virtual Mining - Hash Without Hardware!
by
jjdub7
on 14/06/2013, 10:11:40 UTC
I'm confused.. how do these dividends pay more than ASICMINER dividends if they are BACKED by AM shares?  Shouldn't they be the same?

For the cost of 1 asicminer you get ~385 virtualmine. 1 share Asicminer div is ~0.036 a week. 1 share Virtualmine is 0.00003223 a day. I'm sure I don't have to spell it out for you. Virtualmine is ~2.4x more a week. If you're look solely on dividends virtualmine is undervalue compare to asicminer.

You can't compare the VM bonds to AM shares in the same way because TAT's VM is functionally a loan with repayment terms dictated by the contract, while AM's output is measured against the company hashrate.  In short - TAT chose what coupon rate to pay his bondholders ahead of time in a forward contract while AM's running dividend is determined by the week's block output.

This is why you can't make an apples-to-apples comparison of bonds and stocks.  One is an equity whose returns are determined by market production/mining conditions and the other is simply a non-expiring forward contract.  The VM bonds aren't 'backed' by TAT's AM shares; the AM shares are just the course of revenue he's using to pay the bondholders.  The bondholders only have a claim to the equity in the AM shares if TAT's cash flows hit zero and he's forced to sell AM shares to pay his contract-mandated coupons.