We invested in AM to invest in a company that produces ASIC miners to mine bitcoins. I want my bitcoins to fund MINING. If I wanted to invest in an exchange, then I would have invested in an exchange.
There is a direct logical contradiction to claiming that AM is a "growth company" and that bitcoin mining suffers from the tragedy of the commons. I see that thinking is difficult for you, so I will break it down:
A growth company is a company with rapidly expending revenues and rapidly expanding costs. Every dollar invested will return more than a dollar but not immediately. As a result a growth company typically requires additional capital and cannot pay out dividends. If bitcoin mining truly suffers from the tragedy of the commons, then each dollar invested will return less than one dollar. In this situation no mining company could possibly be a growth company.
AM's revenue is very much capped by bitcoin's scheduled release and the demand for bitcoin mining hardware. As a result AM has likely come close or already achieved to its maximum revenue (revenue is not equal to profit). Revenues may very well slowly decline or stagnate but that is fine.
Investing in 130 nm devices to invest in bitcoin mining was an AMAZING investment when AM launched. It was genius and the shareholders profited enormously. That is no longer the situation and AM has to operate in a changing industry.
By the way, bitcoin mining is not even close to a "tragedy of the commons" situation. Tragedy of the commons also doesn't really apply when the resource cannot be exhausted. You are mis-applying the concept but I understand your point so I originally ignored this point.
AM fit the description of a company with "rapidly expanding revenues and rapidly expanding costs" up until very recently, did it not? Its decision to pidgeonhole itself into mining, pursuing a fixed number of bitcoins with a growing amount of competition, is why it has ceased growing, despite the fact that it is valued like the growth company it so recently was.
Growth companies are supposed to grow. AM is the first "growth" company I have ever seen that has managed to shrink its revenue. I only consider it a growth company because it is priced like one.
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It IS dissapointing. What if Microsoft or Apple had gotten to 5x their IPO, then said "OK, we made our shareholders happy!", converted to 100% dividends, and stopped growing?
The generated cashflow of a company is tightly connected to the utility of the products they offer. In case of mining, it's likely the expected nominal yield of the hardware. However, the economics of mining is still not settled. It can range from profit mining to subsistence mining to defensive mining. Defensive mining results from an environment where the utility of mining is not capped by the nominal yield, but by he ability to govern the bitcoin. In such an environment the utility of the produced hardware is greater than the expected nominal yield and should allow companies to demand a higher price than the naive economic calculus would suggest.
I sympathize with your sentiment that it would be disappointing if a growth company would stop to innovate. For that reason it is important for ASICMINER to closely watch the needs of the mining community and respond in a timely manner. As far as Microsoft and Apple goes, they pursued very different strategies and were blessed with the necessary luck. Unfortunately there is no standard recipe for entrepreneurial success, except to be responsive. That said - what do you think would be the next big move for a company like ASICMINER?
This is a great question, and I don't have
the answer, just ideas.
My hypothetical vision of the most valuable company in Bitcoin-land is not
just a mining company, but instead a company that really capitalizes on Bitcoin as a PLATFORM instead of a currency - for example, enabling USD->BTC->USD transactions for significantly less than credit card fees. Then we are talking about a company with the potential to be worth many billions USD, AND with the potential to create miner fees that will help synergistically fuel its mining business. Why sit around and wait for transaction fees that may not materialize before your competition erodes all your market share - why not create the infrastructure to make Bitcoin accessible to the wider market?
In order to establish this kind of business, there are a lot of core components - a trusted currency exchange, a bitcoin bank, a USD-denominated Bitcoin wallet.
Who is more trusted and better funded to have done all this than AM?