Creative, I believe you are one of the most communicative and capable members around here who run a bitcoin mining related company. Unfortunately, I do not believe that simply buying hardware from 3rd parties in an attempt to maintain network percentage can be profitable in the wake of monstrous difficulty increases. Have you ever considered expanding from simply scouring the internet attempting to find cheap 3rd party hardware to actually taking the step in taking part in the manufacture of your own ASICs?
Related to this post, I was wondering what your plans are for the future in terms of keeping the dividends similar to current returns? I'm not really asking "how" you plan on doing it (that's a whole separate task) but more so do intend to keep dividend payouts similar to today's rates? I know there are no guarantees, and I'm not asking for one but it would be nice to know if what you say in your business statement on the site about maintaining shareholder value directly relates to dividend rates. If that's the case, I feel great about investing with your company. We really only need to worry about keeping up with the difficulty, but that's not too hard.
Hi weezerfan. I'd very much like to simply calculate how many avalons we'd need to add on to keep up with difficulty each re-target and go out and source them, but that won't work as we'd eventually go broke. Safeguarding shareholder value is much more than just maintaining a consistent dividend payout. I have to run each and every purchase candidate through my own common sense detector to determine if we're likely to at the very least get our money back out of this gear before I have to unplug it to stop losses from expenses. We're at a crossroad here where those on the cutting edge are transitioning to 2nd gen ASIC equipment and just like the previous major equipment shifts(CPU --> GPU --> FPGA --> ASIC) there's a lot to gain or lose. I believe we have to keep sufficient powder dry so that we can make significant purchases of gen2 gear when it's actually available.
What FMG points out in the post following yours is accurate, but, if we play it smart we don't have to be victimized by the laws of big numbers. Sure while it would take 17 avalons to double our hashrate now, a single cointerra unit would more than double our hashrate in Dec or January. We just have to not shoot ourselves in the foot before we can get there. In between I see potential in bitfury's products for October delivery and possibly knc's products for November delivery to possibly tide us over.
Also I think it's important to keep in mind that while the law of big numbers applies to our hashrate, so too it applies to everyone else's and the global network itself. It's not hard to believe the global network can expand by 3%/day for a few quarters after new technology revolutionizes mining, but the amount of capital required to sustain that growth long term eventually makes it unsustainable unless the exchange rate grows along with it, which in turn would make older less efficient gear profitable longer.
Cheers.