Re: ASICMINER: Entering the Future of ASIC Mining by Inventing It
TLDR; I think they are about to absolutely crush it.
"Guys, where's the money for 0.04 per share gonna come from?"
"Volume!"
Hahahahaha.
"Volume!"
Hahahahaha.
Quoting this for the future.
I do. That's why I'm a buyer again.
Remind me, when were you not a buyer?
Around 4 I was a holder, not a buyer. I'm pretty damn comfortable with 20% annual ROI, but I also have other things I want to invest in.
At 2 btc, its a question of whether Friedcat can mine and sell 5% of the network, and I'm pretty comfortable that he can.
This is an ABSURD statement.
2 BTC/share suggests a company value/market cap of 800k BTC. Typically that means we should see 800k BTC in profit over 10 years (about average for a fairly valued company, factoring in growth).
The block reward will halve to 12.5 in 2016, and again in 2020 to 6.25. Currently there are about 1.3M BTC up for grabs per year. So the potential REVENUE given 5% mining share is around (3 + 4 * .5 + 3 *.25) * 1.3M * 5% = 374k, less than half what we need for fair value.
But we need PROFIT. ASICs cost money to manufacture and take electricity to run. Long term I expect the margins to drop to 20% or below.
If you're gonna give me some crap about "transaction fees" you are not a value investor, you are a speculator. There is no evidence to suggest transaction fees are going to increase to a significant level.
You are ignoring hardware sales, which can increase the bitcoins above what is mined (essentially what ASICMiner is doing right now, making more profit from hardware sales than from mining).
Also, I fully expect transaction fees to become significant. Right now transactions fees are ~0.3-5 btc per block, and I am expecting the number of transactions per second to increase by 2-3 orders of magnitude over the next decade (as anyone who is bullish on bitcoin would). Since the value of BTC also go up, the transaction fees will go down, but not in a way that would equally compensate. Obviously we can't know how that dynamic will play out exactly, but seeing transaction fees adding up to 10-20 BTC per block is entirely reasonable to me.
More to the point, however, is that bitcoin mining hardware is certainly going to be in demand 10 years from now (assuming bitcoin has not died) and so if ASICMiner is still selling hardware then, that might be a very significant source of revenue (above bitcoin mining). Don't start telling me "you can't predict what's going to happen 10 years from now" because that is just what you are doing, and I am suggesting an alternative (and in my opinion more likely) scenario.