Quote from: Auburn on February 16, 2014, 09:34:45 PM

Hello:

Another newbie question:

You consistently inform us that the value of B.SELL falls by exactly the amount of the B.SELL dividend paid on the difficulty change date. I see that its market price fluctuates, as one would expect. But how do B.SELL holders make any profit if its value only falls and never rises? For example, if the issuing price is 0.12 and if dividends are exactly 0.02 each period, in 6 periods SELL would become worthless, and I presume its market price would then approach zero. What am I missing here? Obviously some of the NAV/unit for B.EXCH must be transferred from B.MINE shares (if B.MINE holders make a poor bet) to B.SELL shares, but how?

Many thanks!

There are four main ways with which you can earn BTC via trading/holding BDD shares. One of those ways to get SELL for less than will be paid out to it in dividends (the same is actually true with MINE).

Both MINE and SELL will go to about zero over time, at which time either MINE or both MINE and SELL will be issued their final dividends and be repurchased by the fund. MINE has a minimum threshold, but that value is very small compared to the trading price at this time. MINE will be paid out based on the Difficulty and the dividend formula. SELL gets dividends when there is excess capital in the fund that it no longer needed on hand to pay MINE dividends.

Basically, all of the fund's capital on hand will be paid out over time to MINE and SELL - if you purchase a SELL share and you, over time, are paid out more in dividends than you purchased the share for, you will earn BTC. The same holds true with MINE, if you get it at a price under the amount that it will pay out over time, you've come out net positive.

The trick here, of course, is to estimate how the Difficulty will change and adjust your estimates over time, as necessary.

Quote from: redmetal on February 17, 2014, 01:11:18 AM

It seems the dividend for sell will be 0.0237 Grin

Yes, based on the NAV/U from Noon today, the SELL dividend would be ~0.0237 - the actual dividend will be a bit higher due to new sales of EXCH. Glad to see someone doing the math on it