Quote from: twentyseventy on April 02, 2014, 05:22:18 PM

Quote from: knownothing on April 02, 2014, 04:51:02 PM

will b.sell go up? or is the gamble playing off the down trend? I know i sound stupid. serious question though. i don't understand and got in over my head with this one.

Over the long term, B.SELL will decrease no matter what. This reason for this is that it is matched 'against' B.MINE. If the difficulty continues to increase as it has, there will be excess capital left over after each difficulty period. This capital will be paid out to B.SELL in the form of a dividend. However, the market value of B.SELL decreases by exactly the amount of that dividend - once that dividend is paid, the fund has less capital on hand, so the Net Asset Value of the fund decreases.

If the difficulty stagnates or decreases, the likelihood that all of the fund's capital will be paid out to B.MINE is high, so B.SELL would decrease significantly.

B.SELL is a bet that people will over-pay for B.MINE, which acts as a 5GH/s mining bond - it pays out a certain dividend per day based on the Bitcoin Network Difficulty.

B.SELL may increase over the short term as it becomes more clear what this period's Difficulty Change is going to look like - right now it looks as if the Difficulty is about to increase about 21% in about three days (https://bitcoinwisdom.com/bitcoin/difficulty).

So, likely sometime on Saturday, the Diff will increase to an estimated 6,067,506,227 - let's use this as an example for the below.

So, if the Difficulty increased to exactly, 6,067,506,227 we would need to calculate what B.MINE would be paying out daily.

Using our formula to calculated B.MINE's Daily Dividend, we get:

5 GH/s in hashes per second * 25 BTC per Block * Number of Seconds per day * (Probability Constant that a hash will generate a block / divided by difficulty)

5000000000 * 25 * 86400 * ( ( 65535 / 2^48 ) / 6067506227)

Plug these values in and we get 0.00041442 (round to 8 digits, always round down) (http://www.wolframalpha.com/input/?i=5000000000+*+25+*+86400+*+%28+%28+65535+%2F+2%5E48+%29+%2F+6067506227%29).

So, we know that at that new difficulty B.MINE would pay out .00041442 per Day. The fund is required to keep 200 Days of capital on hand in Reserve, so 200 * .00041442 = .082884

So, the new Reserve is .082884, that's what the fund is required to have on hand.

Right now, the NAV/U (Net Asset Value per Unit) is .09611805 as I just reported. We still have three more days of dividends to pay at the current rate, which is 0.00050221 per day. So, the NAV/U less the dividends to be paid is .09611805 - .00050221 * 3 = .09461142

So, we can estimate that our NAV/U will be .09461142 at the end of the period. To calculate the SELL dividend, just subtract the New Reserve from the estimated NAV/U:
.09461142 - .082884 = .01172742

.01172742 would be the upcoming SELL dividend based on the new Difficulty that we used.

I may have gotten too far into how to calculate the dividend here, but it's a good resource for anyone wondering how to do so.

thanks you twentyseventy, that was very clear for us!