Quote from: VinceSamios on May 21, 2014, 06:35:15 AM

Quote from: MaxwellsDemon on May 20, 2014, 04:23:40 PM

Quote from: maqifrnswa on May 19, 2014, 11:14:18 PM

Quote from: grnbrg on May 19, 2014, 07:16:15 PM

Quote from: well.attenuated on May 19, 2014, 03:04:31 PM

Are fresh contracts being sold yet or are they still only available in the trading thread? If so what is the current asking price / 100mH from LabRat?

EDIT: changed wording to contracts

If for some reason you wanted to buy direct from LRM, I can certainly get a price for you. It is highly unlikely to be better than the price you can get in the trading thread, though. The current lowest selling price there is 0.006BTC per 100MH/s contract.

grnbrg.

If this is true, labrat should be using LRM funds to buy existing contracts. What you just said means that it is more expensive to go buy new hashrate than it is for LRM to consolidate existing hashrate.

This is a good point, but it assumes that the price Labrat charges for issuing new 100 MH/s contracts is identical to what it costs him to buy 100 MH/s worth of hardware. He could be overcharging when issuing new contracts, which could actually be good for existing contract holders.

dudes this is clearly what is happening...

Contracts are selling for £30/gh, LabRat can buy hardware probably under $1/gh at this point. The bonds are priced as they are because that is what the market has decided is a fair price based on the bonuses that have been paid.

Vince is exactly correct, which is more evidence for my point that LRM should NOT sell shares above market value if they actually want to sell contracts.

Offering contracts above market is a bad business decision and shows zach did not learn from his mistake the last time he tried it. I have no problem with bonds being valued at what they are valued, and it is possible LRM can buy at $1/gh/s. He still should not offer contracts for sale above market value because no rational investor will buy them for two reasons:
(1) As MaxwellsDemon pointed out, the marginal gain in equity (buying power, whatever) from an investor purchasing shares over market is diluted by the outstanding shares, so the purchaser is basically donating money to the other shareholders. Why would I do that when I can get the exact same thing from buying on the open market and not give money to other shareholders? Also, Vince pointed out that LR can buy hardware for cheap, so LRM does not need to price contracts above market rates in order to purchase hardware. Offering at market minus 10% will sell significantly more shares than market + 10%, and raise more money for purchasing hardware than market plus 10%. (in theory, infinitely more money)

(2) nothing in the sales contract says that premiums from sale go to new hardware for contract holders, it's possible that it's pure profit, or buys hardware for LR himself. Cheaper, existing contracts, are "safer" than possibly throwing money away into a blackhole. That's another reason why LR has to offer below market.

This is a simple, no brainer, basic securities management concept. Of course this also assumes rational investors, but bitcoin investors don't always follow rationality. A few fools [1] will purchase above market value, but not enough to make a difference.

[1] http://swombat.com/2013/7/22/friends-family-fools see the section on "fools." sounds familiar?