Quote from: Another User on June 03, 2014, 05:42:38 PM

Quote from: minerpumpkin on June 03, 2014, 03:18:51 PM

I used to be very bullish as well, but do acknowledge that the expectations and numbers from January (0.35J/GH/s, March delivery, weaker competition) need to be re-evaluated. I invite you to present a calculation based on those new premises.

An excellent idea because what happening here is that you are lowering the numbers of profit margins (which is fair) but keeping the costs at a fixed amount (which is not always true). Production costs for wafers/chips, at a general understanding, decreases overtime on older, larger die sizes AND varies on the quantity produced. As quoted from a previous friedcat post, the going rate was "<$0.2/GH" at the time (Nov '13) and aimed for March '14 delivery. If the "costs" go down, the savings can be passed on the buyers via a lower rate and providing incentives for more purchases.

True, the costs of producing the chips are declining as well, sure! But: The difficulty and competition are ramping up on a much higher pace. You can run from a train, sure, but you'll only gain a few meters. We don't know whether the price of $0.2 was indeed for November '13 or the planned production in early '14. Anyways, 40nm technology isn't cutting edge anymore and I highly doubt the cost per GH/s will retract below $0.15 in the following months or even next year. It'll prolong the viability a bit, sure - but I assume this really is negligible.

Quote from: Another User on June 03, 2014, 05:42:38 PM

It has been stated that chip sales will continue until it was more profitable to mine and resources would be adjusted accordingly. Now, if the margins have dropped due to various mentioned reasons, wouldn't the mining start already and the sales stopped?

No, of course selling hasn't stopped. It is still the best way to go. I never said gen 3 wasn't viable, it just seems not as viable as we all (including myself) hoped for.

Quote from: Another User on June 03, 2014, 05:42:38 PM

Because it's too much fun, I'll humor your scenario: Let's say that the production costs are fixed at the $0.2 a GH, as you say, and they decide to continue flooding the market with decreasing profit margins in the coming months. That then eliminates any potential franchisees with such a high network rate (wasted funds on immersion cooling Cry

)and any revenue from self-mining (no moar GH/s for me? Sad

). At this going rate, chip production can't continue and AM is bankrupt before Gen4 can even begin (about Aug/Sept '14 in this scenario). GG Bitfury & Spondoolies. But hey, you're right: it's not a pretty picture when you're using estimated Nov '13 costs with estimated April/May '14 profit margins.

Self-mining, franchised mining etc. makes only sense when we can't sell chips anymore. The turnaround time for selling chips is much faster. Every KH/s used for mining instead of selling chips (as long as it's profitable) is a KH/s wasted. I do agree though, that mining is good thing, as it festers independence and a continuing stream of income. But effectively it means less income/dividends.

Quote from: Another User on June 03, 2014, 05:42:38 PM

I would dump my shares too if friedcat was that short-sighted.

Well I guess he just ran into too many problems (delays, surprise power consumption, competitors) and additionally the expectations from gen 1 (6x returns, 4 BTC share price) were way too high. FC didn't do it on purpose (Hanlon's Razor) but I also assume that it was just bad luck, rather than stupidity or negligence. I do think FC is pretty smart!

Quote from: Another User on June 03, 2014, 05:42:38 PM

Now the question we are all wondering now is what has been the production costs of April & May and will be in June & July. We're not going to get an answer to that but it is safe to extrapolate here that if they can afford to have lower prices, it is due to the lower production cost. Otherwise friedcat = big dummy.

Indeed! A very very valid question! But I don't think that they're below $0.15/GH/s anytime soon, and thus only negligibly smaller. Feel free to re-run the numbers!

Quote from: Another User on June 03, 2014, 05:42:38 PM

Don't get me wrong, I get what you're doing and I'm picking up the cheap shares as well Wink

Actually, I've decreased my position dramatically for the time being. AM is still viable, but won't be able to issue dividends as high as people around here still expect (I was very disappointed as well, believe me!).