ASICMiner Gen3 Hardware Announcement Sees Muted Market Reaction

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Friedcat, the pseudonymous CEO of ASICMiner, made his first direct announcement in approximately a month last week, offering updates on product sales and upcoming hardware developments. Despite signs of progress towards upgraded hardware for the industrial mining company, investors have proven unimpressed, leaving the company’s stock price near historic lows.

ASICMiner was one of the first companies in the world to reliably sell and deploy bitcoin mining ASICs, but has long since lost that market leadership – a title it is working to reclaim. Still mining with first generation 130nm ASICs, the company has announced efforts towards second and third generation chips numerous times, including vague mentions of work towards 40nm and 55/65nm chips in September, albeit with little definitive progress.

Last week, ASICMiner announced a projected tape-out date of January 20 for their third generation chips. Per the company’s previous announcements, most expected the next ASICMiner chips to be in the 40-65nm range to be the next priority. Market chatter indicates expectations of 40nm for the third generation chips, but the company’s forecasted consumption of less than 0.2W per GH/s in low power mode (presumably as high as 1W in maximum power) would make them among the most efficient hardware in the industry.

With 28nm processes from companies like Cointerra and KnC at 0.5W per GH/s or above, ASICMiner seems to be indicating a more efficient chip than most are expecting. Given ASICMiner’s historic role as an innovative company who deploys market-leading technology built for sustained use, such a prospect would not be unreasonable, but is certainly far from assured given the lack of clarity from the company.

Even if the estimated January 20 tape-out date is achieved, ASICMiner will have to wait for the rest of the production process as increasing competition hits the network. Delivery in any less than six weeks from tape-out would be an unexpected feat, placing deployment in at least March. Between now and then, companies like Cointerra and HashFast are expected to deliver pre-orders to consumers, adding multiple petahashes to the network. This is likely the cause of the muted reaction from equity markets after the announcement, which sent AM shares up briefly by more than 25% to 0.58 BTC/share before settling in the 0.35-0.40 range typical of the last few weeks.

immersion cooling

ASICMiner functional immersion cooling (source)

ASICMiner will have some edge in its infrastructure though, with significant immersion cooling systems already deployed on the Gen1 chips. Next generation chips will be easily be swapped in, allowing for market-leading efficiency (i.e. more hashing for with less power consumption and risk of damage). Moreover, the company expects a cost of $0.2/GH. As one of the best capitalized companies in the space, showing some 9,000 BTC on its balance sheet as of last month, ASICMiner is primed for a very large order of new hardware.

Yesterday the company paid the first significantly-increased dividend in months. This is likely the result of more than 3,000 Gen1 units sold over the past weeks for an estimated average of around 1 BTC. Share prices have since settled around 0.36 BTC/share, consistent with the roughly 30% dividend yield maintained in recent months and likely impacted by an over-the-counter block sale at a starting bid of 0.29 BTC.

price and div yield

dividend growth

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