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Bitcoin mining companies have several advantages over running a mining operation yourself. The most significant one is that you don’t have to worry about setting up and maintaining mining hardware. Many of these companies have built-in plans to increase their speed as the network difficulty rises, reducing the risk of a quickly diminishing payout. Additionally, selling shares is significantly more liquid than selling mining hardware if you decide not to be in the mining business anymore. The counter-point to these advantages is that you will be paying a management fee of several percent that will come out of profits. This is the last article in a 4 part series discussing the current state of bitcoin mining. The first three parts provided a background of the current mining environment:
We should start with the qualification that none of these companies are are regulated like those on the New York Stock Exchange. Therefore it is necessary to interpret these numbers with some caution. Additionally, because of the GLBSE shut-down current bitcoin stock exchanges qualify their operations as a “stock market simulator”. BTC Trading Corp distributes share-holder data to company leasdership every 12 hours so there is significantly reduced risk of shareholder information being lost in the case of an exchange closing. To determine share price, we calculated the cost of invsting ฿ 10 at the current ask prices. Weekly dividends were estimated using the last month of distribution and eliminating any one-time reductions. Dividends are also adjusted to reflect a weekly distribution (as an equal comparison since some companies pay out daily). This article covers 5 bitcoin mining companies:
- ASIC Miner
- GLARI Mining Project
- Nasty Fans
|Current Price:||฿ 1.18|
|Weekly dividend||฿ 0.007 (0.6%)|
|Shares outstanding||400,000 (163,962 available)|
|Market Cap||฿ 472,000|
|Owner Share||236,038 shares (59%)|
|Current Speed||7,000 GH/s (17.5 MH/s per share)|
|Near-term speed target||50,000 GH/s (125 MH/s per share) – End of April|
ASIC Miner is different than the other mining companies because they actually manufacture their own ASICs. Their current speed of 7 TH/s is in the process of being upgraded to second generation hardware at 40 TH/s by the end of April. Their share issue was more complex than the other companies described as well: 400,000 shares were issued by Bitfountain and sold at the IPO. There were 163,962 shares sold at the IPO, which are entitled to 100% of the profits up to ฿ 0.1 per share for the weekly dividend. Additional share offerings will come out of the 236,000 Bitfountain reserve so there will be no dilution of shareholder value. Operating expenses are estimated at ฿ 0.001/share per week (currently around 12% of earnings), and for two weeks there was a ฿ 0.005/share expense as new hardware production was paid for – which should now be over with the latest dividend.
Selling mining devices
Friedcat has been extremely transparent with weekly updates on the bitcoin forum. It was always the plan to eventual move into selling commercial ASIC products, and friedcat recently announced the first phase of this project selling 300 MH/s devices. This will add a unique revenue stream to the company, however it does add two significant risks to the company: (1) It is still unknown if friedcat is skilled at distributing commercial devices and handling the strenuous task of running a service company and (2) the production cost and sale price have not been disclosed, so it is difficult to say if the additional revenue will be worth the distraction from friedcat’s core competency of mining.
UPDATE (4/20): Friedcat has completed his first auction of 10 G/Hs cards for a total of ฿752. We should see this distributed as a special increase to the dividend this week.
|CEO||Eric Corlew (USA)|
|Current Price:||฿ 0.41|
|Weekly dividend||฿ 0.00042 (0.1%) – paid daily|
|Market Cap||฿ 11,100|
|Owner Share||526 (20%)|
|Current Speed||1.2 GH/s (0.78 MH/s per share)|
|Near-term speed target||68 GH/s (24 MH/s per share) – Avalon batch 2|
bASIC-Miner is structured to be more of a group-purchase of Avalon ASICs than a full-fledged mining company. The small number of shares outstanding significantly reduces the liquidity of shareholders. Currently, the mining operation is 2 GPU mining rigs, and the dividend is the lowest of the active mining companies. However shareholders should expect a 50x increase in dividends when Avalon ships their second batch. 70% of revenue is returned in the dividend, while the remaining 30% is used for operating expenses and for future investment.
|Current Price:||฿ 0.25|
|Weekly dividend||฿ 0.0006 (0.24%)|
|Shares outstanding||10,939 (8,619 outstanding, 2320 in futures)|
|Market Cap||฿ 2,734|
|Owner Share||10% – not represented in shares|
|Current Speed||13.2 GH/s estimated (1.5 MH/s per share)|
|Near-term speed target||880 GH/s (80 MH/s per share) – BFL Singles and Avalon Batch 3 ASICs|
Cognitive is currently operating 19 FPGAMining x6500 FPGA miners (7.8 GH/s totale) and 7 Butterfly Labs FPGA Singles (5.6 GH/s total). They have several ordered several of ASIC upgrades, so they should see a large increase in hashing speed when the commercial ASICs start shipping. They ordered 7 BFL upgrades totaling 210 GH/s as well as 10 Avalon ASICs toalling 600 GH/s. To raise funding for the Avalon ASICs they issued 2320 in share futures that do not receive dividends, and will be converted into outstanding shares when the ASICs arrive (these are also traded as COG.F). 50% of revenues will be distributed as dividends for outstanding shares, and 50% is used as an investment fund to increase future hashing speed. It is also worth mentioning that the CEO of Cognitive is a high school student, so there is some uncertainty in his ability to commit time to the project as it expands over the coming years.
GLARI Mining Project
|CEO||Richard Porubcanl (Switzerland)|
|Current Price:||฿ 1.5 (note: asks are at B⃦ 0.9)|
|Weekly dividend||฿ 0.0003 (0.02%)|
|Shares outstanding||50,000 (3,500 outstanding)|
|Market Cap||฿ 75,000|
|Current Speed||3 GH/s estimated (0.86 MH/s per share)|
|Near-term speed target||770 GH/s (220 MH/s per share) – Avalon ASICs batch 2|
The “project” originally started as a development house to create custom FPGA and ASIC hardware, however it is not clear if they are currently pursuing this route. They have 3 GH/s of Avalon Lancelot FPGA boards, as well as a pending order to replace the FPGAs with ASICs when batch 2 is shipped. This will increase their dividend significantly (with 200x the hashing power), however their revenue distribution raises some concerns. They distribute 50% as revenue, 15% is used to cover expenses, and 35% is used for their in-house development that still remains ambiguous. The ASIC claims should be taken with some caution until they demonstrate a hashrate in the 100’s.
|Ticker||N/A – traded through their web site|
|Current Price:||฿ 0.3|
|Weekly dividend||฿ 0.0004 (0.13%)|
|Market Cap||฿ 7,500|
|Current Speed||7 GH/s estimated (0.28 MH/s per share)|
|Near-term speed target||720 GH/s (28 MH/s per share) – BFL ASIC Miners|
Nasty is not hosted on any of the exchanges, but instead they host a share (what they call “seat”) exchange on their private forum dubbed the Nasty Fans. They currently have a set of FPGA miners running at 7 GH/s and have orders in for Butterfly Labs ASIC miners to bring them to 720 GH/s. That will bring a 100x boost to their dividend, however given BFL’s track record it is difficult to determine when that will occur. It appears from their mining address that they distribute 100% of their earnings as dividends, which they call “donations”. Disclaimer: This author owns shares in ASICMINER. Opinions in this post are those of the author only and should not be considered as investment advice.