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@teevee $bitcoin, $ethereum $hive cogitating further on mining farms, when a farm is set up, who audits the hardware and software? For example, perhaps a software or hardware contractor or insider could set up a skimming operation where some of the coins are banked on a separate hard drive that the skimmer only has the key for, so the hard drive can either be swapped out or the skimmed coins transferred to another country and then converted to $US dollars or other currency? Do such hardware and software auditors even exist?.... Can mining farms be hacked, turning some of the cards into slaves, earning coins for the hacker? This looks like the wild west to me. https://ceo.ca/@teevee/cryptocurrencies-the-mother-of-all-disruptions
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@tommy @teevee $HIVE Good suggestions. Will fwd to CEO and encourage discussion in coming disclosure. Harry and Olivier are in Zug today, I believe on this and other topics. Zug apparently the capital of #crypto sector. WWW https://youtu.be/_zXKtfKnfT8+
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@Barry_R @tommy, so the IPO is to pay for maintenance & upgrades of the data miners?
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@tommy @Barry_R I expect the funds will be used for the USD $9 million initial data centre acquisition and working capital. There is a comment in the NR about additional financing agreements to acquire data centres 2-5 @newswire/hive-blockchain-currently-leeta-gold-announces-strategic
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@Barry_R Thanks @Tommy, I'm trying to get a handle on general rev vs exp
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@Newton Zug is beautiful. Can't believe it's the capital of the crypto sector.
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@Newton Revenues versus expenses very interesting @Barry_R. There was video posted of CEO of Genesis and he wouldn't say how much money they make because competitors could back-out some key estimates of farm size. $7M EBIDTA is only hard number I've heard. Would guess margins are... 30% but I have no basis for that.
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@lukejackson if Bitcoin crashes another 50% it's still at $1212...up 55% YTD. I'm not a bull on where prices go from here over short/ medium term but context important $HIVE $BTC
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@teevee $hive
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@teevee @tommy, $hive so.....did you have a feed of sild and wash it down with a bottle of akvavit?. Those Danes can really drink a lot of Akvavit;-)
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@Rulingmining @Santidreamer $HIVE is not like buying cryptos though. They build data centers and sell the computing power to individuals over the internet. It is building tech infrastructure, (that will likely have a high obsolesence rate compared to traditional infrastructue as crptos like bitcoin become significantly more difficult to mine (requiring ever more advanced computing) as less are available to be mined). And HIVE is nothing like buying a basket of crypto currencies, though that seems to be implied here a lot. $GBTC has underlying BTC but people can freely trade their shares (much more easily, simply and cheaply than actually buying or selling actual cryptocurrencies). But No, the company (Graystone?) that set GBTC up only buys Bitcoin if you buy new shares of GBTC directly from them, so they trade at a significant premium to #bitcoin
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@BTO @Rulingmining it sounds like you are describing Genesis business model (selling hash power to customers), as opposed to $HIVE
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@Rulingmining @BTO maybe you are right. So what is $HIVE's business model? Please explain? HIVE is buying Genesis' data center capacity and Genesis becomes the major shareholder. Why invest in HIVE exactly? You could just buy your own capacity from Genesis directly and KEEP your own crytos you mined. How is the HIVE business model different? Only in that mined coins are sold immediately! That is the only difference. This is smoke and mirrors. $GBTC #bitcoin @newswire/hive-blockchain-currently-leeta-gold-announces-strategic
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@Rulingmining @BTO More smoke and mirrors is the high hypothetical EBITDA of $7m. The D&A will be their highest most significant cost and drastically reduce the net EPS. #bitcoin $GBTC $HIVE #HIVE $LTA-H
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@Rulingmining $LTA-H $HIVE The business strategy is basically buying data centers from Genesis, paying Genesis to operate them and sell the coins they generate. So instead of selling hash power to individuals, Genesis is selling hash power to HIVE. Have any of you asked yourselves why does Genesis sell the hash power anyway? Why doesn't Genesis build data centers and mine and keep the coins themselves? Apparently a state of the art data center costs $9 Mil. Couldn't they just find private investors for that? I suspect they sold to individuals because people paid a premium. At the same time the capital investment is essentially transferred from the Genesis, the data center developers/operators, to individuals... at a premium. Whether the person makes a profit or not likely depends on the underlying cryptocurrencies appreciating in value, but Genesis earns their margin through selling the hash. Genesis essetially is a infrastructure developer operator. That is how they earn a profit. Now, instead of selling that capital investment to individuals, they are being sold to HIVE. In this case Genesis' business model has transferred from making money on selling infrastructure to being able to earn some profit from the actual cryptocurrencies directly. HIVE is basically buying hash computing power in bulk, but they are likewise not retaining the coins but selling them right away. As I said before, they indicated that the hypothetical EBITDA of $7M would have been generated on a $9M investment. That hypothetical EBITDA would have included the appreciation of bitcoin from $1000 to 2400 and Ethereum's 5000% increase in value. The D&A from EBITDA are the most significant expenses as the main cost will be the equipment which will Depreciate/Amortize very very rapidly. Remember cryptos have a fixed number so they become increasingly scare, but unlike in mining gold for example, cryptos require increasingly more efficient and more computing power and speed, so the profit that is generated, if any, will have to be constantly reinvested in newer more powerful and efficient computing to maintain future operating profits.
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@lukejackson "Based on the computational capacity of the first Data Centre, the historical prices, and required hash rates, and using a mine and immediately sell strategy, the trailing 12 month EBITDA would have been approximately US$7 million."
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@Rulingmining @lukejackson point?
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@BTO @Rulingmining Many people - me included - want to have exposure to alt coins, but don't necessarily want to manage a multi-asset portfolio that trades 24/7/365, decide what coins to mine and when, etc. I doubt actual operations will employ a mine and immediately sell strategy, but rather some sort of portfolio management strategy depending on how the various mined coins are performing.
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@Newton Why invest in HIVE? Simple answer. Own part of business dedicated to mining crypto coins. Unique line that I've wanted to have exposure to for years.
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@Newton I like @BTO comment on potential for holding inventory of coins. I suspect there may be returns possible from acting as "market maker" in some exchanges. Illiquid markets and all that.
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@Newton I am with @Rulingmining in that trailings earnings could be distorted by recent run in prices. I would be curious for more detail there and for cost sides. D&A is big one.
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@Newton From presentation bit more info http://cdn.ceo.ca/1ckbvfe-IMG_20170617_211325.png+
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@Newton I'm with @Rulingmining on question "why couldn't Genesis find private investors to scale-up?". Maybe they had offers but passed for public option instead. I don't know and I don't expect that we will necessarily find out https://ceo.ca/hive?7935678b97c2
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@Newton "Genesis essetially is a infrastructure developer operator. That is how they earn a profit. Now, instead of selling that capital investment to individuals, they are being sold to HIVE." @Rulingmining the comment sounds right, but could be missing something. I don't know what at this point. Not really clear to me exactly what Genesis was doing (mining coins for people for a fee?) and where profits came from. I guess it is clear that HIVE proposes to profit from difference in cost of mining coins versus selling price, but there may be more to story here. Uncharted territory far as I'm concerned.
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BrianBitcoinBull @Newton I agree about $HIVE. Mining Crypto is rarely profitable. The ones who are making the killing are the exchanges.
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@Rulingmining @BTO it's odd that you say you 'doubt' the strategy is to sell the mined coins immediately when in their press release on their strategy $HIVE specifically states that their strategy is to sell the coins immediately. That is their strategy. Yes you are 'exposed' to blockchain, but not spefically in the value of coins. But the mining operation of couns. It's basically like buying a gold miner vs buying gold coins. In fact I do prefer gold miners over buying physical coins that I cannot easily sell without huge spreads and fees. $LTA-H $bitcoin
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@Rulingmining @Newton I went on and subscribed to the Genesis website before I made my comments. What individuals buy on Genesis is X Amount of hash power from a data center to mine a chosen crypto currency. The individual pays Y dollars up front for a contractual period of 2 years of mining hash from Genesis' network. The coins that are mined from the individual's hash get put the individuals wallet for that coin. So the cost of the contract covers the infrastructure plus operating costs and likely a nice profit margin, because Genesis is thereby giving up the coins mined from their data center. So the business model was a data center developer operator. HIVE is essentially buying the hash through buying the data center directly. Genesis still has a management agreement to earn an operating profit and their business model evolves to being a crypto miner. I suspect the coins are sold immediately for HIVE to build scale. This is the first of 5 planned data centers. And as I said the obsolescence rate of the equipment will be high so you will need to continually reinvest (maybe @ 2 years?) $LTA-H #bitcoin
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@Rulingmining @EvenPrime $HIVE $LTA-H stated that the hypothetical EBITDA was based on historical prices. So I would assume it was based on prorated pricing over a year. No idea of the actualtime period if assumptions to calculations are not provided. My main point though was the grossly misleading profit metric EBITDA for a business that has high depreciation rates which directly affects EPS. It was also stated that it would be generating cash right away. Great. But it is very easy to be cash flow positive in a period of time and have a negative net income and EPS. May be cash flow positive up front because you do not have to reinvest in equipment or new data centers in year 1. But is it year 2 or year 3? Not knowing.
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from #lta-h,
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@Newton Great, thanks @Rulingmining!
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@Newton Like the analogy between gold miners and bitcoin miners @BrianBitcoinBull wonder if it holds water...
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@teevee @Rulingmining, also, cryptocurrencies require more computing power and more time to earn a coin as time goes on because the total number is capped and there are fewer of them left as more are made and in circulation....
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@teevee @Newton, track record of success? Yes, there have been some winners. It seems no one mentions talks about the myriad of Frank Guistra's losers that went to zero.
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@Newton I hear you @teevee!
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BrianBitcoinBull @Newton Anyone who has mined Crypto knows it barely profitable. That is why people like Genesis sell the Hashpower to customers for Cloud Mining rather than just mine the coins and sell those themselves. Don't think its out of the goodness of their heart. Iceland is an excellent place to run a Crypto mine because of the cold weather which cools the hot machines and the low cost abundant Geothermoal energy. But make no mistake Crypto mining is a tough business that is why Roger Ver has been arguing for #Bitcoin Unlimited and threatening a Hard Fork so that miners control the fee structure. While it is super interesting that guys like Frank Geustra are getting involved in the space its not glamorous. Like I said before for #Ethereum #Litecoin #Dash and the other Cryptos the money in the space is being made by the exchanges on transaction fees. I love the Small caps but #Hive is not something I would touch unless you are speculating the Crypto crowd will bid up the price initially just because it has to do with Crypto and nothing to do with the business. Which is a real possibility. Kinda like the Marjuana stocks.
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@murat ^ correction @BrianBitcoinBull, the transaction fees go to miners, in any transaction whether it's by an exchange or not.
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BrianBitcoinBull @murat Na, any exchange, Coinbase, Kracken, Bitfinex, Poloniex, etc takes a fee. Especially the ones like Bitfinex, Poloniex, Shapeshift etc that specialize swaping between the different Cryptos. All those when you transfer currencies in they sit in a pool until they are withdrawn.
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@murat @BrianBitcoinBull i understand but that is not fundamental to the bitcoin/ethereum infrastructure. miners take an exchange fee for every blockchain transaction. any other fee that the exchanges take would be their own addition for their services.
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@murat exchanges are not a fundamental part of the cryptocurrencies, they are there for convenience only, and can be thought of as a third party service
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BrianBitcoinBull Disagree with you. When you had just Bitcoin the exchanges didn't matter as much. Now that you have a new ICO every freaking day and 700+ Cryptocurrencies the exchanges are extremely important. Most currencies still can't be purchased efficiently without using a funding Cryptocurrency. With the exception of Bitcoin which has high fees because of scaling issues almost all the other currencies the fees the exchanges get swapping currencies in their Pool far exceeds that which goes to the miners.
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@murat i see what you mean, i'm sure exchanges make a lot of money, however cryptocurrencies will continue to rely on miners to process transactions (even after there are no more "coins" left to mine, blocks continue getting mined) and tx fees will continue to be an incentive for miners, just wanted to clarify that
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@Newton Helpful to distinguish rewards to miners from creating new coins and processing transactions, if I understood that correctly.
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@murat yes @Newton, the agreed upon rules, which defines the standardized software that everybody runs to process and verify transactions, says that each discovered "block" rewards the miner X number of coins. for bitcoin it has been agreed that a block generates 50 coins in the beginning and gets halved every couple years, until it reaches zero (which it actually does unlike achilles and the tortoise :p). miners dont get to change this number because their mined blocks would get rejected by all other miners, and the transaction would be ignored, due to the longest blockchain diverging (forking) away from the faulty block.
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@murat so earning the coins is in addition to using the block to verify a transaction and taking a fee
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@Newton LOL with the Zeno reference.
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BrianBitcoinBull #Bitcoin and Block Chain technology is either going to go down as one of the biggest waste of time, money, resources, & brainpower ever!!!!! When you consider the actual energy and computing power to mine, developers, promoters and users!!! Or this is going to change the World Forever!!!! Time and time again I put my money on the latter? Why? Because as a Speculator I seen for years people 100x smarter than me have put major time for free and crazy excitement if you talk to any of these Nerds. The potential is literally capped at the MOON!!!! The downside is literally whatever money and energy I or you put into it. Hate it or love it, its honestly a LOL interesting paradox whichever side you are on. Is the Glass Half Full or Half Empty??? HAHAHA #Litecoin, #Ethereum #Hive
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@tommy terrific afternoon with $HIVE Harry getting the rocket ship ready
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BrianBitcoinBull @Tommy good luck with $Hive. If you are pumping it to dump it then well played my friend. We are in an Alt Coin Bubble no doubt. The interesting thing is ppl have to go through 3-4 Coins/Tokens to exit out into FIAT currency. I predict essentially the biggest of all short squeezes with #Bitcoin, #Ethereum #Litecoin and possible one to two other going parabolic during the event. Especially with Bitcoin as many are taking theirs off the exchanges and putting them into hard wallets with BIP 148 coming.
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nindeops When HIVE trading
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@lukejackson It strikes me that everyone is calling for a "bubble burst" amongst cryptocurrencies- I'm not a short term bull but there's an immense amount of bearishness/ unwillingness to believe that any of the recent rally might hold. Every article says "CRASH!!!" BTC was ~$300 a couple of years ago. This doesn't resemble a crash to me, yet. $HIVE $BTC
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