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HIVE and Proof of Stake

I sold my position in HIVE.  I hate doing an about face on a position so quickly, but I came across an issue that gave me some concern.

My post the other day raised the question from someone of what the expected change in Ethereum to proof of stake consensus would mean for HIVE.  I did a bunch of reading on the matter and it makes me uncertain enough to sell.

Proof of stake is a change to the consensus method used.  If Ethereum switches to proof of stake, I’m not sure what role miners will have.

I wasn’t able to get a good feeling for when or even if Ethereum will implement proof of stake.  It sounds like it could be some time in 2018, but it also sounds like its a change that has been promised for some time and there remain to be issues to be sorted out before it can be implemented.  It may never happen.

Nevertheless based on what I’ve read, it seems likely that if it does get implemented, the need for miners for will be greatly diminished.  While miners will move to other tokens, I can’t quite see how these other tokens, with much smaller market capitalizations then Ethereum, will be able to absorb the supply.

Until I can understand this better I thought I better sell.

6 Comments Post a comment
  1. German reader #

    I came along an article about BTL group:

    They are a pure blockchain play and will come up with their product in the beginning of next year after running “betas” with BP and Visa. Their product is based on ETH and seems to work quite well.

    The problem is, I have no clue what it should be worth, maybe you have some insight.

    Also here is some interesting reading from Horizon Kinetics:

    December 3, 2017
  2. teamonfuego #

    Lane – yeah we talked about this at length. Major risk and what caused me to take my position off. Could end up being a huge mistake because if its not a concern then you still have the fact that HIVE holds their coins that they mine. If ETH goes parabolic then they will stand to benefit in a big way. Probably should have held some of the position…

    December 4, 2017
    • Problem I had was that everything I read suggested it was a matter of when and not if. If someone could show me that this might not happen i’d be more inclined to stay in. But if its inevitable then you are picking dimes in front of a bulldozer when they announce a date.

      December 4, 2017
  3. arf #

    Hey I looked into Ascendant. Very interesting pick, surprised it isn’t a larger position for you.

    I have done some calculations based on Q3 numbers and what costs will be.

    Latest quarter has $17m in revenue and $3m in gross profit. But production targets are about 20% higher for Q4. So that will be $3.6m in gross profit. But on top of that, costs are expected to drop from $87/t to $80/t. So that means costs will drop another $1.4m. Or $5m in gross profits. Just for one quarter.

    Then prices are also about 15% higher right now than in Q3. So that would add another $3m. If we assume SG&A costs of $2m (vs $1.65m last quarter), that is $6m in operating income in Q1 (assuming it takes some time to get to $80/t). So that means the stock would trade at about 2x EBIT? If prices stay where they are right now. And this is before any further production increases. This seems insanely cheap.

    December 6, 2017
  4. mitch p dillon #

    Arve you alive? Would love to hear your thoughts on OSTK. Jumped in after reading your article at $45

    January 5, 2018

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