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Interestingly, Bitmain sold most of its Bitcoin and accumulated tons of Bitcoin Cash, leading to hundreds of millions of dollars in losses, so they also seem to

Interestingly, Bitmain sold most of its Bitcoin and accumulated tons of Bitcoin Cash, leading to hundreds of millions of dollars in losses, so they also seem to have burned themselves on the gold rush as well.

snikeris 8y ago
Did they then sell the Bitcoin Cash after its price declined? I wouldn't say they lost anything until they sell their asset at a loss.
- Drakim 8y ago
  Not even if it drops down to 0? I'd say it counts as a loss as it goes down, even if you haven't sold it yet. You can't say that you have 3 billion in assets because "in the future it's hopefully rise in value!"
  - snikeris 8y ago
    https://www.reviso.com/accountingsoftware/accounting-words/loss https://www.reviso.com/accountingsoftware/accounting-words/l... > Losses can result from a number of activities such as; sale of an asset for less than its carrying amount, the write-down of assets, or a loss from lawsuits. Seems like some action needs to be taken for it to be considered a loss.
    - village-idiot 8y ago
      There’s a split between the technical definition of a loss, which requires a sale or transfer, and the layman’s definition of a loss, which does not. Technically if you hold an asset that’s traded down to 0, you haven’t realized the loss yet. But the average civilian would say that you’ve “lost everything”.
      - Retric 8y ago
        Companies are valued based on cash flows + assets. That value can change even when they don't sell assets. EX: If a hotel chain was destroyed by a hurricane it's stock price would drop for both cash flows and the value of properties, not when they tried to liquidate the properties.
        village-idiot 8y ago
        Not a good comparison. First, there's a difference between an assets trading value dropping, and it being physically destroyed. With the former you can continue to hold and hope that price recovers, with the latter there is no hope that the hotel will reconstruct itself without serious cash expenditure. Second, a hotel chain is both property and the ability to generate cash flow. If that is destroyed, the company's ability to generate more revenue is eliminated. Financial assets used for speculation typically do not generate a large amount of cash flow while sitting idle. Instead there's the expectation that they can be sold later for a profit (ideally). Finally, there is an important disconnect between a company's assets and its stock price, since the stock price represents an expectation of future profits. If traders think that BCash will rise in the near future, they might vote up Bitmain stock before the underlying assets move in the slightest.
        Retric 8y ago
        I said cash flow was part of the equation. But, assuming a company had an insurance payout for their property: Then they go from cash flow A + property's worth X, to cash flow 0 + property's worth Y + insurance money in a bank account. Under your method because Y is undefined you assume it's X and then add the insurance money to the total valuation. That's really not what happens. I don't disagree that cash flows could increase the value of the company. However, the value of assets really are part of the equation and get updated when the value of those assets change.
      - jboles 8y ago
        The loss may be unrealized, but it would still be reflected in the market value of the company's assets, just not in the book value. The book value will still reflect the purchase price, but a massive deviation between book and market value is going to raise due diligence flags. In fact for marketable securities (which Bitcoin could be compared to, for some values of 'marketable' and 'securities'), GAAP requires unrealized gains/losses to be applied to the book value to bring it into line with the market value [1]. [1] https://www.accountingtools.com/articles/what-is-the-difference-between-book-value-and-market-value.html https://www.accountingtools.com/articles/what-is-the-differe...
    - saalweachter 8y ago
      If you're a US company reporting your finances in USD and happen to be holding a hundred million Euro cash, would you report large fluctuations in the exchange rate in your filings?
      - shusson 8y ago
        yes? or maybe you just report the cash in euro? I think you were being sarcastic, but I'm genuinely interested.
        Tyrek 8y ago
        Yes. All financials are filed in a single currency. You would report the exchange losses under a separate line specific for gains/losses due to FX.
        saalweachter 8y ago
        Yeah, I'm saying that if Bitcoin is a "currency", it can't have "unrealized losses" like another asset does.
- danmaz74 8y ago
  If you bought Bitcoin at 100 and hodled, would you say you made a lot of money? If the answer is yes, wouldn't you do the same thing if you bought at 20k - and say you lost a lot of money?
m-i-l 8y ago
Bitmain have their tentacles in other cryptocurrencies too, e.g. Ethereum: "As recently as April 2018, mining equipment provider Bitmain Technologies announced an Ethereum version of its POW application-specific integrated circuit (ASIC) hardware, a decision that is particularly notable in the context of Casper's planned switch to POS... With this much capital, Bitmain could theoretically continue supporting development of the POW version of Ethereum by itself, even without the consent of Ethereum leader Vitalik Buterin." [0] You could call them the "great vampire squid" of the crypto world. [0] http://strategiccoin.com/chronicles-4/ http://strategiccoin.com/chronicles-4/

snikeris 8y ago

Did they then sell the Bitcoin Cash after its price declined? I wouldn't say they lost anything until they sell their asset at a loss.

Drakim 8y ago
Not even if it drops down to 0? I'd say it counts as a loss as it goes down, even if you haven't sold it yet. You can't say that you have 3 billion in assets because "in the future it's hopefully rise in value!"
- snikeris 8y ago
  https://www.reviso.com/accountingsoftware/accounting-words/loss https://www.reviso.com/accountingsoftware/accounting-words/l... > Losses can result from a number of activities such as; sale of an asset for less than its carrying amount, the write-down of assets, or a loss from lawsuits. Seems like some action needs to be taken for it to be considered a loss.
  - village-idiot 8y ago
    There’s a split between the technical definition of a loss, which requires a sale or transfer, and the layman’s definition of a loss, which does not. Technically if you hold an asset that’s traded down to 0, you haven’t realized the loss yet. But the average civilian would say that you’ve “lost everything”.
    - Retric 8y ago
      Companies are valued based on cash flows + assets. That value can change even when they don't sell assets. EX: If a hotel chain was destroyed by a hurricane it's stock price would drop for both cash flows and the value of properties, not when they tried to liquidate the properties.
      - village-idiot 8y ago
        Not a good comparison. First, there's a difference between an assets trading value dropping, and it being physically destroyed. With the former you can continue to hold and hope that price recovers, with the latter there is no hope that the hotel will reconstruct itself without serious cash expenditure. Second, a hotel chain is both property and the ability to generate cash flow. If that is destroyed, the company's ability to generate more revenue is eliminated. Financial assets used for speculation typically do not generate a large amount of cash flow while sitting idle. Instead there's the expectation that they can be sold later for a profit (ideally). Finally, there is an important disconnect between a company's assets and its stock price, since the stock price represents an expectation of future profits. If traders think that BCash will rise in the near future, they might vote up Bitmain stock before the underlying assets move in the slightest.
        Retric 8y ago
        I said cash flow was part of the equation. But, assuming a company had an insurance payout for their property: Then they go from cash flow A + property's worth X, to cash flow 0 + property's worth Y + insurance money in a bank account. Under your method because Y is undefined you assume it's X and then add the insurance money to the total valuation. That's really not what happens. I don't disagree that cash flows could increase the value of the company. However, the value of assets really are part of the equation and get updated when the value of those assets change.
    - jboles 8y ago
      The loss may be unrealized, but it would still be reflected in the market value of the company's assets, just not in the book value. The book value will still reflect the purchase price, but a massive deviation between book and market value is going to raise due diligence flags. In fact for marketable securities (which Bitcoin could be compared to, for some values of 'marketable' and 'securities'), GAAP requires unrealized gains/losses to be applied to the book value to bring it into line with the market value [1]. [1] https://www.accountingtools.com/articles/what-is-the-difference-between-book-value-and-market-value.html https://www.accountingtools.com/articles/what-is-the-differe...
  - saalweachter 8y ago
    If you're a US company reporting your finances in USD and happen to be holding a hundred million Euro cash, would you report large fluctuations in the exchange rate in your filings?
    - shusson 8y ago
      yes? or maybe you just report the cash in euro? I think you were being sarcastic, but I'm genuinely interested.
      - Tyrek 8y ago
        Yes. All financials are filed in a single currency. You would report the exchange losses under a separate line specific for gains/losses due to FX.
        saalweachter 8y ago
        Yeah, I'm saying that if Bitcoin is a "currency", it can't have "unrealized losses" like another asset does.
danmaz74 8y ago
If you bought Bitcoin at 100 and hodled, would you say you made a lot of money? If the answer is yes, wouldn't you do the same thing if you bought at 20k - and say you lost a lot of money?

m-i-l 8y ago

Bitmain have their tentacles in other cryptocurrencies too, e.g. Ethereum: "As recently as April 2018, mining equipment provider Bitmain Technologies announced an Ethereum version of its POW application-specific integrated circuit (ASIC) hardware, a decision that is particularly notable in the context of Casper's planned switch to POS... With this much capital, Bitmain could theoretically continue supporting development of the POW version of Ethereum by itself, even without the consent of Ethereum leader Vitalik Buterin." [0] You could call them the "great vampire squid" of the crypto world. [0] http://strategiccoin.com/chronicles-4/ http://strategiccoin.com/chronicles-4/