June 14, 2021

Buy Bitcoin, ALROSA, diamonds? What's the difference?

There is a difference.

When after writing an article

The mistake of Durov, Zuckerberg, Satoshi Nakamoto and everyone else.

smart-lab.ru/blog/621472.php

I continued my thoughts, I tried to answer the question: how to determine the value of acquired assets?

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Bitcoin

Bitcoin is a Crypto-Token (Token), which whencirculation inside its SPVC (Virtual Value Moving System) transfers or stores some kind of Virtual Value. In fact, this is the Collective Value of the Crypto Token, which Fans of the SPEC Bitcoin agree with.

How this value is related to the benefits that Bitcoin SPEC brings is a big question.

The benefit of SPEC is the number of client transactions per period.

Currently, around 300,000 transactions per day or 12,500 trans hours or 3.5 transacts are made in the Bitcoin SPEC.

bitinfocharts.com/comparison/sentinusd-btc.html#6m

Power consumption SPVC Bitcoin is 7 Gigawatts.

hightech.fm/2019/07/10/bit-2019

3dnews.ru/990234

Bitcoin Miner-Validators spend about 60 TeraWatt * hour of electricity per year or 168 GigaWatt * hour per day (7 GW * 24h) to maintain the operability of the SPEC.

SPEC Bitcoin consumes 0.25% of all electricity generated in the world.

Energy consumption SPVC Bitcoin is commensurate with the energy consumption of countries such as:

Switzerland 58 TW * h

Kuwait 58 TWh

Czech Republic 62 TWh

Austria 64 TW * h

Greece 57 TWh

Israel 55TW * h

1 GW = 1 billion watts (One Billion Watts, 1,000,000,000 W)

Those. 7 GW * h12500 = 7,000,000,000 12,500 = 560,000 Wh * h = 560 kWh of electric energy is consumed per transaction.

With an electricity tariff of 5 cents per 1 kWh, the cash cost of carrying out one transaction is 560 * 0.05 = $ 28.

And the annual and daily costs for the operation of the SPEC Bitcoin are, respectively:

In year

60TW * h = 60bn kW * h

60bn * 0.05cents = 3bn dollars

Per day

168GW * h = 168mln kW * h

168 million * 0.05 cents = 8.4 million dollars

UPD

More recent evidence suggests that costs have increased even more.

The daily electricity consumption is 263 GW * h or 96 TW * h per year.

The cost of this electricity is 13 million dollars a day or 4.7 billion dollars per year.

The cost of computing equipment is approximately $ 20 billion.

gobitcoin.io/tools/cost-51-attack/

More accurate results can be obtained using the most current data from sites:

www.blockchain.com/stats?

m.bitmain.com/

bitinfocharts.com/comparison/bitcoin-hashrate.html#6m

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Such monstrous costs of electricity (and, accordingly, money) follow from the economic model of the SPEC Bitcoin, which is fundamentally damaging.

The problem is, the transaction confirmation mechanism in the Bitcoin SPEC is based on the PoW algorithm.

The PoW algorithm is effective and acceptable when an enthusiast has made his SPEC on his knee for fun and experience.

It uses to ensure functioningSPVC has its own home computer, processor or graphics accelerator of which calculates some hashes there necessary for the PoW algorithm to work, while the computer owner (creator of the SPVC) is doing its own thing.

And just the same, other users of this SPEC use their computers.

In this case, the functioning of the SPEC- this is one of the tasks of a home computer, and the cost of maintaining the functioning of the SPCE is included in the cost of ensuring the operation of the home computer of any user of this SPEC.

And everyone is happy.

But when the race for promotion beginsthe processing power of a personal computer (which is gradually being replaced by a hangar with thousands of ASICs) and this is accompanied by the desire to give out home crafts (SPECs made on the knee) for an Enterprise-level product (New Electronic Money, Crypto Currency For The World), then monstrous operating costs This SPEC signals us about the unsuitability of this SPEC for operation in the Enterprise sector.

The economic inefficiency of the PoW algorithmIt also manifests itself in the fact that the Miner-Validators, ensuring the operability of the SPVC, constantly have to compensate for their costs of paying for electricity, updating equipment and increasing computing power.

To do this, they must exchange part of the Crypto-Tokens received in the form of remuneration for mining and validation activities for hard fiat currency.

The media write that “miners are forced to sell cryptocurrencies for more than $ 6 billion a year.”

www.rbc.ru/crypto/news/5dc54aaf9a7947ae982bd809

It turns out that in the SPEC with the consensus algorithmPoW laid down a mechanism that forces not only to remove value from the system (in the form of Crypto Tokens, to pay for current expenses), but also to change these Crypto Tokens to Fiat Money, putting pressure on the exchange rate of these Crypto Tokens.

It becomes quite clear that the SPEC Bitcoin is too far from perfect to qualify for the title of Enterprise Level System.

Those. she eats like an Enterprise system, and the cat cried out of her benefits against this background.

The mountain gave birth to a mouse.

Incidentally, the drawbacks of the HSPC with the PoW algorithm are deprived of the HSPC with the PoS algorithm.

Algorithm mechanism PoS stimulates leaving Crypto-Tokens in the System (Staking, Stacking), and the cost of electricity for the functioning of the System reduced by three to six orders of magnitude. forklog.com/sp/DPoS/ (i.e. 1,000 to 1,000,000 times !!!).

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Buy a cue ball for the purpose of teasing, hoping that its value will increase?

Absurd idea!

The economic model of Cueca is imprisoned for Miners and stimulates only them.

Perhaps the legendary Satoshi Nakamoto could notto foresee the fact that craftsmen will be able to adapt graphic accelerators for Bitcoin mining first, and then they will make powerful ASIC miners on powerful processors that are exclusively for Bitka mining.

I wrote about this hypothesis a long time ago in an article Satoshi Nakamoto's mistake.

Those. Bitka’s economic model was violated due to Satoshi Nakamoto’s lack of knowledge about the capabilities of computer hardware and about specific technologies.

The creator of the SPEC Bitcoin failed to foreseeeconomic model, a special mechanism that prevents the enlargement of mining nodes, and the development of the Bitcoin Network has led to a decrease in its decentralization and energy costs.

If SPECC Bitcoin was a Joint-Stock Company, then buying its Shares would be deprived of economic feasibility, because SPEC Bitcoin is a low-efficient and low-profit enterprise.

But now we do not have PJSC Bitcoin Shares, but there are Bitcoin Crypto-Tokens.

But Crypto Tokens are not Promotions, although manycrypto enthusiasts believe the opposite, confused by the fact that popular information resources provide information on the Capitalization of various “Crypto-Currencies” (multiply the number of issued Crypto-Tokens by their Market Price and compare the results with each other).

But the Crypto Token is only a tool for Moving Virtual Value, and its actual price depends only on the rush demand for it, as a Collectible.

Therefore, neither the price of the Crypto-Token, nor the capitalization of the entire SPEC, nor the number of adherents of this SPEC can not indicate the level of success and usefulness of a particular SPEC.

It’s just an unhealthy excitement and fashion, as it used to be for Tulip Bulbs, when the Benefits and Value also did not correspond to the Market Price.

You can buy Bitcoin only in speculativepurposes, but not with the purpose of Preserving the Value, for it is impossible to determine the parameters confirming their Internal Fundamental Value with Bitcoin and other Crypto Tokens.

(I do not consider other purposes of buying Crypto Tokens based on their useful properties, for example, the Transboundary property, etc. I am only interested in Investment Qualities considered objects)

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Diamonds

Diamonds (Diamonds) - these are such brilliant stones that are used to decorate the luxury goods that are produced by the Jewelery Industry.

From a distance you will not distinguish them from other Shiny Tsatseks made of glass, plastic or metal.

Or from cubic zirconias, or from some Swarovski crystals.

The value of Diamonds is undoubtedly purely Collectible.

Passion for Collecting appears when an Individual has Extra Strength, Extra Time and Extra Money (i.e. the Individual has Excessive Resources).

If Extra Money is Very Big, then Dear Things - cars, paintings, jewelry, become a Collectible.

Jewelry in general, and Diamonds (Diamonds) in particular - can deliver Aesthetic Pleasure.

Tom Individual - who at least wants to justify his Passion for Collecting.

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Diamonds are Material Values.

Unlike Bitcoin, whose value is virtual.

I have no doubt that initially Satoshi Nakamoto planned that the Utility and Value of the SPEC Bitcoin will be in the Value Transfer Service.

But due to fundamental errors in the Economic Model, the Service function in the SPEC Bitcoin has become secondary.

And Bitcoin has become a Tool for speculating Exchange Players and a Tool for Enriching Validator Miners.

Miners “mine” new Bitcoins, supporting the issue of new Crypto-Tokens on the Bitcoin Network.

More precisely, they get rewarded with new Crypto-Tokens, which are created (issued) by the Bitcoin SPVC, if the Miners managed to generate a new block.

Bitcoins - “mined”.

And Diamonds are also mined.

Interesting coincidence, huh?

The coincidence is also that the value of both Bitcoin and Diamonds is Collectible.

Bitcoin and Diamonds are priced quite high, thanks to fashion and rush demand, despite the rather modest benefits they bring.

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ALROSA

ALROSA is the same Miner that produces the very Diamonds.

A mining company whose shares are traded on the Exchange.

With Bitcoin, everything is clear.

Bitcoin - dear Slag, SPVC with outdated technology, old, like the Petrified Mammoth Shit, whose Crypto Tokens are in demand among Unknown Bullshit Collectors, thanks to Fashion and Agiotage.

With Diamonds, everything is clear too.

Diamonds are Brilliant Tsatski and Trinkets, Useless Thing in the Household, Aesthetic Delight of Very Rich Collectors with Very Big and Very Extra Money.

And ALROSA?

ALROSA is a Business.

The task of this Business is to get Diamonds and sell them to someone.

For a price that is higher than the cost of their production.

To have a profit.

Otherwise, it makes no sense.

If there is no Profit, then you do not need to mine Diamonds.

But Diamonds are bought when - when there is Excess Money.

If there is no Extra Money, then Diamonds are no longer needed.

And if there isn’t Money, then don’t think about Diamonds, but about how to survive.

Now this is exactly the situation.

Coronavirus, isolation, quarantine, some businesses are stopped, workers do not receive money.

Potential consumers of Diamonds no longer think about them.

And ALROSA sold its products 95% (EMNIP) less than in the previous period.

Diamonds are a whim, you can live without them.

Therefore, if ALROSA (or SPTC Bitcoin, for example) closes, no one will notice.

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Shares of ALROSA.

ALROSA Shares are Shares of this Business.

Becoming a Shareholder - you can receive a Part of the Business Profit (Dividends) and Speculate Shares on the Exchange.

To Speculate, you need to Guess the Direction of Price Movement and place a Bet.

It is more convenient to speculate with Shares than to speculate with Bitcoin or Diamonds.

For according to the financial statements one can hope to determine the internal fundamental value of the business.

Fundamental Business Indicators help to understand how underestimated the Business is and what its Prospects are.

For me, these are indicators (in terms of importance when filtering):

Dy

EV

EBITDA

Netdebt

Bv

E

ALROSA is currently selling very few Diamonds, but its Shares are not falling.

For the Shareholders have the Hope that the situation will improve.

But this is hope for the near future.

And in the medium term, ALROSU is facing a Competitor - Artificial Diamond.

Prior to Coronavirus, ALROSA Business was doing well and its Shares could be taken to the Portfolio.

Now the situation is incomprehensible and we must wait for the Financial Report for the 2nd quarter.

But Artificial Diamonds also obscure the future prospects of ALROSA Business.

It is likely that ALROSA's Profit will steadily decline, even after overcoming the Coronavirus Crisis.

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What to read about cryptocurrencies. List of articles.
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What to read about stock portfolio management
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Useful tips for medium-term stock market players.
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My virtual portfolios
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