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Coinbase valued above $100B, ahead of direct listing

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Re: Coinbase valued above $100B, ahead of direct listing

#241

Post by OiNG »

skinnymuch wrote: post #234
skeeter2020 wrote: post #177

Earlier quoted context omitted.

>> When you look at the old staples like Coca-Cola they haven’t appreciated during this time. Pretty tough to eat appreciation; meanwhile Coca-Cola (and all those other old, boring companies) pays ~ 3.5% dividends annually. I'm sick of companies using my money for free to only fund their own growth.

Long term capital gain taxes are lower than dividend taxes which are taxed as income, no?

dividends can also be taxed at long term gain rates if the stock was held for some period of time before hand (see qualified dividends)

Re: Coinbase valued above $100B, ahead of direct listing

#242

Post by TheTaytay »

graeme wrote: post #145

Only tangentially related: How do bitcoin network costs scale with market price? We can expect the marginal cost to mine a coin to scale with price. So if btc worth $52,000 then people will invest on average $52,000 in equipment and electricity. There are 6.5 coins mined every 10 min. So daily network cost approximates to 6.5 * 6 * 24 * $52,000 = $48,000,000 This is not strictly accurate as past equipment costs less…

I think you’re on track. I found this article to be a great analysis of the electric consumption as it relates to the price of BTC. https://www.ofnumbers.com/2021/02/14/bitcoin-and-other-pow-c...

Re: Coinbase valued above $100B, ahead of direct listing

#243

Post by skinnymuch »

eganist wrote: post #27
willyg123 wrote: post #8

No matter if you think we're in a bubble or if this valuation supports your view that we are in a bubble, at the end of the day we are all losers who have decided to spend our precious time on a Friday night glued to HN.

> at the end of the day we are all losers who have decided to spend our precious time on a Friday night glued to HN. It gets worse. Many of us are probably reading HN while listening to Clubhouse at the same time.

What are you listening to on there? I never have any idea what to do with the app

Re: Coinbase valued above $100B, ahead of direct listing

#244

Post by pilord8 »

graeme wrote: post #174
soared wrote: post #168

Earlier quoted context omitted.

> We can expect the marginal cost to mine a coin to scale with price. This feels correct but I don’t think it is. For example gold has decreased by $200/oz recently - it definitely didn’t just get cheaper to mine. I know mining is different and it’s not a great comparison, but costs don’t scale immediately, miners don’t make decisions entirely based on the price of btc now, etc. Economic principles like supply and de…

No no bitcoin mining and gold mining don’t have the same economics. Gold mining average costs are determined by the actual physical costs of mining. Marginal costs will rise in marginal mines if the gold price goes up. But that won’t affect average gold mining costs in existing mines. But in bitcoin average costs have to work out to marginal costs. When more mining power enters mining gets harder to compensate and mi…

That makes a lot of sense. On the other hand, that also suggests that if the price of bitcoin were to rise rapidly, mining costs would take some time to catch up, no? The connection between mining costs and price is an economic one (that can be in temporary disequilibrium), right?

Re: Coinbase valued above $100B, ahead of direct listing

#245

Post by Cullinet »

graeme wrote: post #148
martinko wrote: post #147

Earlier quoted context omitted.

You've got it right. That being said, I dont think anyone realistically expects 1m / btc this decade.

Right just thinking through the claims of the boosters to their logical end. If it did happen in nine years the next halving is 2028 so the cost would be ~$85 billion per year. And that would be less than it is now due to inflation. Ok that’s actually not as bad as I thought, though still pretty expensive. You need $85 billion from new entrants in burnt capital just to maintain the value of existing bitcoins at that…

imagine I have a bitcoin account and my bank lends me to trade against the bitcoin as collateral.

if the account is a true bitcoin account I borrow btc and owe a greater amount of btc to settle.

it's not unreasonable for my bank to expect me to close my trading profits into my bitcoin account.

that's just two regular bitcoin demanding and regular transactions creating more demand

Re: Coinbase valued above $100B, ahead of direct listing

#246

Post by antonislav »

adventured wrote: post #225
antonislav wrote: post #135

Earlier quoted context omitted.

Thanks for all the detailed responses. Very much appreciated food for thought. I have a specific question about the calculation of the fair value. My understanding is that there are two steps: 1. Project the future earning (that is the difficult part) 2. Discount the earnings and get the NPV - the fair value of the company Currently the interest rates are so low that the NPV will be quite high and not that far from t…

When I say fair value, it's what I consider to be fair value. As an investor you always have to ultimately make those decisions for yourself, or you have to defer to another person's judgment on the matter (whether a talking head on TV, or pump & dumpers on Reddit, or newsletters, etc). I'm not basing that on something some guy put into a book 70 years ago about how to value a stock, even if some textbook'ish knowled…

Thanks!

Re: Coinbase valued above $100B, ahead of direct listing

#247

Post by Cullinet »

usehackernews wrote: post #176
graeme wrote: post #148

Earlier quoted context omitted.

Right just thinking through the claims of the boosters to their logical end. If it did happen in nine years the next halving is 2028 so the cost would be ~$85 billion per year. And that would be less than it is now due to inflation. Ok that’s actually not as bad as I thought, though still pretty expensive. You need $85 billion from new entrants in burnt capital just to maintain the value of existing bitcoins at that…

You seem to have a good grasp of creating high level models. I always see people referring to the energy consumption of bitcoin as though it’s strictly additive. What I’d be interested to know is how it compares relative to energy costs for transacting with and securing fiat currencies. Second, what people tend to ignore is that innovation doesn’t come in a vacuum - there are second, and third degree improvements tri…

good question about baseline infrastructure energy cost

> >I always see people referring to the energy consumption of bitcoin as though it’s strictly additive. What I’d be interested to know is how it compares relative to energy costs for transacting with and securing fiat currencies.

the base load of the combined major central banks, transfer networks and custodial institutions is undoubtedly considerable

not least I'm thinking how much still runs on Itanium and OPENVMS. Just ten years ago I would have wagered the majority is on Itanium running vms or nonstop or the Honeywell legacies virtualized by Unisys. now a significant UK clearing bank ( at clear.bank) has run on Azure with white label customers who would have brought plenty of attention in the event of any problems, I'm no longer sure at all that I have any real idea what infrastructure is on.

re the energy costs of the network and that growth, I'm baffled - surely bitcoin should have moved to a custody model of settlement in view of the energy and other costs and risks of on chain transactions by now?

Re: Coinbase valued above $100B, ahead of direct listing

#248

Post by Cullinet »

tracedddd wrote: post #111
raiyu wrote: post #98

One important thing to note is that these are secondary transactions and not where the stock may potentially trade. Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales. Third, as we saw with the last bull run of Bitcoin everything with blockchain i…

“Obviously if Bitcoin succeeds so does Coinbase” This seems obvious, but I’m not sure it’s the case anymore. DeFi has been growing, although hampered by ethereum right now, could eventually consume much of Coinbase’s income stream. They may need to pivot to more of a banking role as ethereum solves tx fees and DeFi grows on L2. Whether that means more or less profit is not clear. I have a theory this IPO is really a…

I sincerely hope that the corollary doesn't apply

edit meaning that you at least wouldn't want that to be exclusively true

Re: Coinbase valued above $100B, ahead of direct listing

#249

Post by reducesuffering »

adventured wrote: post #128
55555 wrote: post #122

Earlier quoted context omitted.

Along these lines, any reading recommendations other than https://www.amazon.com/dp/B000FC12C8/ ?

I don't generally recommend the Intelligent Investor. I think it's almost always a mistake for ... 99% of new investors to bother with Benjamin Graham. His material is far too dense and often advanced for anyone that isn't quite an experienced investor. I'm sure there are exceptions, however I've found it's a huge turn-off for most new or newish investors, it delays / stunts their learning process, it's an obnoxious…

Bless your dear soul for the Margin of Safety link. I've been meaning to read it for quite awhile, but you can guess why not. All your other commentary is top notch, although I still think the SP500 is fairly valued (won't have great 8% returns going forward, but won't be 0% stagnant).

Re: Coinbase valued above $100B, ahead of direct listing

#250

Post by mikkelam »

bob33212 wrote: post #180
emehex wrote: post #155

Perhaps a dumb question: why is Coinbase even entertaining an IPO? Give away shares for fiat money? Isn't that antithetical to what they're trying to do?

They are trying to "Exit". That is what they call a IPO or a Sale in startups. They get paid with cash, then they buy houses, stocks, bitcoin, cars with that cash. The "Mission" of Coinbase exists because they don't want to say "Our mission is to build a 100 billion dollar company and then cash out" it sounds better and feels better to say that you are democratizing and decentralizing power for the people.

Ah the unspoken words of most startups. No one will ever admit to it, but too many are conceited in their quest.

I don't see anything wrong with it, but the status quo is that building a company has to be a true calling to change the world.

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