5 Takeaways from the Main Stage at the World Digital Mining Summit
We would like to share what we have learned from this year’s conference
Taking place in Frankfurt in the second week of October, WDMS is the largest cryptocurrency mining event of the year. The Cyberian Mine team hopped on a train from Berlin for a stimulating 48-hour mix of the latest industry insights, high-class networking, valuable knowledge exchange and coffee. Here are our main takeaways from the main stage, where we were very excited to see Kintaro Capital chairman and Cyberian Mine board member Dr. Mervyn Maistry give his talk on ‘Regulated Investment in Mining.’
Cyberian Mine right at the ‘Pinacle of Digital Mining’
1 – We may be grossly underestimating the potential of blockchain business
A 2017 forecast from research and advisory company Gartner estimated the business value of blockchain derived businesses could reach slightly more than $176 billion by 2025, and exceed $3.1 trillion of global GDP by 2030. At WDMS however, analysis from Kintaro Capital indicated this number could be bigger. Much bigger.
At the moment, the equity markets hold about $60 trn in investment and there are $100 trn in the bond markets. “If you compare those numbers to the $250 bln that current resides in Bitcoin and other cryptocurrencies”, says Dr. Maistry, “it’s a tiny little drop in the ocean of assets.”
“In the future we’re going to have machines transacting with machines. That’s where the future of commerce is going. For that, we’re going to need a secure way of managing these transactions. Cryptocurrencies like bitcoin – and mining as the security layer behind it – provide the global economy with that.”
Dr. Maistry’s analysts at Kintaro Capital have projected the real value could potentially be closer to $25 trn, or 10% of global purchasing power parity (PPP).
Kintaro Capital’s projections for the Value of the Decentralised Future
2 – Bitcoin doesn’t have to be associated with dirty energy – quite the opposite in fact
Bitcoin uses a lot of energy. No one is claiming it doesn’t. But, as Parker Lewis of Unchained Capital has pointed out,
“You will never hope to understand the justification for the amount of energy Bitcoin consumes without first developing an appreciation for the fundamental role money plays in coordinating economic activity.”
Economic stability depends on functioning currencies. And because Bitcoin’s superior monetary properties offer a fair and global exchange of value that fiat and gold have shown they cannot, energy used to secure this network is energy well spent. Furthermore, Bitcoin’s growing energy demands will encourage innovation in renewable energy technologies that otherwise might not have been pursued.
This is a counterpoint to the mainstream media narrative. The Guardian, for example, has written that the “fundamentally wasteful nature of Bitcoin mining means there’s no easy technological solution coming.” If Bitcoin can legitimately be accused of wasting energy, then consider the television sets. Always-on but inactive home devices in the USA annually could power bitcoin mining for 3.0 years.
Comparisson estimated by the University of Cambridge, as of 30.10.19
The takeaway is that while securing the Bitcoin network is energy intensive, this must be seen in context. If a stable monetary system helps avoid situations such as hyperinflation in Venezuela, where a breakdown of economic activity resulted in a costly humanitarian crisis, that is a net positive. Energy production and consumption, properly managed, underpins a functioning society.
3 – Kintaro Capital already has an approved infrastructure for institutional investment in mining
Anyone can set up a mining fund, but not all mining funds have reliable and sustainable long-term infrastructure. Kintaro announced it is using a Professional Investment Fund (PIF), in which each investor can retain ownership and control over the allotted shares/units.
The fund will offer a broader investment opportunity, with greater management expertise. It has the potential for a superior return on investment to what a retail investor can achieve, because the scalable structure of a large fund lowers operational risks and costs:
- More Liquidity: Quantifies mining into units
- Diversifies investments by mining different coins
- Deleverages operational risks compared to retail mining
- EU Regulatory Approved by Malta Financial Services Authority
- Price Waterhouse Cooper are independent auditors for the fund
- Investor protection and the scale to verify & manage potential scams
Cyberian Mine’s board member Dr Mervyn Maistry’s speech at WDMS
4 – Mining offers full exposure to a bull run, and with limited downside
For those of you who don’t want to join the 90% of day traders who lose their shirts in the crypto markets, dollar-cost averaging (DCA) into a bitcoin position is the most sensible way to invest. Mining takes this a step further, because you are averaging into a position not monthly, weekly or even daily, but around the clock, 24/7. This is important because as Thomas Lee has pointed out, historically bitcoin generates all of its performance within 10 days of any year.
If only there was a way to never miss a day…
If you’re relentlessly stacking satoshis through mining, it’s impossible for you to miss out on the upside of a bull run, while your downside is protected by your average entry position. The traditional financial markets would kill for this granular level of risk management.
Historical Bitcoin prices in USD, as of 30.10.19
Given the increase in Bitcoin’s price over the years, DCA offers considerable investment gains. This tool in particular shows the immense benefit of averaging out your entry position rather than trying to time the market. For example, investing just $10 a day into bitcoin for the last three years would have turned $10,950 into $30,901. This strategy also relieves the psychological burden of constantly price watching.
Better still, with mining, once you have made back the cost of your mining machines, you have created a passive income stream for yourself, because your investment is immediately liquid.
5 – Irkutsk in Siberia has the potential to be the green financial energy center of the world
The city of Irkutsk is the de-facto capital of Eastern Siberia. Flush with power from Soviet-built hydroelectric plants, the region charges just 2.1 roubles ($0.03) per kilowatt-hour, compared with 5.3 roubles in Moscow. Irkutsk is actually closer to Beijing than it is to Moscow, but this is the lowest-priced green electricity anywhere in the world. For those of us who don’t give their utility bills more than a glance, $0.03 per kWH is nearly one tenth of what you’d pay in a European city. In Berlin, for example, where the Cyberian Mine offices are, a kWh costs about EUR 0.26, or $0.29.
We also know that by 2030, data centers are projected to consume 40% of the world’s energy, which puts Irkutsk – once nicknamed ‘East Paris’ before the Russian revolution – in pole position to become the green financial energy center of the world.
The time is now.
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