Open the black box — Are Bitcoin Mining Companies a Good Investment?
On Nov. 24th, DADA investor, veteran miner Kenny Ge spoke about the consolidation phase mining space is witnessing and his solutions at the BEYOND-2020 Blockchain Industry Summit and Awards Ceremony in Shenzhen.
Roughly a thousand representatives from the top DeFi platforms, exchanges, well-known mining companies, fintech institutes, investment funds, and major crypto communities attended the conference.
Cofounded by Kenny Ge and Khalid Mazouz, DADA builds aggregators that specialize in DeFi and crypto mining projects with the right credentials. The core team is made up of financial experts from early exchanges like BTCC and major veteran miners in the field.
Ge debuted DADA at this global blockchain conference as he delivered a speech titled “Bridging Crypto Mining with the Traditional World”.
In the speech, Ge elucidated on the new market dynamic where in March, Bitcoin price declined dramatically, pushing miners turning off machines on a big scale; the supply of mining capacity surpassed its demand. Meanwhile, due to the unprecedented events occurring in the global macroeconomy, for the first time in crypto history, hedge funds, private equities, public listed companies, and other institutional money have been entering the crypto mining industry en masse. Ge and his team brought out DADA finance as a solution for expanding fundraising channels and providing the trust and transparency wanted for the increasing capital influx.
Among the attendees, there was also Yongxu Cai, COO of Minebaba, an open management service platform for mining farms. Similarly, Minebaba is also dedicated to auditing the asset evaluation, financial reports of mining farms, and crypto financial products for risk management.
The Current Pain Points
- Earlier this year Bitcoin price dropped dramatically, pushing a great number of mining operations below the breakeven price. Miners chose to turn off the machines. The Entrepreneurs Confidence Threshold is fluctuating around 60W/T.
- With mining capacity supply surpassing the demand, the mining industry enters a buyer’s market. During the rainy season, the mining farm owners had a hard time finding customers for the machine custody service. To consume the power capacity fully, they chose to purchase mining machines and become miners.
- Overseas bulk order increases significantly. Since Q2 2020, a great number of mining machines, with a power consumption of 40W/T are bought and delivered outside of China.
- The mining industry operates obscurely. The total miner community is less than 10,000 people. This business exists on a small scale, which makes it easily succumb to black-box operation.
For all the reasons aforementioned, three issues are calling for solutions: black-box operations, unbalanced supply and demand domestically, and the most difficult one — miners' survival and liquidity. Based on their decade-long experience in crypto mining and financial investment strategies, Kenny Ge with his team is aiming at integrating resources in the mining ecosystem.
- Provides investors a single platform to access a large offer of DeFi investment opportunities including the mining projects
- Investors can choose their mining investment or other DeFi portfolios through a DAO aggregator
- Miners and other Fund managers issue their investment plans by smart contracts
- All operational information is hashed on-chain to enable transparency and co-governance
Ge said in the speech, “only by improving the transparency and scalability, we could gain the trust and expand fundraising channels, to develop the mining industry when it is increasingly standardized, consolidated, and institutionalized.”
We upload logistic and operational data on-chain in real-time, including data generated from the mining machine operation, the observer’s link at the mining farm, receipts of the electricity bill payment, and data from the mining machine maintenance. This increases security for capital flow.
The fund managers can lock the funds in smart contracts in a decentralized way. Through Decentralized Autonomous Organization, the investors can choose their investment strategies.
The DeFi Aggregator
The DeFi platforms opened up new utilities in the blockchain economy and offered miners various arbitrage and risk hedging tools, but the high barrier to entry is putting mass adoption on hold.
For the end-users, DADA DeFi Aggregator boasts an intuitive UI for easy onboarding. In the initial stage, the crypto mining projects are the featured portfolios on our platform. On top of that, the DeFi aggregator offers access to the top DEX platforms in the market, for trading and gaining interests as a liquidity provider. With one click, users can filter for the DEX with the best exchange rates and the DEX for the highest yield.
This improves the convenience and economic efficiency for users and allows small and medium-sized miners to onboard DeFi applications easily.
- Miltisig wallets and smart contract wallets
The address of the smart contract wallet will be the only address recognized for fundraising. The multisig wallet address is the only address for the project fund management. For the investors, their investment, unlock, withdrawal abide by the smart contract rules in terms of the data and ways of operation. The multisig wallets manage the capital flow, payback, and ensure the safety of the funds and transparency of the flow.
- Community Voting for Project Selection
DADA Committee selects whitelisted managers, based on the KYC information, assets statements, past performances submitted by the fund managers. The committee provides data to assist investors’ decision making.
- Transparent Logistics Data On-chain
Take the mining farms, for example, we show investors on the blockchain, the Power Supply Agreement and the Power Purchase Agreement from the power plants, Contract for the Grant of Land Use Rights for State-Owned Land, Fire Operational Permits, Building Permits, etc. and Electricity Bill Payment Confirmation, Electricity Bills, Mining Machine Purchase Agreement, Mining Machine Custody Agreement.
- Unlock Capital through Stages
The traditional blockchain fundraising projects bear a high risk for investors. They are designed to unlock the capital once for all, which made it difficult to track the expenditure. DADA Platform hosts fund managers who set rules for a step-by-step capital unlocking process, according to their business plans. The managers upload documents proving the expenditure is generated as planned after each capital unlock. The investors have the right to refuse further unlock, as well as the right to vote to liquidate the projects they invested in.
- Decentralized Governance
DADA is structured as a DAO: DADA investors own the right for decision-making; smart contracts release the capital flows; once the contract launches, it can not be tampered. This decentralized investment solution makes it difficult for investors to lose over human errors.
- Establish a DID Reputation Network
DADA sends or removes credential points based on the fund managers’ practices. This builds a network and database for the fund managers with their credentials, assisting investors’ decision-making; fund managers get the opportunity to establish their profiles and exposure to more funding.
DADA, Introducing a One-stop Smart Investment Service Platform
Dd.finance is a decentralized investment platform built for blockchain project founders and investors, to unlock the liquidity and financial opportunities via a safe and open, co-governed platform.
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