ICO Analysis: HydroMiner

With the era of environmental sustainability upon us, demand for so-called ESG investments is on the rise. ESG stands for Environmental, Social and Government strategies – a broad umbrella that includes several, often competing investment strategies.

While ESG integration has become a common buzzword in the investment community, market participants are taking concerted steps to diversify in environmentally-sustainable practices. Startups have no doubt recognized this, and are looking to capitalize on investors’ newly acquired sensibilities.

This trend has not been lost on the ICO market, which has seen a steady stream of crowdfunding campaigns seeking to promote environmental sustainability. HydroMiner (HM) is one such ICO that is using clean energy from hydro power stations in the European Alps to deliver renewable mining solutions.

The company frames its value proposition by illustrating the high costs of cryptocurrency mining and the need to find a more carbon efficient blueprint.

Bitcoin mining alone consumes as much energy as a country like Croatia. We believe it’s crucial that as much of the consumed energy comes from ecologically friendly resources.Our goal is to have the industry’s lowest carbon footprint. – HydroMiner

By using hydro stations in the Alps, HM is able to exploit one of the lowest prices per kilo Watt in Europe. The company claims its electricity bill is an 85% discount to Europe’s average. Savings of this magnitude make profits that much easier to come by.

When it comes to mining digital currency, HM relies on proprietary water-cooling technology in addition to its Alpine-rich hydro power.

With our proprietary water-cooling powered solutions, we are able to maintain lower temperature at very high density, which is crucial for the highest possible mining power in the small space available in hydro power stations. – HydroMiner

In terms of cryptocurrency, HM is equipped to mine the following:

  • Ethereum (ETH): 40%
  • Ethereum Classic (ETC): 20%
  • Zcash (ZEC): 20%
  • Siacoin (SC): 20%

The company says is capable of “mining all scalable cryptocurrencies,” but appears to be focused solely on the four listed above. HM currently has one hydro station fully operational and a second one rented.

HydroMiner Token

HM is issuing an Ethereum ERC20 token called H20, which comes equipped with a proprietary smart contract that has been audited by two independent consultants. Investors who purchase the H20 token receive mining rewards denominated in Ethereum. The reward received is calculated based on the current exchange rate of cryptocurrencies relative to ETH.

The H20 tokens enable investors to participate in mining profits, thus opening up a key segment of the cryptocurrency market that few have reached. Tokens can also be transferred into any ERC20 supporting wallet, such as MyEtherWallet, Mist or imToken.

H20 tokens can be purchased through Ethereum or fiat currencies. The capital raise will fund the following HM business functions:

  • Hardware: 55%
  • Hydro power station leasing/electricity: 15%
  • Operations: 15%
  • ICO Costs: 10%
  • Marketing: 4%
  • Legal: 1%
  • BNT Reserve Fund: 1%

A token presale was held on Sept. 25, where HM reached its hard cap of 1,500 ETH is 36 minutes. The ICO public sale was originally slated for Oct. 3, but HM delayed the release to “fine tune” its token model to ensure compatibility with Australian regulation.

The token will be available to investors worldwide, with the exception of U.S. citizens or permanent residents of the country.

The Team

HM is headed by sisters Nadine and Nicole Damblon, who began crypto mining in 2014. Roughly two years later, the sisters moved to Vienna, Austria to launch HydroMiner.

Nadine and Nicole have surrounded themselves with leading experts from a wide range of backgrounds, including hardware supply, network infrastructure, cooling technology, blockchain, informatics and sales. The team is also supported eight advisors ranging from ICO experts to fund managers.

An active link to to each team member’s LinkedIn account is provided on the HM website. Given the current state of the ICO market, verifying team members is extremely critical for evaluating token sales.

Verdict

Despite being a year old, HM is generating significant buzz in the cryptocurrency community. And for good reason.

Cloud mining – the process of using remote data centers with shared processing power – to mint coins hasn’t exactly earned the best reputation. Anonymous miners, clandestine operations and the inability to liquidate one’s stake have undermined trust in this segment of the market. Against this backdrop, HM has the potential to make waves. This is true even when you decouple the company’s committed environmentalism.

That HM is relying on hydro power offers a strong value proposition to prospective investors. That’s because hydro is the cheapest way to generate electricity today. Once a dam has been built and the equipment installed, flowing water is essentially free. However, key questions surrounding scalability and an increasingly centralized mining community may pose challenges to HM’s business model.

Nevertheless, the company’s business model is remarkable simple, and can be summarized as follows:

  1. Identify and lease hydro power station
  2. Order equipment
  3. Assemble hardware in container
  4. Earn mining revenue
  5. Maintain and renew hardware

HM has promised return on investment in eight months if invested in the first week of the ICO. Dividends are paid monthly via smart contract to every Ethereum address that holds the H20 tokens.

Risks

  • Finding a balance between economic and environmental sustainability has proven difficult before.  -0.5
  • Changes to mining rewards could impact profitability. -1
  • Cryptocurrency mining is increasingly being dominated by large enterprises now offering significant competition. -1.5
  • Scalability could become a challenge as HM expands significantly beyond existing hydro stations. -0.5

Growth Potential

  • Simple and potent business model. +2.5
  • Strong ROI potential. +3
  • Significant buy-in from investor community, as evidenced by ICO presale. +2
  • Partnership with Bancor strengthens liquidity of operation. +1.5

Disposition

Factoring all the above, the author gives HydroMiner a score of 5.5 out of 10. HM is a highly ambitious project, but one that could face challenges democratizing the mining industry.

Cryptocurrency mining used to be something that non-specialized hardware could do. However, as the market evolved, miners have come to rely on powerful systems and graphics cards to process computations profitably. Manufacturers are now making special cryptocurrency mining cards that can mint tokens much faster than previous methods.

This has drawn many individual miners into mining pools, where the cost of minting new coins is smaller. Large firms with greater economies of scale have also entered the market to utilize their competitive advantage.

HM appears to have pulled its whitepaper from the internet before the author got a chance to look at it. As such, HM may warrant a second look once the company updates the document.

Investment Details

The HydroMiner crowdsale begins Oct. 18, and will run until Nov. 21. Updates and information pertaining to the token sale can be found here.

  • Project Type: Token Sale
  • Platform: Ethereum (ETH)
  • Total Supply: 100,000,000

Featured image from Shutterstock

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi
Comments
  • Not to mention not this is not available to US residents.

    “You are not allowed to purchase H2O tokens if you are either a U.S. citizen or permanent resident of the United States, or have a primary residence or domicile in the United States, including Puerto Rico, the U.S. Virgin Islands, and any other territories of the United States. Please see our complete Prospectus for more details.”

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