HydroMiner checks most of the boxes you’d like to see in an ICO, which is why it has received the highest grade to date (see below). The company has existing revenue, a product in demand and they claim to have solved the mining pay-out formula. Their goal is to eliminate the value loss of hash-rate investing models. HydroMiner might be indistinguishable from other hydropower mining operations if it wasn’t for their kWh buy-in model and dividend payout program. With this new model, they stand out. The company also plans to repurchase tokens equal to 10% of mining revenue a month.
Solves a Unique Problem – B+
The primary service of HydroMiner solves a very necessary problem: provide hashing power to create new blocks on the blockchain. The problem and its solution is proven. Mining has moved past the living room into the economies of scale mode.
Market Size – A-
The crypto mining market is very large. There are over 1,000 coins of this writing, and many of them require Proof of Work to build and maintain their blockchains. The staff claim to be using an algorithm to determine the most profitable chain to mine on with their rigs (some GPUs & some ASICs). They currently mine mostly Ethereum & Bitcoin. The beginning of Ethereum’s PoS rollout and alternative proof algorithms gives this grade its minus.
Customers are Willing & Able to Pay – A
Blockchains are as good as fundamental institutions in the crypto world. They pay miners a reward to verify the vital transactions of their blockchain. Bitcoin, Ethereum, ZCash, Monero are a couple other altcoins are mentioned in the whitepaper.
Leadership Experience – B
The leadership team consists of only 6 people, plus 2 unnamed maintenance operators. Underneath the PR & marketing they appear to function as a cohesive team. They appear to understand how the business works fundamentally and don’t try to re-invent the business model.
Differentiated Product – B+
The standard in mining investments is a hash buy-in model. Investing in hash-rate type mining structure yields two good months of return on investment, then profits begin to drop. Instead of owning hash rate owning H2O is effectively leasing energy (aka kWhs). Owning the energy allows the investor to reap the advantage of computing efficiency gains. Unfortunately, leasing kWhs does not solve the problems of increased difficulty, hash rate growth and decreasing rewards.
Transparency – C+
HydroMiner’s transparency mostly falls in the “future promises” category. Promises are cheap. They invite the public to take free tours of their mines. Their team has done interviews with the media, including an AMA with their CEO on Reddit. Even their future promises leave investors with a lot to be desired. They promise to provide financial documents, but are not specific to what details they will include.
Competition – High
There is significant competition in mining, but large scale operations have the competitive upper hand. Over the long run, electricity costs will weed out the losers with hydropower miners at the most profitable side of the bell curve. Due to the immense size of mining there will be many profitable mining companies, but they will all have similar models.
Currently Revenue Generating – Yes
HyrdoMiner currently has two mining locations, one location is fully operational with 120 units and the other is under construction with capacity of 350 miners. Their revenue stream is semi-stable with production suffering from plant cycles since they are not tied directly to the grid. They claim to use the grid as a contingency, but it is not clear how they manage power shut offs. Their reported ROI varies greatly. It is not clear if their ROI variance is due to price of crypto or variations in hydropower supply. They mention the issues & cycles of hydropower supply, but do not make the correlation on ROI.
A young business with an inexperienced leadership team might be the weak link in this mining operation. They are good at marketing, but have yet to prove themselves in other aspects of the business. Operating a 120 mine farm is different than managing large scale operations. Does the management team have what it takes to realize the economies of scale, or will they become lost in the mountains of growth?
|Solves a Unique Problem||B+|
|Size of Market||A-|
|Customers are Willing & Able to Pay||A|
|Currently Revenue Generating||Yes|