Crypto Mining & Digital Securities

The Capital Needs of Crypto Mining

Digital Securities as a Solution

  • Borrowing capital: there are a lot of avenues for borrowing capital at relatively high interest rates, and the advantage of this structure is that after paying off all the debt, equity-holders are not diluted at all. They will receive 100% of the cash flows generated by the project onwards. But as ASICs get older, there is also a tradeoff in terms of mining efficiency over time. The caveat is that if the debt is paid off at the start of the project, equity-holders will be left with less efficient machines when it’s their time to collect cash-flow.
  • Offering equity: there are lots of savvy investors looking to gain exposure to the crypto mining sector, and they have many avenues to do so. For the firms themselves, it only makes sense to raise capital via equity if they can get a valuation that is worth giving away their cash flows. Alternatively they can offer equity on specific, ring-fenced mining projects that are separate from the corporate entity that carries the main operations.
  • Revenue sharing: this structure has recently become popular, as it gives crypto mining firms the ability to retain equity (which is a good idea if they want to eventually IPO and get the type of valuation offered by public markets) while giving investors the rights to their cash (Bitcoin) flows. A prominent example of this is the BMN Token issued by Blockstream.

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Co-Founder & CEO, Altas One Digital Securities

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Atlas One Digital Securities

Atlas One Digital Securities

Co-Founder & CEO, Altas One Digital Securities

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