Security Tokens are simple.

They are nothing more than equity ownership, on the blockchain.

Example:

Tim has a house he wants to sell. He issues a security token to sell his house.

The owner of the security token is the owner of the house.

Hi ladies and gents,

My name is Paris Smalls and I am here to propose an idea that I call "Proof-Of-Work-For-Good"

Here is the general concept:

1.) Tokenize renewable energy infrastructure as an asset on ERC-20 smart contract
2.) Decentralize ownership of asset by allowing multiple people to have small equity stake (<5%) power plant
3.) Cryptocurrency mine to accelerate pay-back-period of power plant
4.) Pay token holders dividends
5.) Trade Security Token (ownership of power plant) when ready

I believe by looking at cryptocurrency mining as an asset (security), instead of as a PPA Agreement (utility) we will be able to use Proof-Of-Work to grow the renewable energy sector, which is good.

This should work for all renewable energy technologies (i.e. Solar, Wind, Geothermal, and Hydro), so if your working on projects in any of these fields, please feel free to reach out to me if you want to learn more about how you can tokenize your assets. I am only here to help, and I would be very happy to share my experience working on this.

I recently did an interview on the topic, and we start talking about the utilization of security tokens for cryptocurrency mining at 20:40.

Security Token Interview:
https://www.youtube.com/watch?v=xch5HLhjvNs&t=596s

Please provide feedback, but play nice

Honest question:

If you are mining Bitcoin (or any other cryptocurrency), do you ever consider the source of the energy?

Example:

Coal at 2 cents.

Hydro at 4 cents.

What would you do? Would you even consider where the power comes from, or simply go after the cheapest rates?

Kakmar,

To be clear, I am not making any Youtube income.

I am a "newbie" on this platform, and accidentally started too many threads on the same topic.
Here is a response I received from an older member:

"Better stick to 1 topic. You already started a fresh topic 3-4 times for the same project. Better stick to 1 topic and update with new Posts"

I decided it would be better if we talked on the other thread, since there are more people there that I have responded to.

If you take a look at the other thread (look for Adam4Eve "Why Geothermal Energy is simply better for mining"), I have responded to you there so that I can talk to everyone at one place.

My apologies if I did not make this clear.

Response to 'Patata's' Comment (Below):

"Interesting. What is the cost of implementation of this technology? Will it help the individual miners? I don't think so. The large scale energy generation can only benefit mining farms which run on a large scale. Even if the technology works as shown in the video, it's not feasible for small scale miners. One can't implement their own geothermal energy generation plant.

Hello Patatas,

Yes, actually this model was made to give power back to the individual miner.

This is why I speak so much about "Decentralized Power Plants". My simplified proposal:

1.) Miners group together to OWN THE POWERPLANT. Imagine an ICO, but instead of a company raising funds, each mining operations raise funds.

2.) Distribute ownership. Miners, as a group (likely 1,000+ miners) will work together and own the entire facility.

3.) Distribute funds based off ownership. The more of the power plant you own, the more mining power you have. The power plant only mines. We can make sure no 1-person or group has control of all of the power by capping how much of the power plant each person can. No need to be greedy. These things will be 10 MW+. Plenty of power to go around.

4.) Allow liquidity. The ownership will be in the form of a Security Token, which will be tradable (first one's of this kind came out early 2019).

I will reply to you in "Why Geothermal Energy is simply better for mining"

I think there is a strong misconception in the public's view about earthquakes and geothermal energy.

To be clear, large earthquakes from traditional geothermal power plants is extremely rare, despite the power plants being along the Ring of Fire.

Please remember that the Geothermal industry knows that this is a problem, and potential earthquake hazards and how to handle them are mitigated in the planning phase, before the power plants are built. The hazards mentioned were not from traditional geothermal plant, but from a new geothermal technology called "Enhanced Geothermal Systems". The method was created in 2008, and those first plants started closely after in 2009. The articles cited are outdated, as this was from over 10-years, when little was known about the earthquake hazards of Enhanced Geothermal Systems. Modern day scientists know better and do not drill into faults.

To give a real world example as to how well the industry plans power plants, the Geysers Geothermal field has been around for about 70 years, and is located along the ring of fire.

Here is an article about the field:
https://www.usgs.gov/faqs/why-are-there-so-many-earthquakes-geysers-area-northern-california?qt-news_science_products=0#qt-news_science_products

This is a sentence taken straight from the article, written by the U.S. Government (USGS)

"To date, the largest quake recorded at The Geysers is approximately M4.5. It is possible that a magnitude 5 could occur, but larger earthquakes are thought to be unlikely. In order for a larger earthquake to occur, it is necessary that a large fault exist. For example, the 1906 magnitude (M) 7.8 San Francisco earthquake ruptured nearly 300 miles of the San Andreas Fault. At The Geysers no such continuous fault is known to exist. Rather, there are numerous small fractures in the rock located near the many steam and injection wells."

If you don't drill on top of the fault, you should be good to go.

Geothermal Plants are not known for producing greenhouse gases. Most power-plants these days are closed-loop and produce close to zero-emissions.
https://www.energy.gov/eere/geothermal/geothermal-power-plants-meeting-clean-air-standards

Without a doubt, the power plants will trigger earthquakes. They will most likely not be affected by earthquakes, however.

I think is is important to remember there are literally thousands of earthquakes daily, the majority of which you will not feel (have little impact on anything). The evaluation of an earthquake works on a Richter Scale, which is logarithmic such that a magnitude 2 earthquake is much different than a magnitude 3, although they both do sound scary, there isn't much harm until you get to about a magnitude 5 or larger, which is extremely rare.

In the citation you mention, the earthquake was trigged by a technique called "Enhanced Geothermal Systems".
https://www.energy.gov/eere/geothermal/how-enhanced-geothermal-system-works

In this scenario, scientists and engineers essentially create their own geothermal reservoir though "hydraulic fracking". As you can image, this causes the generation of earthquakes, but most are harmless. The leader of the Swiss project cited in your article made a big mistake of drilling directly into an active fault, which when lubricated with hydraulic fracking fluids, cause slip on the fault easier, generating more earthquakes.

These concerns can now be mitigated with advanced reservoir characterization technologies to prevent the drilling of wells into active faults.

@Kak

"Why do we need a decentralized mining operation? I know people use decentralization to prevent attacks from hackers and governments that are trying to take it down. Is this one of the motivations behind a decentralized mining operation or is this more about decentralized decision making powers?

It could also mean that decentralized mining operations might prevent a 51% attack, if the mining pools are more decentralized. Right?

Please expand a bit more on the concept and what the motivation for this was?"




Adam4Eve Response / Motivation:

1.) Utilize the high energy demand of "proof-of-work" to stimulate the development of renewable infrastructure.

2.) Allow common people access to cheap electricity to help prevent "51%" hacks in the future and move away from large institutional control of hashpower.


I will try to be as brief as possible, but please feel free to continue asking questions that are not clear. It as also great for me to hear feedback.

The last Bitcoin block is not estimated to be mined until 2140. That gives us another 120 years of continued Bitcoin mining energy demands. Cheap electricity is going to be harder to come by as time goes on. There has to be renewable energy infrastructure, and lots of it, to verify transactions for large scale crypto adoption.

We can build this infrastructure now. Geothermal works well because the energy is 24/7. Wind and Solar (if you are not grid connected) require storage units (large-scale batteries) to provide the 24/7 energy needed to maximize returns. These units very expensive, much more than geothermal. If you are grid connected, then the energy you get is  almost certainly going to be from fossil fuel sources. My climate scientist friends could jump in from here....

Bitcoin mining is going to continue to be harder. Few people have access to power resources requires, leading to large centralized control of mining power. There is also cloud mining, but here you are paying for the power per kW, which performs poorly when Bitcoin is low, and those cloud mining companies fail.

What I am proposing is the pulling together of resources from the crypto community, to stimulate renewable energy adoption and helping to decentralize mining operations. Everyone gets a piece of the pie, not by cloud mining (selling the power) but by ownership. Giving the community both ownership of the resources, and distribution of Bitcoin mined, allows for these power plants (I call them special purpose vehicles) to be more resilient to Bitcoin price fluctuations. The vehicle will maximize revenue generation, and can be traded at any time by the different power plant owners thanks to new security token trading platforms that just came out in 2019. We move away from Utility tokens, and use Asset based Security tokens to give people ownership.

Example of security token platform:
https://www.tzero.com/

Example of the "Decentralized Power Plant Model" and the benefits of tokenization:
https://www.linkedin.com/pulse/proposal-promote-democratization-sustainable-using-jay-fortin/

Original Article:
https://www.iisd.org/library/tokenization-infrastructure-blockchain-based-solution-financing-sustainable-infrastructure

All of this stuff is pretty new, but I think it should work.

Ok.

I will respond to this in the:

"Why Geothermal Energy is simply better for mining"

thread

It's my company and I also worked on the design/developed the concept.

Please feel free to open up the chat here just in case anybody else is curious, and we can have a more private conversation if necessary.

I put together this 3-D animation for what a decentralized mining operation would look like:

https://www.youtube.com/watch?v=tNb1Mg0e-jc

You can skip to 0:40 if you don't care about the power generation technology.

Feel free to ask me any questions about how any of this stuff works.

Most geothermal resources are along tectonic plates, or the well defined 'Ring-of-Fire'

In the U.S. this means California, Nevada, Oregon, etc..

The investors could be assured of their ownership, because it would be in the form of a 'Security' a.k.a 'tradable financial asset' as approved from the governmental entity.

The 10% example was simplified, and meant profit. You are correct, without accounting for mining equipment, racks, operation and maintenance, etc... that would be revenue. The 10% (or whatever ownership) would be in respect to net profit from the operation.

These decentralized power plants would be in the form of a 'Special Purpose Vehicle', and would have only one purpose in life:

Mine Bitcoin and pay out the coins (profit) to the owners.

First of all solar works in some spots not others.

Same with wind.  the 24/7 concept is simply wrong  as a grid tie in  with the local power company makes solar 24/7.

I agree with the grid tie-in argument. However, the local power generated is more than likely not renewable, since it would have to account for the off-peak times of wind and solar.

Five year plans are worthless.

Please see my previous argument about why a 5-year plan is not worthless. In a nutshell, liquidity from a security token design will work well to mitigate any concerns about infrastructure development timelines.

When Buysolar and I deployed a 100kwatt array then a 300 kwatt array we were mining in under 6 months.

I congratulate you on deploying solar renewable energy infrastructure. I am all for it. It is going to be increasingly difficult however to have a 100% renewable energy infrastructure to meet the hopefully growing mining energy demands, and I believe now is the time to begin thinking critically about how this is going to look like in the future, and how we can integrate crypto energy demands as a net positive in the fight against climate change.

We are now working on a 500kwatt to 1 megawatt setup that if we start it will will be using it earlier then Nov 1st 2019

Please keep me posted on your progress!

Going geothermal sounds nice but to be real it needs to be up and running quickly.

Thanks, and please do not forget about scalability. In the "5-year plan" that is continuously mentioned, a geothermal plant of this nature would be 10 MW + with a lifetime of over 30 years. This is an invest into renewable energy infrastructue for the future, supported by crypto, but has scalability larger than mining

1. This just seems like another pipe dream ICO selling garbage tokens that wont ever be worth anything. (it makes it that much funnier that you quote gigawatts failures, as they failed after having an ICO like you are trying). Sorry if you dont like it but the facts are ICOs are a scam and they just don't work. We have years of data to prove this now.

I actually thank you for this comment, as I am sure other people have similar concerns.

a.) When did I ever mention having an ICO? We do not plan on issuing an ICO. You mention that they are scams. I am not far from agreeing with you. What I am proposing is much more similar to a "Security Token Offering". There is a vast difference. Security tokens are based off selling equity in a project, meaning that participants in such offerings have direct asset based liquidity in their holdings.

b.) You are correct. We have years of data proving that this does not appear to work well. However, what it did prove is that vast amounts of capital can be transferred easily to fund the development of novel projects. If done correctly, the 'token offerings' could be a great benefit to build renewable energy infrastructure for cryptocurrency mining, which could have many societal benefits (we cite hydrogen production for clean fuel) down the line.

2. I think you might be missing a fundamental understanding of how this industry works.  No one in their right mind would give you money on the promise of a power station when you wont even have a prototype operational for another 5 years. This industry moves WAY TOO FAST for something like this to have any value. In 5 years the whole landscape could change rendering this obsolete.

a.) The 5-year timeline would be more or less valid for a project completed from start to finish. 4-years would be the average for such a project, and it is more like 2 years if the geothermal reservoir is already identified (if the site is already operational).

b.) I understand that the industry moves fast. I think there is a miscommunication in what you believe we are proposing, as referenced to your statement about the 'ICO'. This is an ASSET based project. You are not simply buying power for cryptocurrency mining, but rather owning the powerplant asset. What is beautiful about this, is that even if we take your example about the 5-year use case (let's assume this is correct), and cryptocurrency completely crashes, you OWN a fraction of the power plant as a security. Power can be used in various different ways (data servers, material refinement, clean fuel production ...) and is a market that will continue to grow with time.

3. 4 cent power is easily obtainable in bulk if you understand the US energy market. There really isn't much value to your proposition when the result is already available.

a.) Again, the argument is owning vs. renting. When you get 4 cents power, I assume you purchase it correct? What if you owned the infrastructure that produced the 4 cents power?

b.) I think your missing the infrastructure development piece of the proposal. I have no doubt that you can simply go to a location that perhaps sells renewable power cheaply, but this doesn't necessarily stimulate the growth for large scale adoption of renewable energy.

4. The reason mines center around places like the pacific northwest is because that is where the renewable energy already is. I run a 20mw facility powered fully by hydroelectric power. People in industrial nations outside of China are VERY RARELY running on fossil fuels, so touting this as a cleaner alternative when the vast majority is already powered by renewable sources doesn't really give you many advantages.

a.) I am a huge fan of hydroelectric, or any other base load renewable generation technology. Understood about the argument for most mining coming from renewable energy. Question for you, how much new renewable energy infrastructure is being built for cryptocurrency mining? My argument is to use cryptocurrency mining to stimulate renewable energy creation, not renewable energy adoption. There is a difference here.

5. 2.5 million per megawatt to install instantly makes this a no go for miners. With the depressed market prices, people are in survival mode. Nobody is going to spend millions and wait 5 years as most will be out of business by then.

This is one of the biggest hurdles we had when designing the model. Of course high capital costs, plus a long project development plan, makes this look unnattractive. Here is our solution for how to get around it:

1.) Re-define the miner. To be frank sir, this is not a traditional mining project. We are not trying to say "Here everybody, we have cheap power, come buy from us and mine!" What we are talking about is a truly decentralized mining operation. No targeted mining group, just a power plant producing power and generating revenue. The power plant is the money maker, not the individual, and while we highly suggesting mining, the power can in theory be used for any energy consumer.

2.) Security Token. Let's pretend that it will take the power plant 5-years to be developed. We are currently on year 1, and trying to convince people why they would ever participate in something that "takes 5-years". The solution is to not have it make the token liquid. Exchanges like t-zero now allow you to freely trade security tokens like stock. We will:

a.) Issue the security token (ownership of power plant) at a discounted rate (lower than powerplant net worth)
b.) Have the token be freely tradable on the open market (you don't have to wait 5-years to trade it)
c.) Benefit from renewable energy incentives (carbon offsets, tax reductions for capital installation), which will greatly increase the economics of the project.

Feel free to continue to raise any concerns you might have, and I will try my best to mitigate them.

-P

Response to a question I received about geothermal infrastructure for bitcoin mining. Let's start a discussion.

Thank you for your question. The U.S. Department of Energy has a good source here showing the land use of geothermal compared to other power plants:

https://www.energy.gov/eere/geothermal/geothermal-power-plants-minimizing-land-use-and-impact

To summarize land use by acre:

a.)   Geothermal: 1-8 acres per megawatt (MW)
b.)   Nuclear: 5-10 acres per MW
c.)   Coal: 19 acres per MW

Geothermal is not only renewable, but it also has one of the smallest surface footprints of all power generation technologies.

To give you an estimate on the installed cost of a power plant, the DOE traditionally uses approximately $2500 per installed kW in the U.S.

Therefore, a 1 MW Geothermal Power Plant will cost approximately $2.5 Million to install.

However, geothermal can produce electricity 24/7, at a high capacity factor (>90%), and has one of the lowest LCOE of all power generation technologies.

This means that so much power can be generated from a geothermal power plant, that it justifies the high upfront capital costs. However, these high upfront capital costs are why development of geothermal infrastructure has stalled, and why we are trying to get many investors in developing a “decentralized” model for geothermal power plant installation.

We will use this opportunity to clarify the offering. Right now, we are simply raising money by selling equity in our company. Your shares will increase in value as the company evaluation increases.

If you invest in the power plant development (the future security token offering), then yes, you will receive part of the Bitcoin mined. We plan on fully decentralizing ownership of the power plant by utilizing an asset-based token model. Here is an example:

If you invest and own 10% of the power plant, you will receive 10% of the profit (bitcoin mined) from the power plant.

You will also own 10% of the power plant, which you can trade to other investors on alternative token exchanges. Thus, you get back what you paid for the token, plus the additional profit from the mining operation.

It is the same argument as Renting vs. Buying a home.

Currently Bitcoin miners try to find the cheapest electricity possible for their mining operations but have no ownership of the mining infrastructure.

The model we have developed will allow individuals to own the mining infrastructure (power plants), make money from the cryptocurrency mining process, and sell their ownership at any time. Our company will generate revenue by taking a small percentage ownership (< 5%) of each power plant developed. We will also be involved with the operation and maintenance of each facility.

We believe this is the first time this decentralized power plant ownership model has been proposed.

Here is a response we recently gave on the concept:

Hello Derrick,

Thank you for your question. The U.S. Department of Energy has a good source here showing the land use of geothermal compared to other power plants:

https://www.energy.gov/eere/geothermal/geothermal-power-plants-minimizing-land-use-and-impact

To summarize land use by acre:

a.)   Geothermal: 1-8 acres per megawatt (MW)
b.)   Nuclear: 5-10 acres per MW
c.)   Coal: 19 acres per MW

Geothermal is not only renewable, but it also has one of the smallest surface footprints of all power generation technologies.

To give you an estimate on the installed cost of a power plant, the DOE traditionally uses approximately $2500 per installed kW in the U.S.

Therefore, a 1 MW Geothermal Power Plant will cost approximately $2.5 Million to install.

However, geothermal can produce electricity 24/7, at a high capacity factor (>90%), and has one of the lowest LCOE of all power generation technologies.

This means that so much power can be generated from a geothermal power plant, that it justifies the high upfront capital costs. However, these high upfront capital costs are why development of geothermal infrastructure has stalled, and why we are trying to get many investors in developing a “decentralized” model for geothermal power plant installation.

We will use this opportunity to clarify the offering. Right now, we are simply raising money by selling equity in our company. Your shares will increase in value as the company evaluation increases.

If you invest in the power plant development (the future security token offering), then yes, you will receive part of the Bitcoin mined. We plan on fully decentralizing ownership of the power plant by utilizing an asset-based token model. Here is an example:

If you invest and own 10% of the power plant, you will receive 10% of the profit (bitcoin mined) from the power plant.

You will also own 10% of the power plant, which you can trade to other investors on alternative token exchanges. Thus, you get back what you paid for the token, plus the additional profit from the mining operation.

It is the same argument as Renting vs. Buying a home.

Currently Bitcoin miners try to find the cheapest electricity possible for their mining operations but have no ownership of the mining infrastructure.

The model we have developed will allow individuals to own the mining infrastructure (power plants), make money from the cryptocurrency mining process, and sell their ownership at any time. Our company will generate revenue by taking a small percentage ownership (< 5%) of each power plant developed. We will also be involved with the operation and maintenance of each facility.

We believe this is the first time this decentralized power plant ownership model has been proposed.

Yes,

What I am talking about is using "proof-of-work" energy demands to develop renewable energy infrastructure for cryptocurrency mining.

The concept isn't very new, and companies like GigaWatt and now CryptoSolarTech have tried, but failed.

The reason these companies failed, is because they failed to realize that the "intermittent" renewable energy resources of wind and solar can not provide the energy needed to economically mine bitcoin.

For Example:

If you have a S9 running for 24 hours of the day, you would need electricity for 24 hours, every day.

Wind can not do this.

Solar can not do this.

At least not without energy storage (large-scale batteries)... however battery technologies are sill very expensive, and makes those projects un-economical once you account for storage.

I am suggesting we build BASELOAD Renewable Energy infrastructure for these projects.

It will make the mining more economical/ actually make sense.

-P