EnvionBusiness modelBuild mining sites inside standard shipping containers and ship them around the world, so they can be installed close to cheap and/or renewable energy sources. This is their way of creating “World’s Most Profitable Standard of Self-Expanding Crypto Infrastructure”, as they say on their website.
Envion claim they have a database of places in the world where you can connect to cheap electricity. In this case, the most cost efficient option is to select the one that provides the lowest total mining cost (electricity, maintenance, shipping costs, rent etc.), like Kazakhstan for example, and send all of the containers to this one place. This would lower the cost of maintenance even further. So why would you send the containers all over the world instead?
I’m not sold on the idea of building the mining site in one central location and then sending it to remote sites, especially by sea. Think about traveling just with your laptop and all the sleeves and special padded bags. Now think about installing $100–150k worth of very specialized hardware inside a shipping container, connecting it all and putting it on a truck, a boat, a truck again and handling it by cranes all the way. I don’t think it will be plug and play. Rather plug, check what needs to be fixed, fix it and then play.
The idea of powering crypto mining sites with renewable energy is great. However, mining has to be done 24/7 to be profitable. Installing mining containers on solar/wind farms and using their surplus capacity will not be profitable at all, unless there will be a secondary source of renewable electricity when the farm is not generating enough. It turns out that the cheapest, most reliable renewable electricity right now comes from… yup, hydroelectric powerplants.
Envion is really selling (too) hard the concept of decentralization. The mining operations are centralized because of the mining algorithms and the rules (the code) governing cryptocurrency supply transaction fees etc. It’s the way bitcoin and other currencies are set up that drives the ‘arms race’, centralization and demand for low cost electricity. Miners centralize and create mining pools because the market makes it the most profitable approach, not because there is a crypt-conspiracy. A decision to run decentralized operations all over the world is fine, but this business will not be competitive against the HydroMiners and Ice Rock Miners of the world. And, assuming these mining sites all over the world are competitive and more and more are brought on line, they are still owned by a single company — Envion. How decentralized is this?
Finally, the cooling system: “More than 40 times more efficient than traditional data centers, ENVION’s patented cooling system outperforms virtually any other data center.” I’d say, if you have the most efficient cooling system in the world, screw the mining business. Sell your license to other miners and the Googles and Amazons of the world.
It looks like an overly complicated approach to problem that has a simple, straightforward solution. I prefer simple solutions, something like what HydroMiner and Ice Rock Mining are proposing.
Team / ExperienceTeam members have a lot of experience with finance, media, consulting, marketing and software development. I have to admit their marketing and press materials look really good and very professional. However, I couldn’t find any information about backgrounds in crypto mining, data centers or logistics. Envion claims it has one mining container unit operational. Again, I couldn’t find photos or videos of a connected operating unit. The photos on their website show a mining container parked in front of a solar farm, but it’s not connected to anything. There is a ‘mining dashboard’ on their website, but there’s no way to verify what is it actually showing.
TokensEnvion token (EVN) holders will receive earnings from mining operations and have voting rights. So EVN is a security and therefore limitations apply to US and Swiss citizens (general public can’t be offered unregulated securities). I couldn’t find any specific detail explaining how earnings will be calculated, how they will be distributed or how voting works.
I did find a calculation showing a 166% return on investment and how to turn $50k into almost $900k in 5 years. There are no details regarding the assumptions and variables running the financial model and generating these numbers. I have to admit it’s not even close to Ice Rock’s 664%, but it makes me think how close to Madoff’s territory is it.
The financial plan shows profits for the next 5 years. I bet anyone that the mining business model will change during the next 12 months. It has to. Otherwise, given the current trend, by 2020, the energy to mine bitcoin alone will surpass the entire world’s electricity production!
Dear Envion team,
I’m really sorry no one replied to the email I sent regarding your ICO. Maybe you never received it, maybe you missed it. Just in case, I’m pasting it below, so you can read it now and hopefully reply. I’m happy to include any insights I receive from you in this article later on.
“Envion, with the founder coming from solar industry presents a pure project (asset) finance approach. They want equity from the investors and looking to pay back dividends. So, I’m trying to find any sort of business plan calculations backing up their promises of 161% ROI. A spreadsheet with assumptions (about costs, price of crypto mined, performance etc.) and a business model would be nice.Here is a list of more specific questions:Envion wants to run on renewable energy. This is great, but solar and wind energy is intermittent. And you need 24/7 power supply to make mining profitable. How do they want to solve this?
Cost of the container with mining rigs is a constant. The only variable is transportation cost and cost of electricity. So, the rational approach is to find the cheapest electricity as close to the manufacturing place and send all containers there. But this raises the question of decentralization and sending the containers all over the world. Why would you do it, instead of concentrating them all together in the place with cheapest electricity (next to a Chinese nuclear power plant for example)?
Envion is talking about installing the containers in remote locations, so I’m assuming far away from the nearest hardware supplier. What about servicing and maintenance? What is the reaction time for replacing a broken rig?
And a more general, but a fundamental question:
How long are they planning to operate? Because essentially this business model is solving a fundamental software problem (energy intense network consensus mechanism) with hardware. What if the software changes and solves this problem altogether (proof of stake, proof of time-stake)?”
Solving a software problem with hardware
As I mentioned above, the mining business model has to change. When the bitcoin network was launched, no one fathomed how big it would and will grow or how many resources will be committed to mining. Currently, there are over 1,300 cryptocurrencies and tokens. Most of them use a Proof or Work algorithm and require mining. Bitcoin alone uses about 30TWh of electricity per year. It’s a lot. More than Serbia and closer to Denmark’s energy consumption. It’s ¾ of the annual electricity generated by the Hoover Dam.
But, to put things into perspective, the consumption of all data centers in the world in 2015 was about 416 TWh.
All as a result of the algorithm that decides that winner (the fastest miner) takes all and rewards concentration, ‘arms race’ and excessive energy consumption. It is a software or, more accurately, , a governance problem that miners (including the above ones) are trying to solve with hardware. There are crypto coins out there now that do have a negligible energy consumption — Solar Coin for example.
Cryptocurrencies will evolve. Governance, rewards and incentives for maintaining the network will change. Mining by inefficient brute force will become obsolete but it will not happen overnight. Different cryptocurrencies will transform at different rates. So the mining business model still has some life left. Maybe a year, maybe two. But I wouldn’t bet on 5 years.
If you like this article you might also be interested in the series I’m writing about crypto for non-technical people like myself. Part one is available here:
A lawyer friend asked me about bitcoin, blockchain, investing and bubbles
Please feel free to post your comments or questions here, get in touch on twitter (
https://twitter.com/HiEnergyPeople) or Linked In (
https://www.linkedin.com/in/michalbacia/ )
_____________________________________________________________
Update on 21/Dec/2017Envion did reply to me on twitter. I wasn’t happy with their answers, so I asked some more specific questions. Here’s the link:
https://twitter.com/HiEnergyPeople/status/940535045013561344You can follow the thread and all the Envion answers and my further questions in the comments.
I was also contacted by someone who is an investor in the cloud mining industry. The person wants to stay anonymous and is afraid Envion will give a bad reputation to the entire industry and ICOs. Here are just some issues raised by this person. I think it makes sense to listen to in industry insider:
161% return is basically impossible in mining. It happens only due to the gains in currency skyrocketing, in this case it would have been also great to just keep the currency.
The container “technology” they present is ridiculous, it mixes s9 miners that need a temperature of max 40 C with GPU miners that run at 70 C, this does not work other than in cold winter.
They have a 100KW or 60 GPU computer in a container, that’s not much, we have an up to 200 GPU computer in a container and there is no need for special cooling or 50 holes in the container; 2 very large fans are fine
They fantasize about building 200 such units a month, crazy, it takes 3 people and a whole month to build ONE, and they must know about electricity and mining and work efficiently. You can’t find and organize people so fast nor find the mining equipment or the necessary electrical equipment so quickly.
Envion claims that they have pre-orders with producers of asics etc. This is nonsense, there is no such thing. Prices change 2x a day and if you want to buy, you just pay and get it delivered, there is no need for a contract.
They claim they can purchase large amounts of asics. Impossible! The market is empty right now and always tight.
Their calculation is based on an asic cost of 1700 USD/pcs. Current prices are 5000 USD plus VAT, plus transport etc. No need to say their ROI calculation does not work on that base.
In their calculation they have only a 25% hardware reserve. Reinvesting 25% of the mining proceeds will no work. We usually keep 65% of the proceeds to have a profit and to be able to keep the hardware at a competitive level.
They make the calculation net (with no VAT). In fact, all over Europe, Canada and many other countries, they will not be able to get the VAT back because the mining is not subject to VAT.
They present the business model as if every power plant would be in a position to power their containers. This is not possible because transformers and cabling are expensive: installing a transformer, switches and cables cost anywhere from 20 to 50 K USD for a facility and can take 2 or more months.
As per the “mobile” mining solution: there is no point to move containers around, it’s very costly: transportation, insurance and hardware problems after transport are frequent. Additionally there are problems with humidity and a lot of paperwork if you cross country borders.
They consequently did not answer questions on telegram or elsewhere and deleted every account that asked critical questions.
Why are we saying all of this? They can’t deliver and will create many angry customers. It will make regulators in central Europe angry and will make the whole ICO market look bad and force more regulations.
To sum it up:Envion doesn’t answer any reasonable, specific questions.
Industry insides are calling them out on their bull$hit.
If something looks like $hit and smells like $hit, I wouldn’t recommend putting it into your mouth hoping it’s chocolate.
The people running Envion are either ignorant or cynical. Either way the investors will lose their money. I’d short them if it was possible.
Die im Review gestellten Fragen, wurden dann vom Envion Team auf Twitter "beantwortet".
