Our new Disruption by Blockchain series aims to highlight companies that are leveraging the incredible potential of blockchain technology to disrupt and revolutionize their industry. Through one on one interviews, we'll speak directly with industry leaders to cut beyond the hype and get directly to the heart of practical use cases and examples of how it will change the world, one industry at a time.
The following is an interview we recently had with Nadine Damblon, CEO of HydroMiner.
1. What’s the history of HydroMiner? How and where did you begin?
ND: HydroMiner is a company that is working in the field of cryptocurrency mining.
Our goal is to conduct crypto mining on a large scale using solely sustainable energy resources. My sister Nicole and I began mining in 2014 on our computer at home. After we bought special hardware from Chinese producers it soon got so hot and loud in our apartment that we needed to look around for a new accommodation for our miners. At that time we already saw the potential in that business field, but also the problems.
We decided to bring our operations to a new level because the mining was extremely profitable and at the same time tackling one of the biggest problems, the vast amounts of energy consumption of mining. This problem we solved by only utilizing renewable energy.
2. Who are the founders and key team members?
ND: Me and my sister Nicole founded HydroMiner in 2016. Today I am the CEO of HydroMiner, together with the managing directors Michael Marcovici, Davies Guttmann and Christian Vogl.
Michael has expertise in online business stretches back to 1991, when the Internet still worked without WWW or domains. Back then, he published the Austria Boersenbrief, a financial experts magazine, and was a private equity fund manager.
With advisors, we are more than 20 people already and grow constantly.
In the 2000s, Michael established a trading company that grew to eBay’s biggest power seller – worldwide.
Christian Vogel is an expert in hardware supply, network infrastructure, server migrations and energy supply. His experience in crypto-mining goes back to 2012, where he started his own profitable mining operation. In 2016, he joined HydroMiner as CTO and is managing all technical aspects while implementing and adopting new technologies and cryptographic strategy.
My main responsibilities at HydroMiner are business development, strategic planning, and networking. I come from the art world and have a degree in media studies, my father has a software company so the process of mining wasn’t all new to me. During my studies, a friend introduced me to cryptocurrencies. The libertarian idea of bitcoin quickly caught my attention as well as my personal support. It is extremely important for me to know that that people can have control over their own money without relying on third parties.
3. What problem are you solving? Who are you solving it for?
ND: Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Miners participate in a race to validate these blocks, the first miner to validate a block receives a fraction of the cryptocurrency as a reward. In the early days of cryptocurrencies, you could mine on your home computer but these days are long gone. Now you need to order highly specialized hardware that consumes vast amounts of energy. A big part of the mining is still done in China, around 70%, where they use a lot of fossil fuels.
4. What is your solution to this problem?
ND: We use solely renewable energy for our crypto mining operation. We had the idea to put our hardware directly into hydro power stations, where we could avoid the grid costs and get a very low energy price, because governmental subsidies for small hydro power stations expire after 10 years. And the energy is drawn directly from a renewable energy source which means a great deal regarding the vast amounts of energy used for crypto mining. Hydro power stations are the best environment for our miners, located on a certain height, the temperature is low, which means that we don’t need to use this much energy for cooling the hardware down. We either deploy the hardware in containers which we bring to the hydro power stations, this way we are very flexible. Or we install the hardware directly inside the hydro power stations.
HydroMiner raised 8676 Ether during the ICO, participants were able to buy H20 Tokens, which are vouchers for mining time in the mining facilities of HydroMiner. With the funds a new power station near Waidhofen an der Ybbs was equipped with GPU cards and around 300 Antminers S9. The mining portal where customers can now redeem their H2O Token or buy mining contracts with fiat or cryptocurrencies will go online in the first weeks of February.
In Q2 we will offer the H3O Token, a security token that will grant rights similar to the ones shareholders have. The Presale with a ticket size above 150.000 USD will start this February.
5. Why is your industry ripe for disruption?
ND: The crypto mining process requires stable energy 24/7, because of that hydro power is the most suitable renewable energy source since solar and wind power are too unstable.
Usually, we rent base energy of the power stations to supply the computer hardware with power and to cool it down. Currently, we work only with power stations that are privately owned since the decision making is a lot easier and faster this way. Most hydro power station owners got a guaranteed price of up to 10 cents/kW from the state for their energy, when these subsidies run out after 10 years they are forced to sell their energy around 3 cents/kW to the power utilities. Here we step in and offer them an attractive price. Our business model is simple but highly profitable and scalable.
As already stated around 70 % of the crypto mining happens in China where they use mostly coal-fuelled energy. HydroMiner wants to become the biggest sustainable mining operation, we are working as well on developing a more efficient mining and cooling technology to save energy and space.
Other people tackle the energy consumption from a different side, one project that we particularly like and support is bitcoinClean, which is a bitcoin hardfork (clone) that will happen in March. Bitcoinclean.org introduces a currency that can only be mined with renewable energy, this will be verified through a peer-to-peer revision network. Taken the tendencies there is lots of effort pushing mining towards a more sustainable and environmentally justifiable direction.
6. What’s the future of crypto mining?
Prediction #1: Proof-of-Work will stay, since it is the perfectly designed way to achieve a consensus. This means that in my opinion, it needs some form of capital that is invested in the network to secure it. It will always require some form of computing power to validate transactions and the opposing mechanism of Proof-of-Stake will probably not push through since the validation is inherent to the system, which for me offers no security.
Prediction #2: The horror scenarios described in various newspapers in which the bitcoin mining could consume all the world’s energy supply in a few years are completely wrong. This is basically an old scheme: people used to say that the streets would be no longer usable because they would be covered in horse manure; not this long ago they said Google’s search engine would use up all the world’s energy. Both didn’t happen, and I think in the case of bitcoin mining the capital will flow into more efficient hardware that will need less energy. We could see this mechanism in the past already. If for a good the demand is high, humans come up with a solution to make it cheaper and available for everyone, or invent other ways to circumvent the scarcity of this good.
Prediction #3: Mining power will not be a monopolistic market but one with bigger players, when the margins are getting smaller it will be too expensive to mine, for example, bitcoin with a high energy price at home where one also has to pay for the grid costs. There will be in my opinion no chance that the mining market becomes a monopolistic one, if this would happen no one would use the currency any longer, and the monopolistic miner would in the end have nothing. The free mining market this way takes care of that threat.