If you own the token, you own part of the company - we talk to the CEO of Minedblock about their plan for a crypto-community owned crypto mining operation!

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Last week we learned about the new STO (Security token offering) from a company called 'Minedblock', read that here to catch up.  This week, we spoke with it's founder Greg Wales and asked him to tell us how the whole thing will work!

Tell us where things started for you, how long have you been involved in cryptocurrency?

Personally for about 3 years but on a pretty small scale. I started mining as a hobby around 18 months ago. I’ve been watching the space for a long time and made the initial mistake of writing it off as ‘a silly fad’ when I could have snapped Bitcoin up at 7 cents each.

So when did mining cryptocurrency come in to the picture?

Mining is something I played with as a hobby with a few Antminers and a home built GPU rig. The cost of electricity in the UK and increasing network difficulty made it unprofitable to do from home so that’s where the idea of MinedBlock was born.

We’ve been watching others in the space and recognise that there is a way to deliver this service in a much more efficient way for investors. Existing cloud mining services don’t seem to be able to actually deliver so that’s what we want to change.

Any other experience in your professional background that will benefit you running Minedblock?

I’ve been working in IT and Managed Services for nearly 20 years with a range of experience from simple service provision to designing huge datacenter installations so I have the knowledge that we need to set MinedBlock up in a effective way.

Many of our readers have likely seen recent news of other big mining operations downsizing and laying off employees - where did they go wrong? What steps are being taken to make sure you won't make the same mistakes?

During the first part of 2018 after Bitcoin soared to nearly $20,000 a lot of mining companies appeared and raised millions of dollars through ICOs but as the price dropped throughout the year the businesses became unsustainable because of the increased interest in mining and higher hash rates and the fact that they set up in areas where the electricity was too expensive to make a positive return. In the latter half of 2018 we saw cloud mining services cancelling contracts and big mining companies literally scrapping unprofitable mining equipment.

We believe that by starting this now, with a much lower average crypto price and making the service sustainable at this price level that we will be able survive another crypto winter and keep on delivering.

Some people have questioned our small team size at this stage but the team is intentionally small, more staff equals more cost which reduces profits for us to share. We have resources on call when required and will run the farms with the minimum possible footprint to keep our efficiency high.
We also have a plan to further reduce our running costs but we’ll reveal that once we’re up and running.

You've filed documents with the SEC (see here) - It's my first time seeing something like this, what exactly are we looking at here? 

The SEC is one of the most vocal regulatory authorities when it comes to crypto, the form we filed is basically an admission that we are a security and an exemption from the need to fully register at this stage using Regulation D Rule 506c. What it means is that we are able to accept Accredited US investors and actively market our token sale without attracting the wrong kind of interest. If we hit our fundraising goals then a Regulation A+ offering will come next which will allow anyone in the US to invest with us but that it a costly process; both financially and time consuming.

Let's talk technical details - what kind of rigs will you be mining with, and why?

We plan to have a 50/50 split between ASIC miners and custom built GPU rigs. The ASICs will be dedicated to mining specific coins, although there is some small scope to switch them to different assets. The GPU rigs give us a lot of flexibility to switch between whichever coin is the most profitable as well as the ability to mine multiple different assets at the same time.

Where will this be located? Why did you choose this location?

I won’t go into specific details of where, for obvious reasons, but we have chosen Iceland for our first location. The electricity costs, cool climate and the fact that it is in easy reach of the UK were the main reasons. Politically speaking Iceland has been pro-crypto so far which is a good sign. We also considered Canada, Sweden and Georgia as options but ultimately decided that Iceland was the best fit for us initially. If we get to the point of setting up another mining facility then it will be located in another country.

So, someone purchases tokens in your security token offering, how will this then determine how much of the company this person now owns?

ICOs were fixated on Soft Cap/Hard Cap thresholds and in a lot of cases it made sense, investors wanted to know that they would own a portion of a fixed quantity coin to prevent the supply having a big effect on the value.
In a Security Token/Equity Share model that is less of a concern so whilst we have a soft cap, which is enough for us to build a competitive facility, we don’t have a hard cap. The more successful our fund raise is - the bigger the initial mining farm will be. We will create one token for each share that is sold, the percentage of the company that a person owns will be directly linked to the percentage of the total token supply they own

How long following the end of the token offering do you expect to be operational?

We plan to start the ordering and build process as soon as we hit the soft cap, even if the main sale hasn’t concluded by then. Depending on equipment manufacture and shipping timescales we estimate 6-8 weeks to start operating, the farm will then grow as the token sale progresses. There is an implantation road map towards the end of our whitepaper (https://www.minedblock.io/assets/MinedBlockWhitepaper.pdf)

How long after becoming operational do you expect to be profitable?

We will be producing revenue shortly after the mining units go live and hope that within 1-2 months will be mining enough revenue to distribute to token holders.

How will the process of a token holder receiving profits from the mining work?

Token holders will simply need to keep their tokens in their whitelisted ETH wallet. Each month we will use a Polymath smart contract to distribute dividends to all token holders automatically.

The token sale started last week, how long do people have to participate?

We have a pre-sale running currently which will run until 29th March. During this time there is a 33% discount to $0.10 per MBTX token. If you purchase via the smart contract you can pay with POLY which might give you a chance to get a bigger discount depending on the price on the day.
Investors can register at our website and go through the KYC process to get whitelisted.

Controversially, we are charging the cost of KYC to participants which has received mixed feedback. There is a $2 fee which we are reimbursing with $4 worth of tokens and the reason for doing this is to prevent people just going through KYC for no reason. So it’s a good opportunity to get a few extra tokens at a slightly bigger discount.

Anything else you'd like our readers to know?

Despite all the negativity around ICOs and mining projects there is a huge opportunity for us to come along and do this the right way, our investors will become our customers and they are our number 1 priority.

All token holders will be able to vote on the direction of the service, they can have an input on how and where we expand the operation and are always free to suggest alternative revenue streams that we should add. We want this to feel like a community driven project.

If anyone wants to know more then please feel free to reach our to the team or join our telegram group here.

Visit Minedblock at https://www.minedblock.io

This piece was a GCP Team Collaboration.

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