What could possibly be hotter for investors right now than a startup providing people with the computing power necessary to profit from cryptocurrencies such as Bitcoin or Ethereum?
And what if that startup uses eco-friendly hydropower, rather than dirty coal-fired power stations, to cool the ever-increasing number of servers necessary to do so?
Nadine and Nicole Damblon, German-born now Vienna-based sisters, already have half the answer.
Proof of concept
Their startup HyrdoMiner, founded in 2016, allows people to rent time, payable in advance, on servers to “mine” cryptocurrencies.
Nadine and Nicole made the decision early on to put their energy-intensive servers in shipping containers that can easily be transported near to eco-friendly power sources such as hydropower.
In 2017, HydroMiner raised US $3 million through an Initial Coin Offering (ICO), a form of crowdfunding using cryptocurrencies, allowing the sisters to rent two hydropower stations located beside rivers in Lower Austria.
In a month, the sisters aim to raise US $7 million in the pre-sale for a second ICO, this time also tied to the performance of Hydrominer, to invest in hydropower stations in Georgia and Canada.
The second ICO is planned to be completed later this summer following approval by the Austrian Financial Market Authority, one of the first in what is traditionally an unregulated source of funding.
And a listing on London’s AIM stock exchange at year end is planned.
Hockey stick curve
In the early days, “cryptomining”, as the process is called, could be done on your home computer.
As the craze has taken off so has the need for ever-increasing computer power to be able to make the same kinds of return. With it has come a massive spike in the demand for energy, all too often from unsustainable energy sources such as coal-fired power stations.
The Digiconomist website that analyses the carbon footprint of the cryptocurrency craze estimates “the country closest to Bitcoin in terms of electricity consumption” to be the Czech Republic.
HyrdoMiner tackles the issue head-on, surprising given that the Damblon sisters are as far removed as you can imagine from the traditional background of the start-up founder.
Nadine studied theatre, cinema and media studies at the University of Vienna, before going on to be an Assistant Director at the Burgtheater, Austria’s celebrated National Theatre.
Nicole, meanwhile, read East Asian Art History at the Free University of Berlin. She then landed a stint in Beijing working at Chambers Fine Art, the gallery founded in New York and Beijing by Christophe Mao, the art dealer who brought contemporary Chinese artists to the notice of a US audience.
“We’ve always been interested in new thinking,” says Nicole, referencing the Libertarian ideas of the 19th century Austrian School which emphasised the impact of individuals on an economy.
“The arts have always been about critical thinking,” continues Nadine. “And we’ve always needed to be creative in our thinking as we’ve developed our business,” adds Nadine.
They cite their former lack of technical know-how as having given them an edge, allowing them to come up with ideas such as putting their servers in easily transportable shipping containers.
Or on a ship in the North Sea, anchored beside a wind power turbine.
The Fast and the Curious
Nicole and Nadine have more than doubled the size of the team in the last six months.
“We’ve had to scale up like any startup and find a lot of people,” says Nadine. “The cryptocurrency world is small so you get to know a lot of people.”
But, unlike much of the startup world, Nicole and Nadine are not obsessed with youth.
And an advisory team of 15 has been pulled together, boasting lawyers, including a New York attorney, bankers, investors and stock brokers.
The blockchain is NOT cryptocurrency
HydroMiner’s growth so far has followed that of cryptocurrencies.
But Nicole and Nadine’s long-term plan is to distinguish the value of the blockchain from the hype of cryptocurrencies.
“A variety of new possibilities are opening up for us,” says Nicole.
Imagine a world, some of it already here, where the blockchain is used to ensure drug supply chain integrity or aiding cybersecurity, particularly hacking, with an immutable ledger or cheaper energy through peer-to-peer energy transmission.
“We can supply the computing power needed for verification processes,” says Nicole.
Before they do that, they’ve got their work cut out persuading the wider world.
Hearts and minds
“Our task is to separate in the public’s mind the process of the blockchain from cryptocurrencies,” says Nadine.
Nicole and Nadine have already been given a platform at the World Bank, making the case for the potential uses of the blockchain at a workshop hosted last month by the World Bank in Washington DC.
And even the younger generation.
“We go with school kids to visit our mining facilities and our power station,” says Nadine.
“They get the difference fast.”