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12Ships Basic Review

12SHIPS is developing a new mining chip in collaboration with Samsung and a new mining rig with an immersion cooling method. Rigs can also be gathered on a farm inside a 20ft container to increase mobility. Owners of 12SHIPS mining rigs will be incorporated in a network where mining revenue will be distributed through a smart contract mechanism according to the number of tokens each user holds.

Below is the main information about the project:

PROJECT BRIEF

Name

12SHIPS

Ticker

12SHIPS

Project type

Mining

ICO BRIEF

Pre-sale start date

01.07.018

Pre-sale end date

14.07.2018

Public sale start date

15.07.2018

Public sale end date

31.07.2018

Private sale

Yes

Token type

ERC20

Token usability

Utility; Security

Total token supply

1,000,000,000

Token supply for sale

500,000,000

Part of tokens for sale

50%

Soft cap

10,000 ETH

Hard cap

100,000 ETH

Token price

1 ETH = 5,000 12SHIPS

Bonuses

40%

Lock-ups

1 year team tokens lock-up;

Currency accepted

 

KYC

Yes

Additional emission

N/A

Restricted list

N/A

TEAM & ADVISORS

Team member

10

Key member (executives)

● Young Min

● Hoseong Ko

● Taewong Kang

Advisors

6

Partners

Samsung

The main sources of information about the project are the website and the whitepaper. The whitepaper is available in Japanese, Chinese, Korean and English. Meanwhile, the website has the same configurations.

Both sources lack business information like the final price of the products or production costs of one item. The business model is not clear as well. However, the team provides a detailed technical description and a good conceptual description of the project.

Conclusion

However, the technical description is available, but without business metrics it is hard to judge the project’s potential.

12SHIPS founders aim to improve the existing mining market in several directions. First of all, the modern mining rigs are noisy, consume a lot of electricity, and produce heat and dust. Also, none of the modern mining tools is eco-friendly. Secondly, there are few mining machine producers. Now, the mining machine market is somewhat like an oligopoly which leads to price fluctuations. Lastly, 50% of Bitcoin hashing power is controlled by a small group of mining pools. Despite the fact that pools are decentralized themselves, they are controlled by a small managing group that can affect the network.

To solve some of these issues, 12SHIPS is developing a new mining machine in partnership with Samsung. At the first stages, 12SHIPS ASIC will be configured for Bitcoin, Bitcoin Cash, and other currencies using the SHA256 mining algorithm. The new ASIC chip will have the following technical characteristics:

The team’s new chip is 42% faster and 12% more energy efficient than those of competitors. However, it is unclear against whom it was compared. There is information about chips exceeding 12SHIPS hashing power .

The heat issue is addressed with the immersion cooling system. Panokseon II, the mining rig used by 12SHIPS, employs a non-conductive liquid to cool ASIC chips. Using liquid for cooling also helps to avoid noise and dust produced by traditional mining machines. Immersion cooling is 100 times more effective than traditional air cooling and consumes 40% less energy. Again, this information is not supported. However, 3M declares up to 97% energy efficiency improvement with its immersion cooling. Bitfury is already using 3M immersion cooling and has benefited from it.

Panokseon II will be able to fit up to 2,600 12SHIPS ASIC chips, and will allow 30% overclocking, resulting in the following technical characteristics:

The team has provided a comparison against rivals, however, they have chosen only models that perform worse than their product:

Another comparison is available on the website:

Information about other rival products can be found here.

If a buyer wants to acquire a big amount of Panokseon’s, he can order a 20ft container that can hold up to 1,600 Panokseons. This construction will have a 568 PH/s hashing power and will consume 46.9 MW of energy.  In this container, a non-conductive liquid will be cooled using simple water. This is eco-friendly as this water can be used repeatedly.

As a matter of fact, the project will develop potential implications of this heated water to maximize profits. Until now, the project has considered the following business models:

● Development of hot springs, saunas and open-air baths;

● Using heated water in industrial facilities;

● Using heated water for domestic purposes;

● Using heated water in agriculture and fishery industry.

It remains unclear if 12SHIPS offers these models for customers, or will utilize them itself.

By now, all mining machines are tailored for the SHA256 algorithm, however, in the future, project plans to create GPU ASIC chips for mining other cryptocurrencies.

On top of these mining machines, 12SHIPS will build a network. It will emit the 12SHIPS native token. It is unclear if all buyers of 12SHIPS ASICs will become a part of the network automatically, or the network will be separated from ASICs.  All token holders will receive a mining reward according to the amount of tokens they hold. Token distribution will be governed by Ethereum smart contracts. The smart contract is not available for review.

We can imagine a situation when a user has few tokens and a big amount of ASICs. Therefore, he will have big contributions to pool’s mining revenue, however, he will receive a tiny reward. The mechanism linking the controlled hash power to the token ownership is not described.

Users will also be provided with a smart monitoring tool that will provide information about ASICs and the mining process in real time.

In the future, the project plans to develop its own blockchain for games and e-commerce that will be based on 12SHIP mining products. No other information about a future blockchain is provided.

Conclusion

The project is not creating anything new. There are chips which are outperforming its products, as well as projects using immersion cooling for ASICs. Also, the project does not provide any business metrics like prices, therefore, it is impossible to estimate the project’s economics and potential success. The project’s propositions to use heated water for secondary businesses is not clear and needs clarification. In addition, the project’s statements about future blockchain development are vague and look like they have been added there for no reason. Whitepaper does not clarify how native tokens will be linked with main businesses. Moreover, 12SHIPS does not solve the problem of Bitcoin hash power centralization.

The project’s token model will be based on the Ethereum blockchain. The smart contract will govern mining reward distributions and reinvestment ratios.

The 12SHIPS pool will have the following structure:

At first, the mining pool will consist of Panokseon II exclusively. As was already mentioned, it is not defined whether Panokseons will be automatically added to the pool, or users will be given a choice.

Furthermore, other mining machines will be able to join the pool through the Stratum Network. To do so, users will have to buy 12SHPIPS tokens and meet other joining conditions. A description of conditions is not provided.

No information about future blockchain that project plans to develop is provided, therefore, no analysis can be done.

No other technical information available about the project, apart from a product technical description, is provided in the previous part. A technical description of the GPU ASIC was unavailable on the date of the analysis.

Conclusion

The project provides a poor technical description of the project. No informed decision can be made with the provided technical information.

The project provides the following roadmap in the whitepaper:

Conclusion

No valid information about the current stage of development is available. Therefore, it is hard to estimate how pretentious the roadmap is. The roadmap is purely technical and does not have any business development information. Also, what the phrase “Launching game using 12SHIPS based on blockchain” stands for is absolutely unclear. GPU ASIC will be developed by the end of 2019.  

 

Young Min

Position

Business strategy & planning

Total experience

25+ years

Relevant experience

Yes

Professional achievements

IBM & Accenture Consultant, Samsung SDS

LinkedIn

Yes

Affiliation with project

Yes

Connections

160

Endorsements / Recommendations

No

 

Hoseong Ko

Position

Hardware integration development

Total experience

20+ years

Relevant experience

Yes

Professional achievements

Samsung Electronic Mobile Division; CEO at MAPTech Co;

LinkedIn

Yes

Affiliation with project

Yes

Connections

162

Endorsements / Recommendations

Yes

 

Taewon Kang

Position

ASIC design and development

Total experience

5+ years

Relevant experience

Yes

Professional achievements

Samsung Electronics Semiconductor Devision; Rep. Of Nexell

LinkedIn

Yes

Affiliation with project

No

Connections

56

Endorsements / Recommendations

No


 

Khan Lee

Position

Electric & Equipment design

Total experience

10+ years

Relevant experience

N/A

Professional achievements

CEO at Egeongo

LinkedIn

Yes

Affiliation with project

No

Connections

1

Endorsements / Recommendations

No

 

Seungjae Moon

Position

Heat exchanger analysis

Total experience

N/A

Relevant experience

Yes

Professional achievements

Professor, Hanyang University Micro & Nano Heat Transfer

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A



 

Hanjo Kim

Position

Software R&D, Game and application development

Total experience

20+ years

Relevant experience

N/A

Professional achievements

Former CEO at Jupros; Former head of R&D; CSO/Director at TongYang Online

LinkedIn

Yes

Affiliation with project

Yes

Connections

243

Endorsements / Recommendations

No

 

Nick Min

Position

Blockchain & Mining Alogorithm, Core Application development

Total experience

N/A

Relevant experience

Yes

Professional achievements

Cafe24, Wex24

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A

 

Seungsoo Park

Position

Heat exchanger design & development

Total experience

N/A

Relevant experience

N/A

Professional achievements

-

LinkedIn

Yes

Affiliation with project

Yes

Connections

4

Endorsements / Recommendations

No

 

Jongho Ahn

Position

IR & Investment

Total experience

N/A

Relevant experience

N/A

Professional achievements

Rep. of Daesung Capital Management

LinkedIn

Yes

Affiliation with project

No

Connections

3

Endorsements / Recommendations

No

 

Elodie Dornand de Rouville

Position

Design and User Experience,

Total experience

N/A

Relevant experience

Yes

Professional achievements

Art director for many art & science projects Master

LinkedIn

Yes

Affiliation with project

Yes

Connections

205

Endorsements / Recommendations

No





 

Advisors

 

Young Bum Koh

Position

Advisor

Total experience

N/A

Relevant experience

Yes

Professional achievements

President of Samsung Austin Semiconductor; Head of the manufacturing center in LCD business; Head of Mechtronics center;

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A

 

Dong Il Seo

Position

Advisor

Total experience

N/A

Relevant experience

Yes

Professional achievements

Samsung Display, Senior Vice President (Team Manager of IT Development)

Samsung Electronics, Senior Vice President (Team Manager of Flash Memory Product Engineering)

Samsung Electronics, Vice President (Team Manager of DRAM Product Engineering)

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A

 

Jeffrey D Jones

Position

Advisor

Total experience

N/A

Relevant experience

No

Professional achievements

Chairman of the Board of Governors, American Chamber of Commerce in Korea

Kim & Chang

President, Ronald McDonald House Charities of Korea

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A


 

Seokwon Kim

Position

Advisor

Total experience

N/A

Relevant experience

Yes

Professional achievements

Author of “Unleashing Blockchain” in Korea

Edito, Co.

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A

 

Seunghwan Lee

Position

Advisor

Total experience

N/A

Relevant experience

No

Professional achievements

Professor, Dep. of Environmental Engineering, Kumoh National Institute of Technology

LinkedIn

No

Affiliation with project

No

Connections

N/A

Endorsements / Recommendations

N/A

 

Douglas Ching

Position

Advisor

Total experience

20+ years

Relevant experience

Yes

Professional achievements

Co-founder of Coins Marketing; Co-founder of V Partnership;

LinkedIn

Yes

Affiliation with project

No

Connections

500+

Endorsements / Recommendations

No

 

Conclusion

The team consists primarily of Samsung employees and is backed by Samsung top-managers. However, the team does not have sufficient experience in blockchain. In addition, there are no members responsible for business development, marketing, and other business aspects. Advisors also do not provide LinkedIn accounts, therefore, their affiliation with the project cannot be validated.  Finally, several employees do not provide their LinkedIn accounts as well.

Project targets to markets: the crypto-mining market and crypto-mining machines market.

The global cryptocurrency mining market is expected to reach $38.38 billion by 2025. Below is the graphic representation of this trend. The data is in million USD.

The compound annual growth rate during this period will be 58%.

The team estimates the mining rig market at about $3.3 trillion, although no justification is provided. No other valid mining rig market estimate from an independent source was found.

On the mining rig market, 12SHIPS main competitors in the Bitcoin mining rig market will be Bitmain and Canaan.

Bitmain – according to open source information, Bitmain’s profit in 2017 was $3-4 billion and controlled about 35% of Bitcoin hash power.

Canaan – Chinese ASSIC producer with a revenue of $204 million in 2017. Hashed estimate Canaan Bitcoin mining share at 15%.

Other competitors are Ebang and BitFury (also use immersion cooling).

The biggest mining pools are represented in the graph below:

Just like mining rig industry, the Bitcoin mining industry is oligopolistic.

Conclusion

12SHIPS will operate on a very competitive market with distinct leaders and a competitive fringe. Since 12SHIPS does not have any obvious competitive advantage over other competitors, the project’s prospects are debatable.

Apart from the information provided in the first section of this report, the team also provides information about token allocation and the use of proceeds.

Tokens will be distributed in the following manner:

According to the scheme above, 50% or 500,000,000 tokens will go to the public. Since 10% will go to the team, it is unclear who 12SHIPS are. Probably, this 30% will go to the 12SHIPS foundation. However, since this is not clarified, and this amount will not be a subject for lock-ups, this is an issue we would like to emphasize. Also, it is not described which part of the tokens will go to participants of the private round that project held.

The team also provides the following scheme for the allocation of funds:

90% of funds, up to 90,000 ETH or around $40 million, will be spent on mining infrastructure. In 2017, Bitmain attracted $50 million on development of new ASICs, therefore, this amount seems to be reasonable. However, since this sum is calculated on the basis of a hard cap, the final sum my be insufficient for the development of a competitive product. R&D spending also seems insufficient. However, without information about the present stage of development, and team progress, this amount is hard to analyze.

No information about the airdrop and bounty campaign is available.

Conclusion

Token allocation and the use of proceeds scheme need further clarification as significant blind spots remain.

The token total supply will be 1,000,000,000 12SHIPS.  Further emission is not mentioned in any official documentation, but it is not specifically mentioned that it will not take place. For the purpose of the analysis, it is assumed that 1,000,000,000 is a finite supply.

The token demand will be stimulated through the following incentives:

● Token gives the right for a part of the pool’s mining revenue;

● Tokens give voting rights to holders;

The first incentive may attract extra attention from the SEC and other legal institutions since it is a clear feature of a stock.

This leads to another problem as well. Supposing the few tokens are in a float on the market and the majority is held by pool participants (this looks like a logical token distribution for such model), new users will have to buy tokens from existing users to enter the platform. Since selling tokens will reduce the revenue of what an existing user receives, and, thus, reducing his profits, he will only sell his tokens if the reduction of the share will be compensated by an increase in the absolute revenue of the pool. This can be done only if big players come to the pool. If the mining pool is 100,000,000, and a user has the rights to 10% of the pool, he would sell 1% of his rights to new users only if the new users increase the total pool revenue by 11.2%, otherwise he will decrease his profits in the long-run.

Since users will have to hold their tokens, 12SHIPS velocity may be low, and token’s price won’t go down due to that, but this may not be the case. This will depend on how long users will have to hold tokens to have rights for revenue.

Conclusion

Token economics is ill-developed and leads to monopolization of the pool by big players. There is also a tremendous spread between the soft cap and hard cap. The hard cap is 10X soft cap. In addition, the team does not provide any information on private-sale and pre-sale bonuses

12SHIPS project has the following social media coverage:

● Facebook – 9,999 followers;

● Twitter – 6,075 followers;

● Medium – 8 followers + 15 articles;

● Steemit – 9 articles;

● YouTube – 546 subscribers;

● Telegram –  9,198 followers;

● Kakaotalk – 418 members;

According to Similarweb projects traffic, the sources on the official webpage are the following:

72.2% of the traffic comes from direct links, and 27.8% comes from searches. All of the searched traffic is organic.

According to BE1, in June, www.12ships.com was visited 789 times. In May, this figure was 2X times higher.

Geography of the traffic is the following:

● Korea – 65.73%;

● Belgium – 30.49%;

● Russia – 3.78%.

Conclusion

The project is steadily increasing  its social media coverage, however, at the moment of writing, it was still lower than that of the major ICO projects.

Considering all available information and the ICORating analysis, we have identified the following strengths and weaknesses of the 12SHIPS project.

Project strengths:

  • Project is backed by Samsung;

  • Team members are former Samsung employees with relevant technical experience

  • There are competitive advantages in terms of technical characteristics of the ASICs

Project weaknesses:

  • Weak team composition in terms of blockchain;

  • Weak token economics;

  • Underdeveloped business model;

  • Vague plans for future development;

  • Highly competitive market;

  • Unclear token allocation model.

The team can be contacted via the following channels:

Website

Facebook

Twitter

Telegram

YouTube

Medium

KakaoTalk

 

 

The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.

We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.