Swiss Alps Mining & Energy Rating Review
|Start ICO||01 Oct 2018|
|End ICO||29 Oct 2018|
We assign Swiss Alps Energy AG (SAE) a Risky+ rating.
Swiss Alps Energy AG (SAE) is a project developing a decentralized infrastructure for mining, based on a internally developed modular cubic system. SAE offers several interesting and innovative technical solutions, including Organic Rankine Cycle, SamaiX, etc.
SAE customers will be able to buy SAM Cubes, a fully prepared infrastructure for crypto mining, or to lease computing power. One SAM Cube has already been launched; the construction of the second one should be completed in September 2018.
The advantages of a clear idea and high-quality technical implementation are offset by the concept of the token economy. In fact, the existing concept implies the following: the SAE team buys physical assets (mining equipment and generating capacity) with funds raised during the ICO on the balance sheet of its enterprise. Further, the team runs the equipment and all profits are distributed to the legal entity. Thus token holders do not receive any benefits if the current concept remains as is.
SAM tokens are used on the platform solely as a payment instrument, and there are no mechanisms to create an artificial deficit of tokens in free circulation by the team.
General Information about the Project and ICO
Swiss Alps Energy AG (SAE) is a project developing a decentralized infrastructure for mining based on a internally developed modular cubic system. SAE uses an intelligent modular cubic system (SAM Cubes) to assemble and implement prefabricated mining equipment. Cubes are installed permanently in unused buildings in the Swiss Alps, and provide environmentally safe and highly efficient mining.
One of the innovative ideas of the project is the use of Organic Rankine Cycle (ORC) systems in SAM Cubes. ORC systems use the waste heat energy of industrial processes (through a steam power process) for additional power generation. Thus, the cubes are completely autonomous. To provide maintenance and monitoring, each cube interacts with a central management platform that controls the cubes and assigns each cube optimal performance parameters (for example, what currency to mine) in order to maximize the efficiency of mining. SAE is planning to lease individual cubes or some portion of their capacity.
In fact, the project offers future users an opportunity to invest in mining equipment to receive passive income via the use of an internal token, and manage these investments from a mobile device or PC with the help of SamaiX, a special intelligent system for selecting the optimal coins for mining.
SAE is staging its ICO to attract investment for the construction of SAM Cubes, the acquisition of generating facilities to provide SAM Cubes with electricity and developing the necessary software.
The funds raised are planned to be spent on development and promotion in the following proportions:
Size of emission: 239,682,538 SAM
Round 1: Private token sale: 14,583,333 SAM
Price: 1 SAM = 0.3-0.4$
Minimum Buying Transaction: no data
Maximum Buying Transaction: no data
Token private sale – tier one:
Price per token: $0.30
8,333,333 Sam at $0.30 = $2,500,000 (3.4768%)
Private sale – tier two:
Price per token: $0.40
6,250,000 Sam at $0.40 = $2,500,000 (2.6076%)
Round 2: Token main sale (15.06-27.07) – 165,178,571 SAM
Price: 1 SAM = 0.5-0.8$
Minimum Buying Transaction: no data
Maximum Buying Transaction: no data
Token main sale – tier one:
Price per token: $0.50
100,000,000 SAM at $0.50 = $50,000,000
Token main sale – tier two:
Price per token: $0.60
25,000,000 SAM at $0.60 = $15,000,000
Token main sale – tier three:
Price per token: $0.70
21,428,571 SAM at $0.70 = $15,000,000 (8.9404%)
Token main sale – tier four:
Price per token: $0.80
18,750,000 SAM at $0.80 = $15,000,000 (7.8228%)
Unsold tokens will be burned after ICO.
Description of the Project Services
Swiss Alps Energy AG is developing several activities related to mining, alternative energy and blockchain technology. Project services can also be conditionally divided into these 3 areas. Let us consider each of them separately:
SAE offers the rental and use of mining facilities located in the Swiss Alps. SAE uses its own development, SAM cubes, which are flexible, modular mining containers with a high degree of automation. Cubes can be equipped with ASIC or GPU mining equipment at the same time.
In the functioning block 1 (4x2x2) 50 Asic operate with a total power of 800 TH/s and several GPUs with A total capacity of 4000 Mhz/s. This modification currently produces about 115 ETH and 17 Bitcoins per year. The SAM 2 module (8x2x2) which is under construction will enable doubling this value in the future.
Highly effective ventilation devices for heat removal are included in the cubes and a special system of Organic Rankine Cycle (ORC) is also under development. ORC systems use secondary heat from production processes (steam energy) to generate electricity and use heat generated during the mining process to regenerate energy. SAM cubes are located at high altitude and therefore in places with a lower water boiling point, which facilitates this whole process.
Cubes are serviced and monitored remotely. Each container interacts with a central management platform that monitors the containers, and assigns optimal parameters to each container to maximize profit.
SamaiX technology was developed by SAM Smart Mining to optimize this mining project. This is SAE’s patented artificial intelligence, which constantly calculates which coins are most profitable for mining and offers optimization to its miners. If a user joins SAM Smart Mining, SamaiX can make appropriate offers for optimizing mining. If a user accepts the offer, SamaiX will adjust the general mining operations.
Users (companies and individuals) can lease their mining capacities for project tokens and profit from them in accordance with current market prices, the complexity of the system and other parameters, or buy a cube outright for their own use. Users can calculate returns on investment via the website using a calculator. This calculator does not take into account increases in the complexity of the network or its impact on miners’ margins.
SAE will earn profit directly on the resale of ready-made cubes (according to our calculations based on the team's data, their margin will be about 20%) and on leasing capacity fees: The fixed fee is 4000 USD for two years + 10% of mining revenues.
SAM Power Plants
The project is planning to purchase hydroelectric power stations, photovoltaic systems and wind power plants and create its own independent energy system. SAE will not buy electricity, but will provide stable, economical capacity for operating SAM cubes.
The energy produced by SAM power plants is delivered to SAE cubes. Alternative energy is effective for mining, where a high share of costs arises from use of electricity. The Swiss Alps have a wide range of possibilities for generation of renewable energy. As services develop, SAM will be able to utilise surplus electricity and sell it to various enterprises.
In the second phase, the SAM Power Net will be launched. Energy producers (households or renewable energy industries) and energy consumers will be integrated within as single ecosystem on a peer-to-peer network platform. This will enable end users to purchase energy directly at below-market prices.
Blockchain - SAM KYC-AML
SAM KYC-AML is a service provided by SAE enabling online providers such as banks, government agencies or private e-commerce stores to simplify identification of customers. Customer IDs are usually stored centrally by a service provider and can be checked based on available data. If such a data warehouse is hacked, only a portion of client IDs would be compromised.
The concept of SAM KYC-AML works as follows: initially, a user registers their personal information and is confirmed by a recognized institution. This data is then encrypted, divided into fragments and stored on a public or private chain. For this purpose, systems such as Ethereum and Hyperledger Burrow can be used. As a result of this procedure, there is no data set that contains all a user’s information, which creates more secure data storage.
Partners will be able to access this identification system and distributed data storage for their businesses using SAM tokens.
The main focus is on mining services at this stage of the project. The modular systems (SAM cubes) are an interesting solution taking into account the peculiarities of the Swiss Alps region and we highly appreciate the use of secondary heat to reduce energy dependence. However, at the current stage the project’s work on blockchain solutions for KYC-AML is not entirely clear to us. Unlike the energy developments and plans, this service does not seem to have the proper synergy and does not look organic. The provision of leasing facilities for users is a much clearer product solution, with a number of distinctive features due to the region and the claimed energy efficiency.
Crypto mining is a process requiring intensive computer calculations involving a network of computers verifying a transaction record known as a blockchain. Miners are offered a share of transaction fees and a higher probability of finding a new block the greater the processing power. These transactions help to provide increased security for users and ensure network integrity. The emergence of digital currencies such as Bitcoin, Ethereum and Bitcoin Cash has led to huge investment from private companies and it is expected that this will contribute to significant market growth in the near future. As of mid-2018, the total capitalization for various digital assets is estimated at more than $320 billion.
The increased popularity cryptocurrency use for commercial transactions, as well as prices for cryptocurrencies in recent years, has led to a significant increase in crypto mining. Moreover, increasing difficulties in finding new blocks of the most popular cryptocurrencies including Bitcoin have led to an increase in requirements for hashing capacity, increased power consumption and a requirement for specific weather conditions to maintain performance over long periods of time. These factors, in turn, led to increases in investment in crypto mining to obtain high returns on investment (within 20 months) and additional long-term income.
Recently, remote hosting services and cloud mining are gaining popularity, giving users access to inexpensive solutions for gaining income from crypto mining. It is expected that these factors will help to significantly grow the crypto market up to 2025.
According to Cryptocurrency Mining Market, this mining market which was estimated at $610.91 million in 2016, is projected to reach $38.38 billion by 2025, showing a CAGR of 29.7% over the forecast period. This market includes receipt of rewards for block and transaction fees in exchange for processing transactions using computer capacity. It is expected that the growing market capitalization of cryptocurrency, combined with increasing levels of complexity in the search for new blocks, will represent significant growth opportunities for industry participants with high levels of mining experience during the forecast period to 2025.
According to an analysis by Coherent Market Insights, China and the United States accounted for more than 70% of the global crypto mining market in 2016, based on the total number of pools worldwide. However, location of pool operators is not the only factor determining opportunities and mining capacities. Low temperature, low cost of electricity and continuous online access are the basic requirements for optimizing these facilities. It is expected that a reliable power generation infrastructure and climatic conditions will be the main competitive factors in this market.
The geography of distribution for mining is extensive, and often depends on the cost of electricity as well as on climate, due to the high thermal output of typical equipment and the need for cooling. According to a global cryptocurrency benchmarking study, the distribution map for mining is as follows.
The idea of obtaining passive income attracts many people, and the market is likely to develop in the near future. As we can see, this market has a place not only for major players but also for projects developing environmentally-friendly features and other advantages in addition to economic feasibility.
The mining sphere is highly competitive: there are projects offering their tokens during ICOs for financing future mining equipment, cloud mining services that lease equipment, mining pools and others.
To a degree, the market is also concentrated in the hands of a few operators. Currently, the key operators in the global crypto market are AntPool, BTC.com, ViaBTC, BTC Top, SlushPool and F2Pool. The above-mentioned companies accounted for more than 75% of the entire industry as at December 2017.
Since there are many competitors, we will consider only projects similar to SAM:
https://hydrominer.org - a crypto mining company using an alternative energy source, from hydroelectric power plants, in the Alpine region of Europe. It is a powerful competitor with a similar idea that has already implemented some of its promised functionality.
https://icerockmining.io/ - a project offering its own tokens which enable users to earn revenue from mining. Its main advantage is the availability of cooling technology - "cold mountain" caves - able to cool thousands of ASICs due to the natural rock ecosystem and constant temperature (12 degrees Celsius).
https://ambitmining.io/ - this project is mining in the mountainous region of Georgia, where hydroelectric power is the energy source. The project is located in the free economic zone.
https://www.envion.org/ - is creating a global and highly profitable crypto infrastructure for mining located in mobile containers near sources of energy.
https://hashflare.io/ - one of the most popular services for cloud mining, enabling any user to receive revenue from mining without the purchase of equipment.
SAE’s services have a number of features shared by the market as a whole. Clearly the project is focusing on mining and future revenues from mining. The Swiss Alps, the use of alternative energy, as well as a flexible management system for the mining process - all these are features realized by other projects at different stages. The competitiveness of SAE will depend on its profitability for users and depends on this being higher due to the geographical features of the region and the design of the project. However, it is impossible to currently calculate the benefits. Firstly, investments in alternative energy sources are characterized by a long payback period. Secondly, it is important to note that a number of competitors are also using renewable energy sources and other features of the Alpine region.
In general, mining services are an extremely competitive market. Perhaps some of the advantages and developments in energy and mining technology will play into the hands of SAE. However, in most cases, demand for services will depend on the price of cryptocurrencies, network complexity and overall business profitability.
The SAE team features a large number of specialists with different orientations, including project management, engineering and development, clearly vital for a project of this kind.
In general, the team gives the impression of being competent and capable of implementing technically complex projects. However, we note a gap in the economic component, largely due to the lack of a sufficient number of finance professionals involved.
Some of the team are connected with the Giracoin and Cryptocoinexchange.com projects.
Let us consider the positions and experience of several key team members:
Founder and CEO
Member of the commission for public buildings and facilities of the municipality of Hofstetten-Flueh, Switzerland. He has experience in founding several projects related to cryptocurrencies, and has significant experience as CEO.
Founder and CFO
Ramon has previous experience as CFO for crypto projects. He has technical and engineering skills, and also monitors the evaluation and acquisition of hydroelectric power plants.
Founder and CMO
Michael has been engaged in the fields of design, development, marketing, project management and consulting over more than 25 years for various companies. He has founded several companies and has extensive managerial experience.
Founder and CTO
Rajasekaran has successfully developed and implemented large blockchain-based business models and an e-commerce platform. Has extensive development experience and knows many programming languages.
Founder and CDO
Experienced blockchain specialist, database expert, software developer and project manager. He developed a solution for smart contracts on blockchain with Multichain open source on the basis of Bitcoin and Bitcoincore.
In addition to the above-mentioned participants, the team has technical and engineering specialists, in particular the head of construction of mining cubes, Christian Giger, who installs and operates cubes; the head of electronics, Zekeriya Ak, who will be responsible for the development of the internal power system, electricity generated by hydroelectric power stations, and other specialists.
Regarding the composition of the advisory board, it includes consultants for a variety of developments in the field of blockchain, as well as specialists in engineering and science.
We would like to highlight the following participants:
Sergey is a founder of the consulting company Basil Street Advisory in New York, a firm developing growth strategies, organizing financing and mergers and acquisitions transactions for private investment companies and companies on the high-tech, financial, digital transformations and IoT (Internet of Things) markets. He has experience with the Boston Consulting Group, Switchouse (Amazon), Exigen Group, Mirantis and Microsoft, including senior positions.
A well-known expert in the field of financial technologies specializing in digital transformation. He is the founder of the Swiss FinTech Awards and the chairman of the board of directors of Accenture Services AG.
Dr. Sabina R. Korfmann-Bodenmann
Founded Korfmann Corporate Communications Consulting AG (KCCC) in 2001. Currently, KCCC serves several leading international firms in the financial sector. Dr. Korfmann is a member of several boards of directors and trustees, as well as the author of several books.
Dr. Daniel Rytz
Dr. Rytz has extensive international experience as a process and marketing manager, including senior positions at Sulzer Chemtech and Krebs Swiss AG. He was also general director of technical specialists at Polymetrix.
Marco is an experienced advisor in the field of ICO and blockchain projects. He actively participates in the development of various communities. Founder of MaZee, which supports ICOs in matters of marketing and community management.
Ian is a well-known and experienced consultant to various ICO projects, and one of the leading blockchain and crypto experts.
The team is notably strong, and includes a large number of multidirectional and highly-competent specialists.
SAM tokens sold during the ICO will have the following functions:
- As a means of payment for the rental of SAM cubes and hardware.
- As a means of payment for the purchase of SAM cubes.
- Payment for electricity costs.
- Payment for other services, including global KYC.
There are no other functions for the token. Thus, we are talking about a payment token, the use of which is based primarily on the project’s need to raise capital through its issue and sale during the ICO.
From our point of view, SAM tokens are not an essential element of the SAE ecosystem and could be replaced by either fiat or another more liquid cryptocurrency. According to our statistics, ICO tokens of this type most often fail.
Analysis of Factors Affecting the Future Value of the Token
SAM tokens are the only payment tool on the SAE platform. Interaction between users and SAE will take place via the platform. Thus, 100% of the proceeds of SAE will be available in SAM tokens.
At the same time, the operating costs (costs of building SAM cubes, rent, the cost of electricity, etc.) will be mostly nominated in fiat. So revenue in SAM tokens will be converted to fiat. It would therefore be incorrect to state that the value of SAM tokens will increase in the medium term due to growing demand for them; demand will be compensated by supply from the service provider, SAE.
Potential growth for SAM tokens will depend on their liquidity (most likely the coin will be low-liquidity due to the narrow focus of the project) and SAE’s margin, provided that the project does not convert net profits to fiat but accumulates it in SAM tokens. No statements have been made by the team on this issue, nor has it announced burning of any portion of tokens received as revenue.
According to the roadmap, commissioning and leasing of the first cloud-mining cubes will take place in September 2018. Thus, there may be an infrastructural demand for Sam tokens in September, which will support the quotation of the token locally.
Investment Risk Analysis
The idea of the SAE project inherently involves the provision of funds for the team for the purchase of generating facilities and the construction of SAM cubes. At the same time, all project profits will rest with the company and not be distributed among token holders. The token economy model does not allow for mechanisms for the artificial creation of a permanent token deficit, which means that we do not see any fundamentally valid reasons supporting the growth of its value. This is a serious risk for potential ICO participants, as there are no benefits for token holders implied.
More questions arise regarding any motivation for participation in the ICO after becoming acquainted with the calculation of ROI for the rental of mining capacities. For an investor, it is more profitable to buy SAM tokens after the completion of SAM cube construction and pay for the rental of computing capacity, rather than take on the temporary risk of volatility of the token’s price between the time of the ICO and the beginning of project operations.
The success of the project will largely depend on the following:
- The amount of funds raised during the ICO: the more raised, the more SAM cubes the team will be able to run, which means that SAM tokens will have a larger liquidity.
- Crypto market dynamics: if the downtrend continues, the economic efficiency of mining will fall.
- Competition: this is one of the most competitive segments of the crypto world. SAE will have to compete with cloud mining and mining pools.
These factors are either not controlled or only partially controlled by the team.