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Alex Kimani

Alex Kimani

Writer, Divergente Research LLC

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Divergente Research LLC and Safehaven.com. 

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  3. Blockchain

London Stock Exchange To List First Blockchain Company

BTC

Despite the crypto markets swooning, ICOs remain still red-hot with startups in the space having raised nearly $10 billion in the year-to-date through token sales. But not everybody is buying the ICO hype. Cryptocurrency mining outfit, Argo Blockchain, has chosen to do it the old-school way--by listing on the London Stock Exchange.

Argo will offer mining-as-a-service, a cloud-based subscription service that will allow people to mine Ethereum, Ethereum Classic, Bitcoin Gold and Zcash even from their smartphones.

The company has a grand and noble vision to democratize cryptocurrency mining, saying the current mining industry is heavily skewed in favor of the heavyweights with 90 percent done on an industrial scale.

It sounds fair enough, considering that the company will charge customers a monthly fee of just $25 to rent mining resources compared to several thousand dollars it might take to set up a decent mining rig.

First Pure-Play Blockchain Company

Argo will hardly win any pioneering awards though, with cloud mining companies such as Genesis and Hashflare having made their debuts a couple of years ago.

Nevertheless, the company's move to list on a major stock exchange has been creating waves because:

• It's set to become the first crypto company to list on the London Stock Exchange, the largest equities exchange on the European continent, and …

• It will become the first-ever pure-play blockchain company to list on any public exchange

The second reason is particularly noteworthy.

First off, we currently don't have any pure-play blockchain companies listed on public stock exchanges. Sure, we have nearly a dozen blockchain-related stocks, but none that's fully dedicated to the technology or even making money from it. The purest incarnation of crypto mining stocks are probably Nvidia and AMD--companies that manufacture high-end GPUs used in cryptocurrency mining.

Second, Argo's move might help to open the doors for other pure-play blockchain companies to list on public exchanges and democratize the space.

After all, even though stock market ownership by Americans has hit a nadir since the 2008 financial crisis, only 8 percent own cryptocurrencies compared to 54 percent that own stocks.

Are Cloud Mining Stocks Worth Investment?

Cloud mining companies have a bad rap on main street due to an abundance of scams in the industry. However, calling all cloud miners a scam would be making sweeping generalizations. Related: The Double-Edged Sword Of Crypto Regulation

In this interview between Digital Trends and Hashflare's head of public relations, Edgar Bers, the company executive makes it clear that their business model is not to provide Bitcoin mining but rather to provide hashing power for rent.

There are a couple of reasons why this model looks attractive, and could even be nicely profitable.

The most important is that the company is able to pass the risk of lower crypto prices and increasing mining difficulty directly to the customer. By selling a specific hash power for a fixed sum of money, the customer is forced to bear the brunt of price fluctuations while the company's costs including power, cooling costs, labor and maintenance are for the most part fixed.

Further, the company is largely inured from the vagaries of increasing mining difficulty by cryptos like Bitcoin. It's a well-known fact that Bitcoin-mining algorithms become increasingly fiendish as time passes, making it progressively harder to mine the coins.

Of course, there's a big risk that cloud mining companies like Hashflare and Argo Blockchain will not be here very long. But with mining hardware costs constantly on the rise and GPU companies giving gamers preference over crypto miners, their value proposition keeps getting stronger, not weaker.

By Alex Kimani for Safehaven.com

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