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Hut 8, a cryptocurrency mining company founded by Dutch venture capitalist Marc van der Chijs got listed on the Canadian TSX Venture Exchange (“TSXV”) via a reverse listing. The crypto mining company is partly owned by chip maker Bitfury Group, one of the largest private infrastructure providers in the Blockchain ecosystem and a maker of ASIC silicon chips, printed circuit boards (PCB), servers, and data centers. Hut 8 previously raised €81.2M ($100M) from private investors before being listed on TSXV.
Dutchman’s Crypto Startups
Marc’s other notable investments and companies in the space include First Block Capital, a Blockchain VC firm and ICO (Initial Coin Offerings) bank FirstCoin.com. Marc’s realization about the need to have an alternative money system came as a jolt when he lost money during Cyprus Banking Crisis.
“After moving to Canada the Cyprus banking crisis started and I happened to be involved in a company there which bank account got frozen. That led me to do research on how the global financial system really works because I did not understand how a bank can stop you from taking your own money out of your account. I quickly learned that money in a bank account is actually not your money, but that it’s an asset of the bank. I started looking for alternatives and then came across Bitcoin in early 2013,” said Marc in an interview with Gene Swank.
“Today’s listing on the TSXV is a milestone for Canadian investors, who can now access one of the world’s largest publicly traded crypto-mines without purchasing the underlying cryptocurrency. In crypto-mining, the scale is what determines success in the short term, but is also what allows mines to weather any volatility over the long term. Our exclusive partnership with Bitfury, one of the world’s leading full-service Blockchain companies, facilitates the kind of scale that will allow us to deliver ongoing value to investors,” said Sean Clark, interim CEO of Hut 8 and founder and CEO of First Block Capital that Marc co-founded with Sean.
Driving other miners out of competition
It appears that Marc van and Sean Clark adhere to Peter Theil, PayPal co-founder and a billionaire entrepreneur, and investor. Thiel professed the idea that “competition is for losers“, and that competition reduces the profits and startups should try to avoid competing and instead try to create their ‘secret’ success formula, be it a network, technology or distribution strategy. Marc and Sean newly listed company have also adopted a similar strategy of making the competition irrelevant as echoed by interim CEO Sean in his interview with Bloomberg.
“We benefit because we gain market share because then the hobbyist who’s mining for 10 cents a kilowatt-hour is going to leave the market because their break-even point is much much higher,” he said. “Because we’re an industrial data center scale play, we can actually go below $1,000 for a while and everyone will leave and we’ll gain market share,” said Sean.
Innovation alone is not enough: A lesson for startups
One of the core lessons Dutch and other regional startups can learn from Marc is his ability to execute faster and more aggressively than others in the industry. The billionaire investor acknowledged his strength when asked if he’s got really innovative startups or he attributes the success to anything else.
“I don’t have a most innovative project, but I would say that the ‘reverse take-over’ structure that we use to quickly raise lots of capital for blockchain companies is the biggest innovation we bring to the sector.
What this means is that we start a company, capitalize it ourselves, grow it as fast as possible and then take it public by merging it with a listed company on the Toronto Stock Exchange.
That has allowed us to become the leaders in this space, simply because we could raise capital extremely fast,” said Marc.
His startup Hut 8 was quick to team up with Bitfury in December last year when both of the companies announced that Bitfury will provide Hut 8 with a mix of hardware, software, installation and operational services to help the latter build the largest North American datacenter for mining cryptocurrencies. This helped Hut 8 later in pitching the idea of reverse IPO whereby Bitfury is already the biggest shareholder of Hut 8.