Envion ROI Analysis (update)

On May 4th, Envion updated its investors with new information (annoucement link). While there is no significant change to our model, we have made a few tweaks based on it. The original article on the model can be found here.

The information and model presented here is our own, it does not constitute official Envion communication, The Cryptocoin Register is in no way related to the Envion project or ICO.

Model changes:

EVN token characteristics: 5M unallocated tokens are going to be burnt soon, and another 5% of the ICO funds are not KYC confirmed yet. It is likely they will be burned too. The estimated supply of token is now 116M tokens (down from 127M).

MMU Cost: The update mentions 'significant cut' in the price to build the MMU, the price is therefore adjusted from $130k-$170k to $115k-$145k

Production Ramp: The ICO have not been released yet, waiting for an executive decision. MMUs are therefore still at least 2 months from being delivered. 2 weeks to release the funds, 4 weeks to get the mining equipment, 2 weeks to assemble and test.

Without further due, below are the updated returns for May 2019 and May 2020 for three scenarios considering various hypothetical values of BTC and ETH Mining Revenue per Hashrate, and MMU production cost. The returns over two years are about 20% better than originally estimated.

Disclosure: We have no position in the Envion token and do not plan on opening a position anytime soon. We are crypto enthusiasts, our basic assumption is that the crypto market will thrive, adoption will grow, and some currency prices will go up. We do not know how much nor how fast. The information in this study is provided for education purpose only, it is not meant to be investment advice. Cryptocurrencies are high risk investments with the possibility to loose the entire principal. Invest at your own risk.

The model estimates the ROI of the Envion token in today’s environment and is as follows.

Envion completed its ICO in January of 2018, raising $100M in bitcoin, ethereum, and fiat currencies. Envion plans to develop and deploy more than 600 Mobile Mining Units (MMU) around the world in low power cost locations.

The numbers used in the model are based on the initial white paper and have a high degree of uncertainty. We will update the study as the company gets out more informations about its operations.

All Model Parameters:

MMU Hashrate: the Mobile Mining Unit is capable of contributing a fixed hashrate to the blockchains it supports. The whitepaper describes several configurations. For this analysis, we select the mixed configuration with 36 GPUs miners for Ethereum and 24 ASICs miner for Bitcoin. Both devices can switch to a number of alternate currencies to optimize revenue. The estimated MMU hashrate is 324 TH/s for BTC and 4800 MH/s for ETH per the information provided in the whitepaper

MMU Power Draw: Power amount necessary to operate one MMU, expressed in kW. The estimated MMU Power Draw is 65 kW per the information provided in the whitepaper.

MMU Cost: Cost of the mining devices, plus all accessories, physical container, assembly, and transport of the MMU to the production location. The MMU cost is estimated between $115k and 145k per the information provided in the whitepaper, telegram announcements and May 4th update.

Mining Revenue per Hashrate: Revenue generated for a given hasrate, independently from any cost of power, or operation. Mining Revenue depends on the blockchain difficulty and currency price. Over the past 12 months, the BTC Mining Revenue varied from $3.5 per TH/s to $0.5 per TH/s (source bitinfocharts.com). As the price of a currency goes up and as more powerful mining devices are put to work, the difficulty will increase and push down the mining revenue to the cost of the power it takes to operate. Ethereum has different numbers but follows a similar pattern.

Mining Profitability per day: The profit generated by one MMU every day, we deduct the cost of power and on site operation. The cost of electricity is marked at 5c per kWh per Envion whitepaper. We believe the mining profitability per MMU will remain in relative equilibrium above the floor represented by the kWh cost. All other forces like difficulty, technology advancement, advent of PoS, and currency price will act as springs bringing back the revenue to the same place.

Mining Device Obsolescence: Today’s equipment will fall into obsolescence as more efficient devices are produced pushing up the network difficulty and down the proifitability. Past patterns of mining equipment evolution indicate the device will fall into obsolescence after 24 to 36 months. After that point, the equipment is considered useless with a negligible residual value.

Initial Capital: Envion raised $100M in January, some of it needed to be returned after failed KYC, funds kept in crypto currencies may have lost value. At the time of writing, it is unknown how much capital is available to Envion. We’ll use $90M as a reference of available capital.

Management Cost: Such an operation needs funds to operate, legal, finance, hr, software development, we consider a team of 20 to 40 people will be required to operate the company. With an additional cost per MMU as more MMUs get deployed. We start with a base management cost of $200k per month, plus $200 per MMU deployed.

Production Ramp: Producing and operating 600 containers is not a small endeavor. We model an initial production of 10 MMUs per week starting in June for three months, and 25 MMUs per week after that. Production does ramp down again when all initial capital is depleted. Subsequent MMU production is funded by the 25% of mining return allocated for that purpose. Based on May 4th update, first production deliveries are expected in July 2018.

EVN Token Characteristics: The token characteristics are clearly stated in the whitepaper. After Management and operation costs, 25% of the profit are reinvested in more MMUs, 75% are distributed to token holders. After the burn of unallocated tokens, it is estimated 116M EVN will remain

We would be thrilled if Envion could provide better estimates of our hypotheses and we'll update the model accordingly.

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Yours truly, Tiaan

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