Usually, trying to be everything to everyone is a bad business strategy. Most of the time, this stretches your operation too much. You can be really good at one or two things, and only others, but if you spread out to include all the operations you can handle, you can generally expect mediocrity across the board. Specialization is the way to go.
Neptune Digital Assets (NDA.C) is the exception that proves the rule and they know from experience that the problem with specialization is that it gives you a point of failure.
Back in the hazy days of 2017 and well into the crypto winter of 2018, NES was Neptune Dash. Their specialization and focus was on mining operations and running nodes for the Dash privacy coin. It made sense back when Dash was a legitimate contender for top 10 status, earn up to 8000% in 2017.
It was not sustainable. You could point to crypto winter as the cause, but the reality is that privacy coins have gotten such a bad reputation due to their appearance in deep web transactions involving illegal activity. No one wants to be associated with this and so privacy coins have taken a hit. As a corollary, Neptune also took a hit and while they managed to survive the winter, it became apparent that they could not sustain themselves on Dash.
They have since decided that diversifying their coin operations would likely be in their best interests and have expanded from their specialization, running Dash nodes, to include what appears to be an ever-expanding crypto opportunity. . It’s a big blow on their part, and while they’ve technically come a bit late in the game, they’re still making a name for themselves in the space.
Here is what they have developed since the pivot:
- Bitcoin mining
- Pile Mining Evidence
- Run blockchain nodes
- Decentralized financial applications
Let’s dive a little deeper.
Bitcoin mining has had a bad odor lately due to the environmental issues surrounding it. Large-scale proof-of-work mining requires large amounts of power to feed the network – the equivalent of some countries, in fact. There is a whole industry that has got into mining the coin, and there are sub-factions within said industry that want to get the environmental aspects of mining under control before the government intervenes. .
The secret to competing with the big guys is to reduce your overhead. While Marathon Digital Holdings (MARA.Q) can bring in entire fleets of ant miners and spend millions of dollars on electricity, a company like Neptune doesn’t have that option. They don’t really want it either. Remember? Specialization comes with a single point of failure.
Neptune uses techniques such as mining pools and renewable resources to achieve its goals, and they have formed a joint venture called Pure Digital with Link Global Technologies to offset some of the costs and leverage solar power to reduce their environmental impact.
Altcoin mining does not carry as much environmental weight as Bitcoin. Coins that use the proof-of-work consensus mechanism are usually not large enough networks to need the same kind of power requirements, and the rest are proof-of-stake coins. Proof of Stake does not require as much energy.
Simplified, Proof-of-Stake is a type of consensus mechanism used to validate cryptocurrency transactions. Instead of committing quadrillions of units of electricity to solving a mathematical problem like in Proof-of-Work mining, PoS involves staking pre-existing coins you already own for the right to validate new blocks and add them to the blockchain.
Their other holdings include: Dash (of course), Ethereum, ATOM (Cosmos), FTM (Fantom), AVAX (Avalanche), Litecoin, Polkadot, Bitcoin Cash, Stellar, NEO, OMG, and QTUM. Many of them are in substantial quantities.
This is the base verticle where a lot of their income comes from, closing blocks and getting paid for it, but let’s go deeper.
If you’re not familiar, Decentralized Finance (DeFi) refers to a series of protocols and companies on various blockchains that offer various financial instruments, like loans, bank accounts, and exchanges, without the need traditional centralized institutions and their exorbitant costs. DeFi does this by using smart contracts to secure transactions, which are widely available on the various blockchains involved. Instead of giving your money to a bank to use or waste on their own investments, you can control where your money goes and what it is used for.
This is what Neptune is involved in, having recently introduced a few different DeFi protocols to its program. Fantom and Avalanche are two examples. They are both smart contract enabled blockchain protocols with specializations in fast transaction speed with reduced cost which makes them ideal and some might say integral part of working in DeFi. Neptune intends to grow its program even further through research, deployment and evolution of its program based on the company’s independent evaluation.
“DeFi represents a significant opportunity for Neptune. It enables faster and cheaper financial transactions and services for organizations and the general public. This equates to efficient and decentralized financial services, while keeping more money in customers’ pockets, compared to existing legacy systems. We are very excited about Neptune’s future in DeFi and the potential return we can generate. This is a nascent space and as such we have carefully and methodically selected protocols that we trust that are run by non-anonymous individuals and groups with a history of success. Although DeFi is in its infancy, our program is proving very lucrative and we will continue to scale in the space and maximize shareholder returns,” said Cale Moodie, CEO of Neptune.
Baseline numbers show a cash position of $4 million, zero debt, and a substantial number of miners popping up and working to expand their Bitcoin mining function. The numbers you are about to read are for a start-up business.
- Neptune ended the quarter on November 30, 2021, with $67 million in assets and no debt. This equates to a 23% increase in asset value compared to August 31, 2021, year-end.
- Neptune earned $1,707,046 from bitcoin mining and other revenue-generating activities during the three-month period ended November 30, 2021.
- Total expenses for the three-month period were $193,308, or $64,436 per month.
- After November 30, 2021 and up to the date of this publication, Neptune has earned an additional 35 bitcoins, bringing the total bitcoin balance to 160,530 bitcoin mining rigs, equivalent to 53 petahashes, are expected to go live in the first quarter civilian of 2022, adding to the existing 22 capacity petahashes.
- Neptune’s two largest digital holdings as of the date of this publication are 160 BTC (bitcoin) and 151,000 Atoms. The company also holds positions in FTM (phantom), Tshare, dot, dash, tomb, ETH (ethereum), BCH (bitcoin cash), LTC (litecoin); a number of other intangible value tokens; an investment in the Protocol Crypto Quant Fund valued at $8.2 million at the end of November; and a current cash balance of $23.1 million for strategic acquisitions, Bitcoin mining rig purchases, and operations.
It’s not a company that will be able to compete with the established big boys and their specialization in the Bitcoin mining space anytime soon, but they’re not trying to be either. They are trying to spread their wealth enough to touch several different aspects of the blockchain-based industry, which will never make a lot of money if one of them takes off, but is enough to guarantee that if one of them them fails (which is more likely) than they won’t sink with.
Right now, it is a company with a market capitalization of $58,083,000 and currently trading at $0.465. What they offer the savvy investor is a connection to the asset class without the need to own it. When crypto takes off, which could seriously happen if regulation reduces the risk factor on cryptocurrency and blockchain as a whole, companies like this come with it.