Earlier this month, the Moonlite Project completed an ICO to raise capital for its first phase, carving out an industrial-sized, green crypto mining center from a warehouse facility in Iceland. Construction on the 2,500 square-meter structure will begin next week. The data center will use 100 percent clean and renewable energy and generate about 15,000 megawatts of electricity, enough to light more than 15,000 homes. The Moonlite Project may offer a blueprint for how the emerging blockchain industry will solve its vast energy requirements in a socially conscious, efficient way. Moonlite’s founder and CEO, South African native Eric Krige, told ThirtyK in an interview that the project “was always on the basis of consuming green energy. As a 15-megawatt facility — 15 megawatts are between 15,000 and 16,000 households of energy — if we consume energy at this rate, it has to be with social consciousness.”

Beginnings

ThirtyK: How did the Moonlite Project get started?

Krige: Cryptocurrency mining caught my attention when the mining capability of hardware became profitable. From there, we started with a smaller project more than what a recreational retail user would mine — 300 machines. The trouble was we could not find a facility in South Africa (where Krige is based) which was sufficient. We decided to scale to a bigger facility, which would get the energy that we would need, and that’s when we were looking for more capital. The project grew to 1.5 megawatts, and that’s when our advisers said “You can go a lot bigger.”

ThirtyK: What was the timeframe on funding?

Krige: The concept was in development from February 2017. By the middle of the year, we were looking for a facility that would have enough energy for us. Over the November- December period, we started receiving seed investment. It was during that time, we got more advisers, who were more influential in the blockchain space. Our pre-sale opened on the 10th of January and ended on the 28th of February.

Seed Capital and Pre-Sale

ThirtyK: How much did you raise through seed capital and your pre-sale?

Krige: We exceeded $500,000 in our seed capital. The novel thing we did was develop a sales portal as a subdomain on our website, which allowed investors in pre-sale to invest in fiat currency using their bank cards, Visa or Master Card and six kinds of crypto currencies. That allowed us to reduce our minimum required investment to 0.1 ethereum (ETH) or equivalent in other currencies. That allowed smaller investors to get involved. By the end of February, we had raised $3.75 million (from the pre-sale).

ThirtyK: What attracted you to the energy part of blockchain technology and to green mining?

Krige: From a commercial perspective, if we were going to get involved in (blockchain, we said), “Let’s be involved in the processing of the transactions, let’s bring down mining prices by bringing more mining capacity.” Increase the speed of transactional verification, and we felt we would be more profitable. In terms of community, we would be more valued as miners than traders. It was always on the basis of consuming green energy. As a 15-megawatt facility — 15 megawatts are between 15,000 and 16,000 households of energy — if we consume energy at this rate, it has to be with social consciousness. We hope to expand to 70 or 80 megawatts.

“The biggest challenge in Iceland is securing the energy you need. Iceland has to generate 100 percent of its own power.”

ThirtyK: How much money did you raise?

Krige: Our target was to raise $35 million. Our soft cap investment to get the project off the ground was $12.5 million.

Schedule, Use of Capital

ThirtyK: Are you on schedule to begin construction in April with an August launch?

Krige: Yes, the warehouse and the land on which we will be building our center has been confirmed.

ThirtyK: What will you do with this capital?

Krige: To get the project off the ground, we’ll be spending roughly $12.5 million to purchase equipment and to construct the data center. The balance of the funds will be transferred into the investment side of our business where we invest in crypto markets, hedge funds and VCs — available for ad hoc expansion based on token holder vote to speed up the rollout if we need and held in reserve for liquidity. We will hold a vote with our token holders to say, “Everything is running right, would you like to proceed to phase 2 of the rollout ahead of schedule?”

ThirtyK: Who are your hiring?

Krige: We’ll have about 22 people. There will be management, engineers, a mining team, people in charge of mining operations, temperature, energy use and other things. We’ll have a trading desk to convert, trade and manage the currency portfolio.

ThirtyK: What have been the main challenges and how have you overcome them?

Krige: The biggest challenge in Iceland is securing the energy you need. Iceland has to generate 100 percent of its own power. So they hold back a little on negotiations. We had to wade our way through that. Then, of course, the operational challenges — there will be many of those when the rollout begins. The ones that we know of, we already have mitigation plans in place.

Combating Volatility

ThirtyK: Do you worry about the industry’s stability as you launch such a sophisticated project?

Krige: When the banks are talking about using ripple (XRP) as another option with the view of replacing SWIFT payments for international transfers, if you look at Fortune 500 companies which are accepting bitcoin (BTC) as a form of payment, we’re at a point where cryptocurrency is here to stay. Volatility is showing in equipment, which developed really fast, and we’re countering that by aggressive equipment replacement where we sell our equipment on the secondary market and replace it with new, more efficient equipment. The other volatility is crypto prices. There is no way to mitigate that, because the prices are what they are. If you look at the financial structure of our project, we remain profitable so long as bitcoin is about $660. As economies of scale, we’re protecting ourselves.

ThirtyK: Where will the next data centers be?

Krige: The land which we’re using is about 12,500 square meters on which there are about 2,500 square meters of existing warehouses, which we’ll be using as a data center for our first build. We can expand the area under roof to about 7,000 square meters. So we can build about 4,500 to 5,000 squares on the same land. We’d like to stay in Iceland as far as possible.

James Rubin
James Rubin has covered a range of business topics for such publications as the Economist Intelligence Unit, Forbes Insights and Adweek. His papers have been presented at World Economic Forum events. He was an associate editor at TheStreet and is the author of the "Urban Cyclist's Survival Guide."