Halving on the Bitcoin network, that is, halving of mining rewards, is an event that can have a significant impact on the entire mining industry.
We consider it necessary to prepare the Minto project for halving in order to minimize its negative impact on the income of $BTCMT holders.
Due to the evolution of the Minto protocol and technology stack, we are offering you a set of solutions that, if supported, will be added to the project development plan for 2024:
- Improving the reward distribution mechanics
- Creation of a Treasury and its joint management according to the DAO principles
- Implementation example
- Results and next steps
1. Improving reward distribution mechanics
As the Minto project develops, it becomes harder for users to objectively perceive information about the $BTCMT and the project as a whole. Despite the fact that the $BTCMT is tightly pegged to the 0.01 TH/s hashrate, mining rewards are accrued disproportionately, and a deep understanding of tokenomics is required to assess the accuracy of accruals and the prospects for their growth as the project’s ever more energy-efficient hashrate grows.
Concepts such as “Multiplier", “65% mining hardware uptime”, “Average Energy Efficiency” (“AEE”) need constant clarification and prevent new investors who are not familiar with Bitcoin mining and crypto from joining the project.
Now the project distributes all the profit earned (for 0.01 TH/s + multiplier) through a single transaction (pic.1).
We propose to divide this process into two parts, where the reward is pegged to the token standard 1 BTCMT = 0.01 TH/s, and the retained earnings are sent to the Treasury for further joint management using voting on the Governance portal (pic.2).
For more information about the joint management of the Treasury (aka DAO), please refer to section 2.
The most energy-efficient and modern project hardware will be reserved for customers (CEE ~30-35 W/TH), which will allow us to switch it to the 100% uptime mode, and the energy efficiency of the remaining capacities will be provided on a residual basis and gradually brought to the project’s target level of average energy efficiency (AEE ~35-40 W/TН).
Key energy efficiency indicators will be adjusted. The average energy efficiency (AEE) of the entire project will be separated into 2 components for a clearer understanding: CEE and TEE:
- Customer Energy Efficiency (CEE) - means the average energy efficiency value of the hashrate used by customers
- Treasury Energy Efficiency (TEE) - means the average energy efficiency value of the hashrate used to fill the Treasury
The target levels of indicators will be adjusted up every year.
For 2024, we see it possible to achieve the following values:
- The AEE value will be changed from the current value of 53.5 W/TH to the target value of 35-40 W/TH
- The CEE value will be changed to the target value of 30-35 W/TH
- The target value of the project's hashrate for the next year is assumed to be 200,000 TH/s
The update of the project's targets will take place as part of the voting on the Governance portal.
Improving the energy efficiency of hardware from 53.5 W/TH to 30-35 W/TH and switching it to the 100% uptime mode will provide higher profitability for each customer, and will also allow Minto to become one of the world leaders in terms of energy efficiency, since the average energy efficiency in the world as of the end of 2023 is 32.22 W/TH (according to Coin Metrics Labs).
2. Creation of a Treasury and its joint management according to the DAO principles
With the current mechanics of mining rewards' accrual, the project does not have flexibility in decision-making and is subject to significant risks in negative market conditions. The creation of the Treasury will allow the community to flexibly use the accumulated revenue through voting in accordance with the DAO principles, promptly funneling it to develop the project in favorable market conditions, or, conversely, to limit the impact of market negativity, e.g.:
- Increasing the multiplier. We will be able to jointly set the multiplier level for contracts, determining how much money from the Treasury to allocate for this purpose each month.
- Purchase of new miners. We will be able to use the funds accumulated in the Treasury to purchase new miners with better energy efficiency and increase the overall project hashrate.
- $BTCMT purchase program. We will be able to use the Treasury funds to buy back $BTCMT from the secondary market.
- Infrastructure development. We will be able to direct part of the funds to the development of the project infrastructure, the creation of new products and the construction of mining farms.
Treasury will be deployed in collaboration with Safe Global on the Ethereum blockchain, ensuring a high level of reliability. Treasury will be managed on the basis of a multisig smart contract with 5 private keys as a multiple signature, which will be managed on the basis of the Whitepaper. In the future, we plan to assign 2 private keys to Delegates who will represent the community and independently put forward new initiatives for voting.
These updates will be reflected in the Whitepaper’s new version and described in detail in the project’s technical documentation if voting results in a positive decision.
Initially, the community will be offered a plan for 2024 (including hashrate, AEE, CEE targets), then quarterly initiatives will be put forward for monthly spending of the Treasury funds, as well as proposals for target adjustment, if necessary.
All decisions will be carried out jointly through voting in accordance with the DAO principles, unquestioning commitment to which allows Minto to remain one with its customers.
3. Implementation example
As of the end of 2023, the average monthly income distributed among customers, taking into account the multiplier, amounted to 27,531 USD with 65% hardware uptime or ~26.3% annually.
If the mechanics update is implemented, the following changes will occur:
- The hashrate will be increased from 78,000 TH/s to 104,000 TH/s (5,000 TH/s of which have already been added on December 1, 2023)
- AEE will be improved from 54.3 W/TH to 50.3 W/TH
- The CEE will be 38.9 W/TH
- The uptime for the hashrate used by customers will change by 100%
- The hashrate used by customers will be calculated based on the total number of tokens staked on contracts in the proportion of 1 BTCMT = 0.01 TH/s
The monthly profit from 104,000 TH/s will be 84,668 USD
29,790 USD will be distributed among customers in daily accruals
54,877 USD will be sent to the Treasury for subsequent monthly distribution using a joint vote.
Thus, customer revenue (APR) will be 19.8% per annum with 100% uptime.
We will continue to support the bonus +10% per annum as a measure to minimize the costs associated with possible lost profits at the moment in the amount of 6.5% per annum.
As a result, customers' incomes will remain above average for 2023, but at the same time, the funds accumulated in the Treasury will work to increase profitability through targeted investments in activities related to project development and corresponding to the current market conditions.
4. Results and next steps
Thus, in order to improve Minto mechanics ahead of Bitcoin halving, it will be necessary to:
- Create a Treasury
- Allot the most energy-efficient (up to 40 W/TH) mining project capacity to customers and all the rest to the Treasury
- Support two operating modes of 100% and 65% uptime for energy-efficient and other hardware
- Add 26,000 TH/s of hashrate (5,000 TH/s of which have already been added on December 1, 2023)
As for the next steps, which will become possible thanks to the implementation of the previous ones, we plan to:
- Actively increase the energy-efficient hashrate at the expense of Treasury funds
- Create a treasury on the Ethereum network
- Add the $BTCMT to the Ethereum network
- Deploy the current smart contracts infrastructure on the Ethereum network
- Update the Governance portal and support the Ethereum network for voting
There will also be respective updates to tokenomics, Whitepaper, the token sale system on the site, reporting systems and others, which will be coordinated in a general manner on the Governance portal.
The dates of the successive implementation of updates are indicated in the voting text on the https://vote.minto.finance/#/ and will be announced in chats and on the project's website.
The future halving situation is partly reminiscent of that of June 2022 as a result of the crypto winter, when, as part of VOTE#1, the Minto community approved the transition to the 65% mining hardware uptime algorithm and did not allow the project to show a negative financial result in any of the following months.
We believe that the comprehensive solution presented to you will allow:
- to avoid a possible project profitability loss if several negative factors come together, e.g., halving mining rewards will be accompanied by Bitcoin’s fall/prolonged plateau
- to minimize possible halving losses among Minto customers
- to increase the hashrate and develop the project more flexibly and intensively
- to reduce the complexity of project perception and understanding of the mechanism of mining rewards' accrual for new investors
- to increase the attractiveness of the project in general and the $BTCMT in particular
- to have a positive impact on the growth of customer profits in the long term
Throughout its existence, the Minto project has proven that it can effectively manage its facilities, consistently develop and achieve positive financial results regardless of market conditions. The Minto team deeply appreciates the community’s contribution to project development and is grateful to everyone for their trust and faith in our values!
We would like to once again express our gratitude to all the like-minded people and promise to take a firm step into the future to an entirely new level with your help!
The Minto team
12/24/2023 Update: VOTE#7 IS OVER!