Czech Ethereum Killer
Article published in Forbes Czechia on December 1, 2021.
The original plan to build a computer center for $5 million in their Czech Republic did not work out because their electricity and space provider backed down at the last minute. To be sure, they are now building precisely two. The costs are currently calculated at $30 million.
The story of Invictus mining began, as it did for many other mining companies that emerged during the penultimate crypto-currency bull market. The company built its career by operating mining hardware for its clients.
In the middle of the bear market, when the crypto fell (in 2019), they noticed many resigning clients who began to sell their mining hardware cheaply and decided to seize the opportunity.
"It was used for clients' wallets, and we only took a monthly fee. Basically, we provided simple hosting. We started with it quite early. I still remember the time when one server was able to extract a hundred ethers a day, something unthinkable today," recalls the company's founder and co-owner Vladimír Vencálek.
His story is a bit like the American dream. He started with assembling mini-kits in his garage, and today he is one of the mining celebrities on the domestic market.
Even Invictus is no longer a small company but a business group. The companies associated with the Invictus brand specialize in the service of data centers, their operation, companies providing investment services, and newly established companies focused on developing blockchain applications and their application on the Czech market. There are a total of ten companies.
It will probably go with even greater force if it doesn't work by force.
Mathematical models and later practices have shown that cryptocurrency mining behaves like any other infrastructure project, but it is incredibly stable and long-lasting. As the first bet turned out to be almost excellent, the company prepared a new project for an infrastructure data center for more than $15 million.
However, as with the current farm, the lease of computing power to miners should be just one of the business pillars. The second will be the rental of computing power for rendering operations or machine learning and artificial intelligence. It often pays more. Today, rendering operations represent major global trends, and their market is growing by more than forty percent year on year.
"Certain types of performance can be provided a maximum of 300 kilometers from the data center. Otherwise, the full advantage of computing power will be consumed by high latencies," Vencálek explains the reasons why similar projects in our country may make relatively good sense.
Surprisingly, the biggest obstacle did not prove to be the finances, but the partner to provide energy and space to the project. The expansion of the original smaller data center into a project worth almost $5 million in Strakonice thus finally fell through. However, the company did not give up, found new premises and investments, and is currently building two similar data centers.
They are to be completed in the first half of next year, and together they promise to offer about 500 petaFLOPS (floating point) graphics performance. To make at least a small comparison, for example, the world's second most powerful supercomputer, built by IBM for Oak Ridge National Laboratory in Tennessee three years ago, has a performance of "only" 200 petaFLOPS.
However, in his case, it is a slightly different type of computing power because it behaves like one "supercomputer" and not like thousands of servers, but the customer may not really care.
Both data center projects are also interesting through the way they are financed. While the first of them, which will be located in Kladno, Central Bohemia, has a substantial investment partner in the form of the Czech industrial trading and production holding MTX Group, the second used cryptocurrencies for capital raising and is open to unqualified investors.
The second project, which is being built by the subsidiary Invictus solutions, is financed from several sources - traditional bank financing, through venture capital, but also through funds selected through cryptocurrencies, or through a so-called "security token" with a stable value of one dollar, a kind of unregulated digital bond equivalent.
Invictus is based on a previous successful sale of yield certificates, where the investor has a formula for calculating the yield based on publicly known mining data. Security token offerings have only been running since September, yet, given the fact that no public marketing has taken place, the result is quite interesting.
In the first fortnight, Choam tokens, as the share token is called, were sold for more than $ 1 million. The target amount is fifteen million by spring 2022.
To issue a digital token in the world of tightening crypto business regulation, which does not hide the fact that to a certain extent, it fulfills the function of security, requires courage, and also good planning.
"You can't buy Choam token on the open market. The purchase takes place only at the approved addresses of candidates who have passed the 'know your customer' (KYC) type examination, provided by the international company Sumsub, which handles the same things for banks. This eliminates, for example, Americans, politically exposed people or users from countries on international sanctions lists, " explains Karel Fillner, another legend on the Czech crypto scene, on behalf of Invictus. However, they also did their homework, and before the token was issued, every step was consulted with a Czech law firm specializing in digital assets and regulation.
From ether mining to the management of an international cryptocurrency project.
The withdrawal of capital through digital tokens always seems a bit suspicious, and especially people who invested in one of the ICO projects in 2017 and 2018 (financing cryptocurrency projects through the initial supply of coins) have a warning light in their heads. One of the reasons for the non-traditional form of financing was the effort to support the ecosystem of the platform cryptocurrency Callisto Network, on whose blockchain the whole project runs.
The Invictus group has invested heavily in its development. Together with foreign funds, it invested about five million dollars in the project. And he plans to invest another ten million dollars in development next year. Where Callisto got married and how Invictus got to it in the first place will turn out to be a separate story.
The project was created after one of the biggest hacks in blockchain history. In 2016, a hacker from a smart contract, DAO (Decentralized Autonomous Organization), sent out fifty million dollars of ethers due to a banal mistake.
Ethereum subsequently split into two networks, one on which the hack never happened (today's Ethereum), and a network that continued on the original (attacked) chain, creating a cryptocurrency known as Ethereum Classic.
Developments on the Ethereum Classic branch have practically stopped, so in 2018 the frustrated part of the community decided to establish their cryptocurrency-focused mainly on security. Callisto was formed.
Invictus was close to Ethereum Classic from the start, so it was only a matter of time before they met Callisto. The executive and the chairman of the Supervisory Board were surprised by the disparity between the technological maturity of the project and its zero promotion. They felt an interesting opportunity and decided to invest capital and their marketing know-how in the project.
Today, they are helping to manage this international project. A new company based in the Czech Republic was also established - Callisto Enterprise, which attracts investors and further develops the network ecosystem. This mainly means acquiring interesting projects and dragging development teams, but it also tries to promote the project on the domestic scene.
The ambitions are mainly in the NFT market, where they can rely on low transaction fees, good connections with competing blockchains, and the opportunity to create a free market without using a centralized NFT marketplace such as OpenSea. For example, Dark Zone Studios, which develops an extensive NFT card game and is preparing an ICO in the coming months, has recently become part of the group. The studio currently has $500 000 to develop, from which it promises to raise another five million.
Own decentralized exchange
Speaking of projects to revive Callisto Network, it would be a shame, not to mention the biggest one so far. We are talking about the decentralized exchange Soy Finance, which recently celebrated the first month of its existence. It reaches relatively interesting volumes for its toddler age. The amount of money locked into the market liquidity in the first fortnight alone exceeded eleven million dollars, and cryptocurrencies are traded daily for hundreds of thousands to millions of dollars.
Like the entire network, the exchange is focused mainly on security and easy connection with other blockchains. Otherwise, they are not so different from the classic "DEX" exchanges. Here we find the possibility of exchanging one cryptocurrency for another and providing liquidity, where the owners of cryptocurrencies can collect, or, as the world has seen in decentralized finance, "earning" interest for participating in providing liquidity to the stock market.
The exchange also has its own insurance fund, from which it should be possible to cover at least part of any losses caused, for example, by the exchange's hack. So far, it is a bit unique among decentralized stock exchanges.
Callisto's story has been a story about an exciting technology buried by missing or misunderstood marketing and too little networking. Will it be possible to change this under the leadership of the Invictus group? There is little competition in the ecosystem of cryptocurrency platforms.
Author: Karel Wolf.
Read this article on Forbes Czechia.
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