Cryptocurrency mining is reaping dividends for Fatfish Internet Group (ASX: FFG) as the company continues to sow its commercial strategy across various sectors of cryptocurrency, fintech and consumer internet technologies.
The ASX-listed venture capital and development company which also has crypto-mining interests in APAC Mining, a privately-held company in which Fatfish has a 51% stake following a US$1 million investment earlier this year.
APAC Mining currently has active Bitcoin and Ethereum mining activities which Fatfish says are on track to deliver US$1.7million (A$2.19million) annualised gross revenue per year, as a result of mining approximately 170 bitcoins and 690 Ethereum ethers per calendar year.
Furthermore, Fatfish reports that APAC’s operations are currently operating at 60% capacity due to a delay in electrical engineering work at its mining server farms in Malaysia, but says that its servers will be running at full capacity “within the next 30 days”.
Fatfish has remained stoic in tempering growing excitement within the rapidly emerging crypto-mining niche by saying that “as the operation is still in its early stage it is too early to estimate its gross profit margin at this juncture”.
The company has also stamped ASIC-induced compliance warnings across its literature warning investors of a potentially “new regulatory framework involving cryptocurrencies” and ongoing changes to market rules that could affect all of its estimates regarding APAC Mining.
Despite the risks, given the current status-quo APAC Mining estimates that its current operation “commands a healthy double-digit gross profit margin” even under conservative estimates.
Given the extreme volatility seen in all cryptocurrencies over the course of 2017 and earlier this year, Fatfish reports that APAC Mining performed a feasibility study on cryptocurrency prices and found that its crypto-mining operation “will remain profitable as long as Bitcoin is trading above US$4,000 and Ethereum Ether above US$250”.
At the time of writing, Bitcoin was trading at $8,187.11 per US dollar while Ethereum was at $534.51 per US dollar, according to Coindesk.
Taking into consideration the encouraging situation report and amiable crypto-market conditions, APAC Mining intends to “procure additional crypto mining equipment” to add to its capacity as soon as its existing server farms have been restored back to full operational capacity over the coming month.
As a result, the APAC Mining is expected to “build more mining server farms across new locations to host the additional equipment”, according to Fatfish.
Keeping energy prices minimised and crypto-mining activities cost-effective has been notoriously difficult. To ensure its operations remain economically viable, APAC Mining is currently in discussions with service providers in Canada and Mongolia, as well as close to its existing server farm operations in Malaysia.
The company said that it has a strong business case to scale up its operating capacity significantly in the near future, to the point of “producing one Bitcoin per day in the near term future”.
By extension, this would generate positive commercial returns for Fatfish as majority shareholder.