LOCAL startup CloudMining.SG, Singapore's first cryptocurrency mining operation, specialises in the mining of Litecoins, an alternative to the Bitcoin payment system. The brainchild of Peter Yeo, together with co-founders Alex Loo, Felix Lee and Neal Blackburn, CloudMining.SG was incorporated just two months ago in May. Started with an investment of S$200,000, the company's valuation is now S$600,000.
Mr Yeo explained that CloudMining.SG has four core functions: the distribution of mining equipment, mining for trading, mining service rental as well as the research and development of mining technology.
For example, they have partnered 3M Singapore and ITE Central's Technology Development Centre to develop liquid immersion cooling technology for the mining equipment, which is far more efficient than conventional air cooling systems.
All four functions are closely related to cryptocurrency mining itself, whereby users on the network help to process hashes in order to make transactions on the network more secure, which in turn generates currency for the user.
In terms of the difference between Bitcoin and Litecoin, Mr Yeo compared the two digital currencies to gold and silver, respectively. While Bitcoin is currently more valuable and widely used, there remains great potential for Litecoin to grow in the future. Litecoins can also be converted into Bitcoins for use.
Bitcoin also offers benefits over traditional methods of online payment - such as credit cards - by minimising middleman merchant charges. It is currently accepted for use in Amazon and eBay transactions, among others.
Continuing with the metal metaphor, Mr Yeo likened the CloudMining.SG's business model to that of a conventional mining operation. Their version of shovelling and excavating machines are known as Application Specific Integrated Circuit (ASIC) chips, which are able to rapidly process cryptocurrency hashes and obtain Litecoins as a result. CloudMining.SG is also the official distributor of leading Innosilicon Technology's A1 and A2 ASIC chips, which are used for mining.
However, CloudMining.SG does not mine Litecoins for its own use. Its business model operates mainly through the selling of contracts to rent out their mining equipment - in this case server farms and ASIC hardware technology - to miners hoping to carve out a portion of Litecoins for themselves.
"We want to enable people to participate in the Bitcoin movement," said Mr Blackburn. CloudMining.SG intends to target the global market and "meet the global demand" currently concentrated in the US, the UK and Europe, said Mr Yeo. They are open to working with both hobbyists and serious investors searching for high returns to form partnerships.
According to them, the fledgling Singapore Bitcoin scene is growing exponentially, with more than 100 enthusiasts who meet monthly compared to just 15 a year ago. There are currently also around 12 ATMs islandwide able to handle Bitcoin transactions.
"Cryptocurrency is the future of money," said Mr Yeo. "We hope to build Singapore as a regional hub for digital currency."