2019.10.05 Bitcoin ROI Revealed - Frankfurt - Sean Walsh

ROI RevealedThe Single Best Mining Opportunity For The Next 24-Months
Sean M. Walsh - sean@hyperblock.co - @SeanWalshBTC - www.linkedin.com/in/SeanWalsh
World Digital Mining Summit, Frankfurt– October 2019

The Big Problem: The Race To The Bottom
@SeanWalshBTC - www.linkedin.com/in/SeanWalsh
If,
$1/day
here
Then,
$0.005/day
here
BTC Mining Revenue – 1 TH/S
$0
$200
$400
$600
$800
$1,000
$1,200
Mining Difficulty BTC Price Profit/Day
99.5%
Reduction

The Rest Of Our Big Problem…

Step 1:
Describe The
Miners’ Dilema

Mining Is Not The Only Way To Obtain Bitcoin
It’s easy to forget that when mining
profitability drops below a certain
threshold,
It is more attractive to buy Bitcoins,
instead.

Bitcoin Mining Investment Trend
$0
$1
$2
$3
$4
$5
$6
$7
Billions
Bitcoin Mining
Gross Profit Vs. Capital Investment
Cumulative Gross Profit Cumulative Capital Investment
$1.2 Billion
Deficit
CONCLUSION: $1.2 Billion over investment may take two years to repay.

CONCLUSION: $1.2 Billion over investment may take 2 years to recover.
($1.5)
($1.0)
($0.5)
$0.0
$0.5
$1.0
Billions
Bitcoin Mining
Net Cash Position
Net Cash Position
Bitcoin Mining Investment Trend
$1.2 Billion
Deficit

What is the Best Investment for a Miner?
Purchase Mining Servers.
Increase the
value of Bitcoin.
Cannibalize value of
pre-existing servers.
Increase value of
pre-existing assets.
(Virtuous Cycle)

Step 2:
Summarize the
Miners’
Opportunity
sean@redwoodcityventures.com - @SeanWalshBTC - www.linkedin.com/in/SeanWalsh

Miners’ Golden Opportunity
1. The single best investment we miners can make is to
stimulate Bitcoin adoption and usage.
3. How? Increased Bitcoin adoption drives Bitcoin value up.
4. This makes all Bitcoin mining assets more valuable.
5. Techniques for achieving increased adoption are
surprisingly economical and simple.
2. This investment delivers at least 10x greater ROI than an
investment into mining assets alone.

Affiliate Marketing Program Built Amazon.com
Concept: Affiliates refer their Website visitors, and are paid sales commissions
on resulting orders.
Amazon History: Launched their Affiliate Marketing Program in 1996.
Amazon Success: Amazon is the Internet’s largest and most successful
company. $1 Trillion market capitalization, and $180 Billion in revenue.
Affiliate Contribution: Affiliate Program is cited as one of the most important
contributors Amazon’s incredible growth.
20-Years Of Growth: There are now over 300k affiliate websites driving
customers to Amazon every day, still driving 25% of total Amazon.com traffic.

$0.5M
$12M
$38M
$271M
$50M
$100M
$150M
$200M
$250M
$300M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Total Expense Total Investment Value
TVPI %: 813%
Initial Capital ROI %: 731%
Expenditure ROI %: 1982%
Note: Even if customer acquisition cost is 2x budget, ROI still exceeds 700%.
Acquisition Campaign Return Profile

Compare Investments: $1 Million Starting Point
Investment Period – 24 Months Mining Expansion Affiliate Marketing
Starting Asset Value $1.0 Million $1.0 Million
Monthly Affiliate Marketing Expense $0 $15,000
TVPI% 166% 813%
Ending Asset Value $1.7 Million $8.1 Million
Total Profit $0.7 Million $7.1 Million
CONCLUSION: Affiliate Marketing investment yields 10x
more profit, or $7.1 Million additional per every $1 Million.

Sean M. Walsh
- One of largest miners in North America
- Related hardware and software products
- Initial Public Offering in 2018 (Toronto)
CEO, Hyperblock.co
Bitcoin/Crypto Investments
Founder, Redwood City Ventures
Advisor, Science Inc, Los Angeles
Advisor, GlobalLive Technology Partners, Toronto
$2B+ Silicon Valley Private Equity firm
Previously Vice President at Bertram Capital
15+ Years Online Customer Acquisition
https://www.slideshare.net/SeanWalsh28
@SeanWalshBTC
Linkedin.com/in/SeanWalsh
sean@hyperblock.co

20 MW Datacenter Overview
https://www.youtube.com/watch?v=aZ6mjOWghnc

Our Strategy
HyperBlock operates an efficient, North America-based
blockchain database security utility service.
20MW cryptocurrency
datacenter in the US
Pacific Northwest.
Proprietary Mobile,
Modular Mining Unit.
Hashrate sales to
Bitcoin.com
Automated trading
system to optimize
crypto assets.
Crypto adoption
accelerator &
innovator.

MODULAR MINING UNITS
SPEED TO MARKET
HyperBox is a self-contained, unit, with a dedicated transformer,
racking and cooling features. Units are in development. Targeting
deployment in Q3 2019.
MULTIPLE REVENUE STREAMS
Modular units may be offered to individual clients for sale, or offered
through HyperBlock hosting/hashrate sales.
ENHANCED ECONOMICS
Modular units provide a low cost path for machine deployment.
Significantly advantaged cost base versus traditional facilities
FLEXIBLE DEPLOYMENT
Modular units can be deployed to any power location, including
behind-the-fence opportunities.
• Compact 20 ft prototype design available in custom sizes, up to 53 ft.
• Prototype model includes 230 T17/S17 servers can be configured for
500 Bitmain S9 servers
• Available from .5 to 2MW.
HyperBox prototype model is .7MW

18
PROPRIERTARY TRADING
HYPERBLOCK AIMS TO OPTIMIZE ITS CRYPTO ASSETS
THROUGH AN AUTOMATED, SPECIALIZED TRADING
SYSTEM
AUTOMATED SOFTWARE
HyperBlock software engineers are
developing a proprietary, automated trading
system to help the company optimize its
crypto holdings.
GLOBAL PROP TRADING
HyperBlock plans to begin active prop trading
in 2020 by dynamically allocating funds to
traders based on performance.

Step 3:
What Are Miners
Actually Selling?

12,000 Years of
Shell Money?!
Paleolithic era shell hoards found from Red Sea
to Switzerland.
10,000BC
Neolithic era shell money in South Pacific & Asia
5,000BC
Chinese Shang Dynasty, bronze cowrie shell money
1,600BC
used throughout India, Africa, Asia, Europe,
South Pacific
1700s
used as legal tender in West Africa
1850
Replaced by modern currency in remote parts of Africa
1920
Still used in Solomon Islands and Papua New Guinea
2018

Stages Of Information + Money Technology
20,000 BC-10,000 BC
Information
Money
Counting
&
Numbers
Cowrie
Shells

20,000 BC-10,000 BC 1100 AD – 1600 AD
Information
Money
Counting
&
Numbers
Cowrie
Shells
Printing Press
With
Moveable Type
Double-Entry
Accounting
System

20,000 BC-10,000 BC 1100 AD – 1600 AD 1980 AD – 2025 AD
Information
Money
Counting
&
Numbers
Cowrie
Shells
Printing Press
With
Moveable Type
Double-Entry
Accounting
System
Internet
of
Information
Crypto-Assets
+
Internet of Money

Money Technology - Exponential Growth
20000
BC
15000
BC
10000
BC
5000
BC
0 1400
AD
1450
AD
1500
AD
1550
AD
1600
AD
1650
AD
1700
AD
1750
AD
1800
AD
1850
AD
1900
AD
1950
AD
2000
AD
2050
AD
The so-called Internet Of Money is an
energy transfer network that connects every
human being on the planet.
20,000 BC-10,000 BC
Sophisticationof
Civilization

20000
BC
15000
BC
10000
BC
5000
BC
0 1400
AD
1450
AD
1500
AD
1550
AD
1600
AD
1650
AD
1700
AD
1750
AD
1800
AD
1850
AD
1900
AD
1950
AD
2000
AD
2050
AD
This network’s bandwidth, and flexibility
have been growing at an exponential rate
for millennia.
1100 AD – 1600 AD
Sophisticationof
Civilization

20000
BC
15000
BC
10000
BC
5000
BC
0 1400
AD
1450
AD
1500
AD
1550
AD
1600
AD
1650
AD
1700
AD
1750
AD
1800
AD
1850
AD
1900
AD
1950
AD
2000
AD
2050
AD
However, the early stages of exponential
growth never appear/feel such. It’s not until the
inflection point, that hockey stick corner, when
the exponential growth becomes widely
apparent.
1980 AD – 2025 AD
Sophisticationof
Civilization

What Is Bitcoin?
• The best form of money ever invented
• But... What is money?
1. Unit of Account
2. Means of Exchange
3. Store of Value
• How to compare different monies? SDDRFT
1. Scarcity
2. Durability
3. Divisibility
4. Reconizability
5. Fungability
6. Transportability

The Squabbling Brothers Of Bitcoin
It’s looking increasingly likely that BTC and BCH will co-exist,
however tense their relationship may be on Twitter...
Bitcoin
BTC
Bitcoin Core
+
BCH
Bitcoin Cash

1. Scarcity limited, predictable supply
2. Durability won’t decay
3. Divisibility easy to subdivide
4. Recognizability difficult to counterfeit
5. Fungibility units are exchangeable
6. Transportability easy to move
Comparing Different Forms of Money
6 Characteristics
They all boil down to
trustworthiness of the
money (faith).

S
Dur.
Div.
R
F
T
Gold = 18
S
Dur.
Div.
R
F
T
USD = 13
S
Dur.
Div.
R
F
T
Arg Peso = 10
S
Dur.
Div.
R
F
T
Frequent Flier Miles = 5
S
Dur.
Div.
R
F
T
Starbucks Cards = 6
S
Dur.
Div.
R
F
T
Cowrie Shells = 15
Scoring “Moneyness”

0
1
2
3
4
Scarcity
Durability
Divisibility
Recognizability
Fungibility
Transportability
Bitcoin’s Moneyness
Bitcoin
Moneyness Score = 22
(out of 24)

0
5
10
15
20
25
Cowry Shells Gold USD Arg Peso Frequent
Flier Miles
Starbucks
Cards
Bitcoin
Comparing Moneyness
It all boils down to
faith in the money...

But, What Is
Bitcoin Really
Backed By?

Bitcoin Is Backed By Neck Tattoos
What is Bitcoin Money backed by?
Its users’ faith in its future value…
(AKA, neck tattoos)

And, Money Tattoos Are Well Established…
Paleolithic
ballers must
have been
covered in
Cowrie Shell
tattoos…
Roman Imperatorial Coinage from 1st Triumvirate circa 59BC

Bitcoin Transactions Increasing the Pie
Existing
Financial
Transaction
Types
Bitcoin
Transactions
SWIFT Wires, ACH,
Credit Cards, Loans,
Checks, Cash, Etc.

Bitcoin: Bubble + Anti-Bubble
Time »
Growth%
Late
2011 20172013 2013
Early
2000%
1500%
1000%
500%

Bitcoin Bubble #1
2011 Bubble
% Gain, Pre-Bubble
To Bubble Peak
3,500%
% Gain, Pullback Level
To Pre-Bubble 700%
$Value»
Time »
$0.90
$32
$6
Pre
Bubble
Bubble
Peak
Pullback
Level

Bitcoin Bubble #2
2013 Bubble #1
% Gain, Pre-Bubble
To Bubble Peak
2,200%
To Previous Bubble 125%
To Pre-Bubble 600%
$Value»
Time »
$12
$266
$70
Pre
Bubble
Bubble
Peak
Pullback
Level

Bitcoin Bubble #3
2013 Bubble #2
% Gain, Pre-Bubble
To Bubble Peak
1,100%
To Pre-Bubble 650%
$Value»
Time »
$100
$1,200
$450
Pre
Bubble
Bubble
Peak
Pullback
Level

Bitcoin Bubble #4
2017 Bubble
% Gain, Pre-Bubble
To Bubble Peak
2,600%
To Pre-Bubble 500%
$Value»
Time »
$750
$20,000
$4,000
Pre
Bubble
Bubble
Peak
Pullback
Level

Bubble
% Gain, Pre-Bubble
To Bubble Peak
To Previous Bubble
To Pre-Bubble
2011
$32
3,500% - 700%
2013 #1
$266
2,200% 125% 600%
2013 #2
$1,200
1,100% 110% 650%
2017
$20,000
2,600% 300% 800%
2019-2020
1,000%
$70,000+
100%
$40,000
600%
$45,000
BOTTOM LINE: 2012–2019 CAGR = 240%

Volatility Explained: Price Elasticity of Supply
In General…
If a surge in demand increases
PRICE,
Then, additional SUPPLY enters
market
(think of things like eggs,
bicycles, concert tickets,
vitamins, oil, electric cars, etc)
Price»
Qty »
PES – Unit Elastic
$110
1100
$100
1000
Increase
of 10%
Increase
of 10%

Price Elasticity Of Supply - Bitcoin
New Minted Coins
(100k / month)
+
Coins Sold
by Holders
Bitcoin Supply
As price increases, supply
declines, leading to
acceleration.
Bottom
Line
Supply»
Price »
Current
Equilibrium

Miner Sells 100 BTC
—
$1 Million
The Feeback Loop – Price Decline
BTC Price
drops to $6,000
for some reason
Miner sells 167 BTC
—
$1 Million
66% Extra BTC Supply
causes price to drop
further to $3,000
Miner Monthly
Operating Expenses
—
$1 Million
BTC Price = $10,000
Miner sells 334 BTC
—
$1 Million

Miner Sells 334 BTC
—
$1 Million
The Feeback Loop – Price Increase
BTC Price rises
to $6,000
for some reason
Miner sells 167 BTC
—
$1 Million
50% Lower BTC Supply
causes price to rise further
to $10,000
Miner Monthly
Operating Expenses
—
$1 Million
BTC Price = $3,000
Miner sells 100 BTC
—
$1 Million

390,290
624,489
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
July, 2015 September, 2017
$277
$3,132
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
July, 2015 September, 2017
Relationship: Bitcoin Wallets & Bitcoin Price
Avg Monthly
Growth Rate:
1.8%
Avg Monthly
Growth Rate:
9.8%
1+ BTC Wallets BTC Price

+30.9%
(avg. monthly growth rate)
1+ BTC Wallets
+3.2%
(avg. monthly growth rate)
Interesting Trend #2: Sep 2017 – Jan 2018
BTC Price

Interesting Trend: Recent Market Stages
-25%
-15%
-5%
5%
15%
25%
Jul 2015 - Sep 2017 Sep 2017 - Jan 2018 Dec 2017 - Apr 2018 Mar 2018 - Sep 2018 Sep 2018 - Sep 2019
1+ BTC Wallet
Growth Rate
BTC Price
Growth Rate
1.8% 3.2%
0.08% 0.1% 0.3%
Note: All Growth Rates are Month-Over-Month

What Fundamentals Drive Bitcoin Value?
1. Transaction Volume / Means of Exchange Use
2. Bitcoin Customer Base Growth
3. Increasing faith in the “moneyness” of Bitcoin
4. Metcalfe’s Law
5. Short-term swings partially driven by miners

Value Driver
Robert Metcalfe’s Law (Network Effect)

Value Driver – Metcalfe’s Law
Source: http://forum.bitcoin.com

Supply Fluctuation From Bitcoin Miners
• Fixed 54k BTC per
month paid to miners.
• Therefore fiat revenue
varies wildly
• And, Operating
Expenses are paid in
fiat
• So, miners must sell
more as price
declines.
All Global
Miners
Operating
Cost

Core Miners
(Sustainable)
1/3
$0.06
per kWh
Operating
Cost
varies wildly
• And, Operating
fiat
more as price
declines.

Core Miners
(Sustainable)
Swing Miners
(Sometimes Viable)
$0.09
per kWh
1/3
$0.06
per kWh
1/3
Operating
Cost
varies wildly
• And, Operating
fiat
more as price
declines.

Core Miners
(Sustainable)
Swing Miners
(Sometimes Viable)
Miners That
Will Fail
$0.09
per kWh
Operating
Cost
1/3
$0.06
per kWh
1/3
1/3
varies wildly
• And, Operating
fiat
more as price
declines.

1 2 3 4
Undeniable Influence Of
Metcalfe’s Law
Price Elasticity of
Supply
Steady Customer Base
Growth
Bitcoin Dilution
Trend
5 6 7
Institutional
Money Flow
99.9% Of Capital Is
Sitting On Sidelines
TAM Of Over 3 Billion internet-connected
adults, but under 0.8 Million people own 1+
Bitcoins.
Evidence of Continued Value Growth?

Annual Bitcoin Expansion
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2014 2015 2016 2017 2018 2019 2020 2021
Expansion, Ex-Dead BTC

Continued Growth – Institutional Money Flow

Max $10 Billion of Fiat Into Exchanges
99.9% Of Capital Is Still On The Sidelines
http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/
$70 Trillion – 7,000x $80.9 Trillion –8,090x
Bitcoin

Step 4:
How Will It Work?
Affiliate Marketing
Campaign

What Is Affiliate Marketing?

Affiliate Marketing for Bitcoin...
Sam wants to learn
about Bitcoin
Sam clicks on the affiliate
link &buys Bitcoin from
Coinbase
You get paid a commission from Miner
Alliance!
BitcoinInfo.com

Customer Acquisition Model – Input Variables
Starting Asset Value $33 Million
Customer Acquisition Campaign Duration 24-Months
Monthly Campaign Expense $0.5 Million
Monthly Expense % Of Starting Asset Value 1.5%
Bitcoin Wallet Growth Expectation Under 2%
Bitcoin Price Monthly Growth Expectations 5%
(very conservative)
Cost Per New Bitcoin Customer $50
New Customers Per Month 10,000
New Bitcoin Supply Absorbed Approx 20%
1. This opportunity exists for any size miner, small or large.
2. 1.5% of Asset Value per month is all that’s required.

$33M $33M
$79M
$233M
$874M
$200M
$400M
$600M
$800M
$1000M
0.5% 2% 5% 10%
MOM Growth, Bitcoin Price
Starting Investment Value Investment Value in 24 Months
TVPI: 2x
Expenditure
ROI = 7,000%
TVPI:
9x
TVPI:
28.2x
Investment Return: Four Scenarios

$500,000
$12,000,000
$33,867,619
$55,487,686
$50M
$100M
$150M
$200M
$250M
$300M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Total Server Expense Total Investment Value
TVPI %: 166%
Initial Capital ROI %: 66%
Expenditure ROI %: 185%
Mining Expansion Return Profile

Campaign Details, 1 of 4
1. Tokyo
2. California
3. Florida
4. New York
5. Seoul
6. Switzerland
7. Texas
8. UK
Who:
1. 2 Million Existing 0.1-1.0
Bitcoin Owners
2. Investor ($40k+)
3. Online Brokerage
4. Specific Locations
5. Age < 50
Note – the target is 1,250 customers per region per month
Where:

Campaign Details, 2 of 4 – What’s The Pitch?
1. Most unique Store of Value ever created. Inconceivably
scarce.
2. Non correlated asset (portfolio diversification, target 1%-4%)
3. Most asymmetric return profile in history
4. Mainstream adoption due to SDDRFT – best money ever
5. Value is up over 5,000% in 4 years – 1% allocation 4 years
ago would have doubled entire portfolio
6. Strong evidence to suggest strong continued price
appreciation
Note: There are also over 300 Million people around the world who own Gold as a Store of Value.

What’s the Outreach Strategy?
1. Affiliate Marketing Campaign in each target market.
2. Affiliate Success = New Customer purchases 1+ Bitcoin on a
participating local exchange.
3. We pay affiliate $50 per new customer.
4. Recruit 500 Affiliates in each market (in partnership with Exchanges).
5. Affiliates will inspire their respective follower-bases to become customers
(offline activity, online events, etc.)
6. New Customers = 600,000 (avg. 60 per affiliate)

What’s the Budget? Schedule?
1. Affiliate Commission = $50 per new Customer (paid in BTC)
2. Budget = $500k per month
3. New Customers Per Day Per Market = 80
4. % of New Bitcoin Supply Absorbed = Over 20%
5. Initial Campaign Duration = 24 months
This triggers the
Virtuous Cycle…

Added Benefit Of Increased Bitcoin Usage
1. More transactions means an increase in the velocity of Bitcoin circulation.
2. The higher the velocity of Bitcoin circulation becomes, the larger the
average Bitcoin balance required by users.
3. This simple demand will overwhelm Supply and drive value up
enormously, while calming volatility due to highly distributed demand
profile.
4. To wit, about 2 million people own at least 0.1 Bitcoin. If even 5% of them
re-activate monthly and buy an additional $1,700 of Bitcoin, that absorbs
HALF of new Bitcoin production.
Important: These 2 million existing customers are our best upsell targets.

Step 5:
Explain The
Conclusion

Conclusion
1. We’ve invested $5 Billion into mining Capital Equipment, and we earn
about that in annual revenue.
2. Our revenues bounce around wildly, and risks are enormous.
3. But, we can easily take control of our fate, and guarantee our profits.
4. The conditions are set for an incredible mining ROI over next 2 years.
5. Action: Spend 0.5% of mining asset value on Bitcoin Marketing.
6. Result: 2,000% 2-year ROI.
7. Online Affiliate Marketing is proven and easy to execute.
8. To join our miner consortium, email sean@hyperblock.co

Reminder: We’re Building New Money Technology

Bitcoin’s Explosive Convergence
Technological
Trends
Economic
Trends
Social
Trends
1. Technical: Byzantine
Generals problem solved
2. Social: 3 Billion adults
using Internet of
Information
3. Economic: truly global
economy, finally ready for
new types of transactions.

The Importance of Moneyness
John Exter
(NY Fed President)

A Metaphor For Money
Consider money to be a storage medium for human
energy (time x ingenuity).
Think of its characteristics like a battery’s…
• Energy per unit volume (density)
• Energy decay over time (price inflation)
• Battery durability (over time, across
environments)
• Charging rates (especially max rate)
• Discharge rates (the variety of different
transactions
that can be supported, and the liquidity of a
money)
• Recharge cycles (another form of durability)

Vauation»
Time »
Stealth Phase Awareness Phase Mania Phase Blow off Phase
Take off
First Sell Off
Bear Trap
Media Attention
Enthusiasm
Greed
Delusion
New Paradigm!!!
Denial
Bull Trap
Return to
Normal
Fear
Capitulation
Dispair
Return
To the
Mean
Source: Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography Hofstra Univ.

Increased Usage – Current Headroom
Note: Legacy network is hitting limit of 3 tps.
Bitcoin Cash upgrade increased throughput by 8x
Source: www.bitinfocharts.com
BTC Network: Very little to 0.4 Million transactions/day
BCH Network: 300x growth to 13 Million transactions/day
BTC, 400k tx/day cap here

2019.10.05 Bitcoin ROI Revealed - Frankfurt - Sean Walsh

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