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Investing in Bitcoin Mining with HAG: The First SEC-Compliant Security Token Pioneering Tokenization of Bitcoin Computing Power

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By Cointime Lu Tian

In the first half of 2023, the "ancient" Bitcoin blockchain ushered in a new era. With the launch of the Ordinals protocol and the rapid adoption of the BRC-20 standard, the Bitcoin ecosystem is experiencing a resurgence. During this explosive growth, one group within the Bitcoin network reaped substantial profits: miners.

According to The Block Research, transaction activity on the Bitcoin network surged in May 2023, reaching a total of 16.9 million transactions for the month. Revenue from Bitcoin mining exceeded $900 million, representing a 13.7% month-on-month increase, fueled by heightened on-chain activity.

There are numerous ways to capitalize on the thriving Bitcoin ecosystem, such as purchasing Bitcoin directly on an exchange, mining with specialized hardware, investing in cloud-based mining, or buying computing power tokens. However, Bitcoin investments inherently face the risk of high market volatility. Acquiring mining hardware necessitates significant ongoing capital investment, and purchasing hash power also carries the risk of platform failures. Consequently, investors are increasingly focusing on finding safe, low-risk methods for investing in Bitcoin.

Enter Hashrate Asset Group (HAG), which offers investors a more accessible, lower-risk, and fully compliant investment option for participating in Bitcoin mining: the HAG token.

Introducing Hashrate Asset Group

Hashrate Asset Group (HAG) is a BVI-based Bitcoin mining company dedicated to establishing the world's first sustainable, compliant, and transparent Bitcoin standard computing power operation model.

As stated on their official website, HAG's mining facility is located in the United States, and its core team is composed of seasoned professionals from the technology and financial sectors, hailing from renowned companies such as Goldman Sachs, Softbank, Bitmain, and TSMC. The ex-Goldman Sachs/SoftBank members are responsible for maintaining internal controls and compliance, while the experts from Bitmain and TSMC contribute their extensive knowledge of Bitcoin mining. Notably, HAG's venture capital team also includes early investors from Bitmain and has enlisted Magic Circle, an STO consulting agency, as a security token issuance consultant to provide management consulting and technical support throughout the issuance process.

According to SEC website, Hashrate Asset Group has received an exemption for the issuance of SEC securities. This means that, in compliance with US securities laws, HAG can legally and compliantly issue security tokens.

HAG Token Officially Launches on US Digital Securities Market INX

On June 21, Hashrate Asset Group (HAG) officially listed its digital security token, HAG, on the US digital asset trading platform INX. INX is among the top three security token offering (STO) platforms in the United States, specializing in cryptocurrency, digital securities, and derivative transactions. In August 2020, INX received approval from the US Securities and Exchange Commission (SEC), becoming the world's first digital securities IPO project.

Details of this round of HAG digital securities issuance (STO) are as follows:

Release date: June 21, 2023, 10:00 PM (UTC+8)

Token symbol: HAG

Number of tokens issued: 12,000,000 HAGs

Target issuance size: $500 million

Minimum purchase per user: $5,000

Token Price: $39/HAG

  • HAG: Tokenization of Computing Power Assets

The HAG token is a security token that focus on Bitcoin mining computing power, providing holders with Wrapped Bitcoin (WBTC) as a monthly Bitcoin dividend.

Each HAG token represents 1 terahash per second (TH/s) of perpetual mining hash rate, backed by a fixed perpetual hash rate of 140 TH/s and a standard power consumption efficiency of 3,010 watts. Bitcoin computing power is a critical component of Bitcoin mining and is essentially a real-world asset (RWA). The HAG token tokenizes Bitcoin computing power, achieving Real World Asset Tokenization. For investors, holding HAG tokens equates to owning the corresponding Bitcoin mining computing power, allowing them to benefit from the growth of the Bitcoin mining industry without directly investing in mining equipment.

  • HAG Income Distribution: 70% Holders + 30% Reserves

HAG token holders automatically receive monthly dividends in Wrapped Bitcoin (WBTC) through a smart contract that distributes 70% of the net Bitcoin mining proceeds to token holders.

What constitutes net Bitcoin mining income? According to HAG's official information, "net income" from Bitcoin mining refers to the gross Bitcoin revenue generated by mining operations minus electricity consumption, gas fees, mining pool commission fees, operational costs, other direct mining expenses, corporate taxes, listing fees, and estimated dividend agency fees and costs.

In addition to the 70% dividend distribution, the remaining 30% of net proceeds serve as a reserve to maintain the underlying hash power of each HAG token. Reserve funds are used to maintain and upgrade users' mining equipment, ensuring that the efficiency of HAG tokens in the mining process does not diminish over time.

  • Why Hold HAG?

HAG stands out as the first fully compliant security token based on Bitcoin computing power, issued in strict accordance with US securities laws in the global encrypted digital asset market.

Apart from compliance and WBTC monthly dividends, HAG offers the following advantages:

- Participate in Mining without Owning Mining Equipment

HAG tokens are issued globally. For investors in countries or regions where Bitcoin mining is not allowed, holding HAG tokens provides an indirect, fully legal, and compliant way to participate in Bitcoin mining. Investors don't need to invest in purchasing and maintaining mining equipment, which can be expensive due to technological advancements and the need for continuous upgrades.

HAG represents the tokenization of Bitcoin computing power assets. Holding HAG means owning a digital asset representing mining equipment or computing power without directly managing mining machines. Additionally, HAG tokens can be traded on the secondary market, offering greater liquidity during a Bitcoin bear market compared to directly cashing out mining equipment.

- Integration with ERC-20 Projects and DeFi Platforms

The HAG token is built using Ethereum’s ERC-1404 standard, the only security token standard listed in multiple SEC filings on EDGAR. The ERC-1404 standard is fully compatible with the ERC-20 standard, inheriting its functions and advantages while implementing regulatory restrictions. This compatibility allows the HAG token to integrate with ERC-20-based DeFi platforms. HAG token holders can transfer between different addresses, just as they would with other ERC-20 tokens. Moreover, ERC-1404 supports restrictive functions such as whitelisting and locking. As a digital asset on Ethereum, anyone can view, analyze, and track HAG token distribution and transaction status through a blockchain browser. Most importantly, digital assets issued according to ERC-1404 can still be recovered in case of private key loss, effectively reducing the risk of asset loss due to custody reasons.

Conclusion

The global encrypted asset market is moving towards becoming mainstream, compliant, and institutionalized. In this context, the issuance of HAG security tokens holds demonstrative significance for the entire cryptocurrency market and Bitcoin mining industry. HAG aims to enable more people to participate in Bitcoin mining in a compliant, transparent, and sustainable manner. At present, HAG's primary goal is to ensure token holders receive dividends. In the future, HAG plans to collaborate with other mining operations and DeFi projects to achieve economies of scale and diversified scenarios in mining operations.

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