Team Spotlight Series
Team Spotlight: Dr. Alex Lam
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They are not fond of rules and they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.
— Apple, ‘Crazy Ones’, campaign from 1997
The earliest true investors in blockchain technology were the Bitcoin miners. The pioneers invested considerable time and resources into mining and took a huge gamble in a virtual currency with no apparent worth. On hindsight, we see visionaries with incredible foresight. But in that moment, they were probably regarded as crazy people believing in a crazy theory.
In Bitcoin’s relatively short history, the cryptocurrency and its ecosystem has witnessed its fair share of ups and downs in the form of political disputes, attempted government interventions, technological innovation, and a rollercoaster ride in price movement.
In this turbulent journey, some of these pioneers rose to prominence as industry leaders, while others chose to stay out of the public eye, hiding behind pseudonyms and living in obscurity despite their significant influence on the ecosystem.
Dr. Alex Lam was one of those who chose to remain behind the scenes. If not for the companies he founded, he would very much have preferred to be an “invisible miner”.
In 2013, Alex had just graduated from South China University of Technology with a Ph.D. in Financial Engineering, when he was offered a job as a senior researcher in an economic research centre under the Planning and Natural Resources Bureau of Shenzhen Municipality. As an enterprising and ambitious individual, Alex did not find the routine work as a researcher particularly rewarding.
Through a serendipitous conversation with a friend, Alex came to know about Bitcoin and blockchain. Initially, he was skeptical of the idea of a trustless network built on mathematics, economics, and game theory that could facilitate peer-to-peer transactions without intervention from any government or third-party intermediaries.
This financial system, with its own governance system and price discovery mechanism hard-coded into the protocol, went against everything Alex understood from his years of research.
However, as Alex dived deeper into blockchain technology, he became intrigued by the viability of new economic models and use cases that would be made possible with the technology.
2013: Eventful year for blockchain
2013 was a fantastic year for the blockchain industry. It was the year in which the industry experienced its first inflection point as it came into the public spotlight.
Something big had happened to the Bitcoin ecosystem. A young talent behind the alias of Kaomao had successfully developed the first application-specific integrated circuit (ASIC) chip for bitcoin mining that was much faster and more efficient than regular GPUs. This development ushered in a new chapter for the mining community as they transitioned from GPU-based mining to ASIC-based mining. Kaomao became highly regarded in the industry, with some referring to him as the “Chinese Prophet of Bitcoin”.
It was also in 2013 when Jihan Wu first provided the Chinese translation for the Bitcoin whitepaper, thereby kickstarting the cryptocurrency and mining craze in China. Together with Micree Zhan, they seized the opportunity and founded Bitmain. Within the first six months, they launched Antminer S1, their first-generation ASIC bitcoin miner with an efficiency that superseded other mining hardware. Jihan Wu and Micree Zhan went on to become industry leaders, producing top-of-the-line mining hardware and operating two of the largest Bitcoin mining pools.
After further careful consideration, research, and analysis of the technology and the industry, Alex grew confident enough to take the leap of faith. Despite looking foolish to his family and friends, he took out $7,000 of his savings, left his job, and began his journey into the bitcoin mining industry with a few friends.
Call it beginner’s luck: towards the end of 2013, not long after Alex set up his bitcoin mining operation, bitcoin prices started to rise and turned his operation profitable almost immediately.
With his sharp business acumen and strong foundations in financial engineering, Alex found a business opportunity amidst a growing mining industry. While Bitmain had quickly established itself as the market leader with an aggressive three-pronged business model — ASIC chip manufacturing, mining hardware sales, and mining pool development — the industry was still in its infancy and Alex believed that it was large enough for more players to enter and compete. That was when he founded RockMiner to expand his mining operations and go into mining chip research and manufacturing.
Operating a mining business might sound straightforward, but Alex soon found himself in a rough patch. Where could they obtain the cheapest electricity? Which mining chips should they use? How would the operations and logistics be optimized and maintained to obtain maximum revenue? Mining quickly proved itself to be a difficult business to run, should one lack sufficient technical expertise, connections, and capital.
On top of operational risks, miners are constantly at the mercy of the fluctuation in bitcoin prices. The profitability of the operation is entirely dependent on the price movement, which cannot be controlled or predicted.
2014: Tide goes out
To the dismay of many miners, a crippling bear market kicked in at the turn of 2014. Bitcoin prices plummeted after regulations on cryptocurrencies tightened up and Mt. Gox, one of the largest bitcoin exchanges in the world, began liquidation proceedings and announced that approximately 850,000 bitcoins were stolen.
This was terrible news for many bitcoin miners. Lower bitcoin prices meant lower revenue, and business became unsustainable for those unable to keep costs low.
With no signs that the bear market would come to an end in sight, several small firms closed down one by one. RockMiner too faced the possibility of a shutdown: With limited funds to sustain the company, key employees became unsettled and departed from the company. RockMiner was on the brink of bankruptcy, and Alex tried his best to optimize operations and cut costs to stretch the runway as much as possible.
2015: Turning point
To his relief, the market turned around and stabilized itself in 2015, providing much comfort to Alex and RockMiner. The market sentiment was warming up, and mining became more profitable. With some breathing space, Alex took the time to reflect and analyze how to better position RockMiner to better deal with the next bear market when it came around.
He realized that the biggest problem in managing a mining business was that very few people had in-depth and relevant knowledge to manage the inherent risks that came with the operations. Lei Jun, billionaire co-founder of Chinese tech hardware firm Xiaomi, has a famous saying: “If the right windy spot is chosen, even a pig can fly.”
When the market is doing well, the performance of bigger firms can tempt smaller firms to enter the business with a false sense of security and confidence. Should the tide go out suddenly, these newbies are caught off guard and most will not have the know-how to keep their operations sustainable.
(The history repeated itself again in 2017: the outstanding performance of Bitmain attracted another wave of new miners into the industry, only to be quickly washed out by the bear market that came a year later.)
Since firms like Bitmain and Canaan Creative had invested astronomical sums of money into R&D to develop faster and more efficient mining chips, the barrier to entry for new manufacturing firms rose rapidly. Recognizing that he was unlikely to match the big firms in terms of capital investment or R&D capabilities, Alex made a choice to streamline operations by abandoning the mining chip manufacturing business, and pivoting the organisation to focus solely on mining farm operations and cloud mining services.
This pivot was a crucial and correct decision. RockMiner was able to secure a defensible position and remain in excellent shape for the next three years, achieving fantastic results when bitcoin prices hit an all-time high of above $19,000. By the time the 2018 bear market came around, Alex was well-prepared.
In October 2019, Chinese president Xi Jinping explicitly expressed that the development and application of blockchain technology across various traditional industries would play an important role in technological innovation and industrial transformation. Soon after, the National Development and Reform Commission (NDRC) removed cryptocurrency mining from the list of industries pending elimination in the Industrial Structure Adjustment Guidance Catalogue.
Within days, the crypto winter was over. Well, for the mining industry in China at least. For RockMiner, these announcements meant even greater security and stability for the foreseeable future.
After building a solid foundation for RockMiner, Alex started seeking new opportunities in the blockchain industry. He recognized that while mining remained a viable and lucrative business, the industry had become highly saturated and competitive. The rate at which mining chips get faster and more efficient was slowing down due to Moore’s Law. He expected the PoW industry to come to a technological bottleneck sooner rather than later.
Learning from his own experience with scams and investment bubbles that came and went in this industry, he wondered if a risk-managed, trustworthy product existed that could serve as an entry point for newcomers to participate in the digital asset economy for a longer time horizon.
In looking to solve this problem, he started researching the Proof of Stake (PoS) economy, specifically on how staking could help investors compound their portfolio in a low-risk manner.
Alex believes that most PoS blockchains are still in their nascent stages, and staking could be a safe and viable way for conservative retail and institutional investors to diversify their portfolios into the digital asset economy.
The PoS consensus mechanism presents benefits over Proof of Work; the most significant advantage is that it consumes much less electricity and is more environmentally friendly. It also allows for faster transaction speeds and higher throughput, making it more viable for mainstream and enterprise adoption.
Alex met Dr. Xinshu Dong, the former CEO and co-founder of Zilliqa — the first blockchain to implement sharding technology. With an aligned vision, they founded RockX, a digital asset platform built to serve industry newcomers with risk-managed services that can help them compound their digital assets portfolio consistently over a long time horizon.
Xinshu and Alex believe that this is the next stage of evolution for the blockchain industry: To ensure that the blockchain industry sustains a healthy growth rate as the market recovers from the scams and vaporware bubble of 2017, blockchain products must demonstrate long-term viability and value, proving their commitment to reliability and build trust to attract new users and customers.
To provide the best user experience and returns, RockX will create a strict project curation process, a user-friendly interface that is simple and flexible enough for new users to navigate, and superior technical infrastructure to ensure maximum uptime and asset security.
In order for the platform to generate consistent and attractive returns for users, it is important to separate the truly exceptional projects from those with nothing but a whitepaper and a website. Alex and Xinshu recruited an experienced engineering team to curate and work with blockchain projects that they believe have the potential to perform well and deliver long term value to the ecosystem. They assess projects based on objective metrics such as technological innovation, engineering integrity, and team competency.
With a strong product philosophy and an experienced team, RockX quickly attracted the attention of several venture capitalists, eventually closing a seed round with FBG, Signum Capital, Vector Capital, Ceyuan Digital Assets, and Alternity Capital.
Vision for the future
Alex’s journey with RockX has just begun, but he has an ambitious vision for himself to work towards and to impact the industry.
Alex envisions RockX to become the bridge between retail and institutional investors and the digital asset economy, allowing them to securely diversify to digital assets without worrying about operational know-how.
As trust builds up in this industry, capital and talent from traditional financial markets will start to flow into the blockchain industry, cultivating a more productive environment for the research and development of truly useful products. Alex believes that only through providing long term value in a compliant and transparent manner can digital assets gradually be considered as a mainstream asset class that is accepted by common investors, major financial organisations, and governments.