Breakout Startups #19- Layer1
The company decentralizing Bitcoin
“If you join a company, my general advice is to join a company on a breakout trajectory.” — Sam Altman, President at Y Combinator
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In the 19th Edition of Breakout Startups Memos, we are covering Layer1, the company aiming to decentralize Bitcoin Mining.
Product
Layer1 Technologies Inc. is the first US-based, vertically-integrated Bitcoin mining company and the mission of the company to strengthen Bitcoin’s decentralization and usage of renewable energy.
One of the investors, Jacob Mullins of Shasta Ventures writes,
From our first meeting it was clear Alex and team are bold entrepreneurs with long-term visions. They are industry veterans who came together around their conviction of proprietary mining, believing in a robust economy where digital currency is a core component of our technology platforms and financial ecosystem.
A strong supply of US-mined Bitcoin will further support the strength of decentralization and give the US financial system a trusted partner as cryptoassets become more commonly traded and used in financial services.
The company has made an interesting pivot by moving from being an activist crypto fund to a Bitcoin Mining Company and something of this kind is very much unheard of in the Blockchain community.
Founder
Alexander came across bitcoin in late 2012 and set up a small electricity arbitrage-play by mining it in the student dorm with some friends who very much formed the “Stanford Bitcoin Mafia”. During his time at Stanford, he also founded Bessel Capital, a quant fund with focus on volatility products.
After Stanford, He worked at the Stanford Management Company (SMC), Stanford University’s $25B endowment fund, where he was their first-ever undergraduate analyst and worked on the special investments desk.
After his stint at SMC, He founded Apex Labs, an AI-powered fraud detection platform for the tax agencies of G20 nations.
Team
According to reports, Alexander has been able to get people from Apple, Google, and Goldman Sachs.[Source]
On LinkedIn, the company has enlisted two people Nic Lopez and Andrew Dirksen as employees.
Nic Lopez- Head of Strategic Operations, Previously: Analyst at JP Morgan.
Andrew Dirksen- Software Engineer, Previously: Software Engineer at Solutional Inc.
The Layer1 team includes founders of Genesis Mining, Blockbase Group, and Layer1 Capital[an activist fund for cryptocurrencies.
Funding
Layer1 very recently raised a $50M round from Peter Thiel and Shasta Ventures valuing the company at $200M.
Market Landscape
Bitcoin mining is heavily centralized in China right now. If you want to go deeper into what Bitcoin Mining Centralization can lead to, here is a good read!
So far, China has dominated the Bitcoin mining industry — estimates say it accounts for around 70% of production — in large part because its government has provided miners with cheap access to electricity.
The company responsible for this Chinese dominance is Bitmain, which runs two massive mining pools and is also the leading seller of the specialized chips now needed to mine Bitcoin.
In-fact, more than 70% of the operational bitcoin mining rigs on equipment manufactured by Bitmain.
Many people in the community have raised concerns about the rising case for centralization in Bitcoin Mining operations.
Layer1 plans to minimize the dominance of China by running its own power sub-station and purchasing solar and wind energy produced on the plains of West Texas.
The company’s focus on renewable energy is especially something worth considering given there are calls of concern on how much electricity is consumed by Bitcoin Miners.
According to the Digiconomist, Bitcoin currently consumes 73.12 terawatt-hours per year. That’s comparable to the total energy consumption of the Austria.
All this electricity consumption makes renewable energy a good option to look at for the Bitcoin mining operations. That’s one reason to be bullish on Layer1 becoming one of the most important companies in the Digital Economy powered by Bitcoin and other cryptocurrencies.
Jobs at Layer1
At this point in time, the company is not hiring. However, we have created a DIY Role for you, so go ahead and fill it up if you are passionate about working at Layer1.
