Discussions are underway among Aave’s token holders about possibly venturing into Bitcoin mining as a strategy to increase income and speed up acceptance of Aave’s stablecoin. This idea has been proposed within Aave’s decentralized finance platform’s decision-making body.
The January 15th proposal, yet to be decided upon by the token holders, was penned by Blockware Solutions – a company offering Bitcoin mining services on demand.
According to the plan, Aave intends to hire Blockware to manage Bitcoin mining equipment for them, aiming to secure a reliable 33.03% yearly return on investment for Aave’s funds.
Mining Bitcoin not only bolsters the protocol’s financial stability, but it also provides opportunities for utilizing substantial depreciation strategies for capital gains tax purposes, according to Blockware.
The decentralized finance protocol plans to connect its GHO stablecoin directly to the Bitcoin system. By doing so, it aims to provide Bitcoin miners and regular consumers with an opportunity to purchase mining equipment using Aave’s GHO tokens, as suggested in the proposal.
Discussions within Aave’s governance community express reservations from token holders, with queries regarding the potential profitability and expenses associated with Bitcoin mining.
Aave is a decentralized finance (DeFi) platform where individuals can obtain cryptocurrencies by pledging different digital assets as security.
Slow stablecoin adoption
In July, Aave introduced their GHO stablecoin on the Arbitrum platform, a scalable Ethereum blockchain extension.
It also started creating its own US dollar-linked token, just like several other DeFi platforms such as Sky (previously known as Maker) and Curve Finance have done.
Up until now, the acceptance of GHO hasn’t been particularly noticeable. As of January 16th, its total value in the market was roughly around $166 million.
Approximately 1,000 times smaller is the market cap of the stablecoin compared to the market leader, Tether’s USDT, which boasts a market cap close to $140 billion.
Growth in Bitcoin mining
Bitcoin miners are increasing their output because the robust performance of Bitcoin is helping to counterbalance the challenges posed by the reduction in rewards that occurred following April’s halving. The halving event decreased mining rewards from 6.25 Bitcoins to 3.125 Bitcoins per block.
1) Mining companies have been focusing on building up their Bitcoin reserves in their financial records. Recently, JPMorgan increased the predicted prices for four Bitcoin mining company stocks due to the value that these miners derive from their Bitcoin holdings, according to the bank’s statement.
Adding GHO to the Bitcoin network could make it function as a “stablecoin tied to Bitcoin, offering real-world value,” according to Blockware’s statement.
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2025-01-17 00:15