Azimut invests in Alps Blockchain

Azimut, an independent, global group in asset management, wealth management, investment banking and fintech, has promoted a club deal to invest in Alps Blockchain, a leading company in Italy developing the infrastructure behind blockchain.

Azimut’s €40 million investment in Alps Blockchain

Azimut’s €40 million investment came through Azimut Enterprises S.r.l and Azimut Direct Investment Alps Blockchain SCSp.

The latter is a dedicated Luxembourg vehicle that enabled some 600 clients served by the Group’s network of financial advisors and wealth managers in Italy to take exposure to the growth of the sustainable blockchain sector.

The deal includes an equity component, through the purchase of a stake of about 45%, and a bond component with a convertible loan. For its part, Alps Blockchain is a Trentino-based company specializing in mining research and development.

Its main goal is to produce computing power for blockchain through the creation and operation of state-of-the-art data centers powered by renewable energy sources.

Founded in 2018, the company introduced an innovative system in Italy that involves installing data centers inside hydroelectric power plants to directly convert water power into computing power, complementing the traditional power generation system.

To date, Alps Blockchain has built more than 20 data centers housing a total of about 3,950 miners, which are dedicated hardware for mining. In addition to the data centers located within Italian hydropower plants and coordinated as a provider, there are also those managed directly and located abroad, both under construction and already operational.

In just over four years, Alps Blockchain has experienced exponential growth and now aims to consolidate and implement its business model. The new capital will allow the company to invest in expansion and internationalization projects.

The company’s goal is to increase its current pool of miners to about 12,000 latest-generation devices, or 1.5 exahash of capacity, by 2023. The deal also aims to promote the development of services to spread a sustainable culture related to blockchain and mining.

Comments regarding the Azimut and Alps Blockchain collaboration

Giorgio Medda, CEO and Global Head of Asset Management & Fintech at Azimut Group, commented on the matter as follows:

“We are thrilled to have carried out this operation through which Azimut invests directly and with our customers not only in an all-Italian excellence of sustainable technological development but also in the digital future and in our country’s young talents.”

As a matter of fact, now that Azimut has joined Alps Blockchain, it will see a strengthening of its positioning and view on blockchain, digital assets and decentralized finance as the new frontiers of investment and operational capabilities towards which the digital transformation is pushing the Asset Management industry.

Francesco Buffa, CEO Alps Blockchain, also said on the subject:

“At Alps Blockchain we firmly believe in the potential of this technology and in the need to develop ever more efficient and sustainable approaches.”

For this reason, Alps Blockchain has taken the initiative to unite the world of blockchain and mining with the world of renewables. To this end, it has developed a solution in Italy aimed at supporting the hydropower sector and providing a new business opportunity for power producers that will help keep incumbent plants profitable once government incentives end.

In fact, Buffa concluded:

“The new synergy with Azimut represents a significant milestone that will allow us to continue along the strategic path we have undertaken, consolidating our presence at a national level and accelerating growth in international markets, such as in South America.”

Francesca Failoni, CFO Alps Blockchain, adds:

“The increase in resources will allow us to participate and contribute more substantially to the functioning of the blockchain network, favoring the development of solid and sustainable projects over time.

Thanks to this financial operation, we will be able not only to increase and make our existing data centers more efficient, but also to invest in the construction of new plants, aiming to quadruple the computing power production capacity at the service of this technology by the end of the year.”

How much power does blockchain consume?

As we know, blockchain, which is set to be used more and more extensively in different sectors, from finance to logistics or from healthcare to food, is an energy-intensive technology, as it requires high computing power to validate transactions.

According to the Cambridge Bitcoin Electricity Consumption Index (Cbeci) the Bitcoin blockchain uses 14 gigawatts of electricity, which corresponds to a total annual electricity consumption of 122 terawatt-hours.

It follows that the energy consumption of proof-of-work blockchains is not negligible. Since all blockchains operate similarly, we focus on the main one, namely Bitcoin.

The main driver of Bitcoin’s electricity consumption is the expected profitability of the miners (i.e., their expected revenue minus costs). Mining revenue is highly volatile and depends mainly on the unpredictable Bitcoin price.

Operating costs are more predictable and are mainly determined by the cost of electricity. Higher Bitcoin prices or lower electricity costs generally lead to higher electricity consumption, given the higher profitability and use of more hardware.

According to Cbeci, as of 8 February 2022, the Bitcoin blockchain used 14.27 gigawatts (GW) of electricity, which corresponds to a total annual electricity consumption of 125.10 terawatt-hours (TWh).

The figure is an annualized measure that assumes continuous energy use at the rate mentioned above for a period of one year. This is 0.59% of the world’s total annual electricity consumption.