The global cryptocurrency frenzy has reached Australia, with a Perth-based solar energy trader Power Ledger, testing the waters of alternative capital raising locally with the nation’s first Initial Coin Offering (ICO) raising an astonishing $34 million in cryptocurrency.
Power Ledger, which uses blockchain technology for households to trade surplus solar power, raised an initial $AU17 million worth of digital currency in a pre-ICO or “Token Generation Event” last month, producing 1 billion “POWR” tokens, and then offered around a third of them for public auction.
More than 15,000 buyers signed on before the offer closed on October 6. DigitalX, an ASX listed blockchain technology company, assisted with the ICO. Hcash, the first public blockchain established in Australia, also known as HyperCash, was among those taking part.
But the success of the ICO will no doubt raise eyebrows at the Australian Securities & Investment Commission (ASIC), which is trying to figure out how to regulate the sector ahead of an expected surge in ICOs.
Power Ledger was the first ICO to be launched after ASIC’s proposed guidelines on ICOs were issued last month.
Cryptocurrencies such as Bitcoin and Ethereum have been notable in 2017 for wild variations in their value as speculators seek to cash in, leading some critics to claim the systems are a giant ponzi scheme.
ASIC is looking at ICOs as a type of Managed Investment Scheme (MIS), and therefore subject to the Corporations Act, but ASIC commissioner John Price has warned that investors face a high risk of losing their cash.
“ICOs are highly speculative investments, are mostly unregulated and the chance of losing your investment is high,” he said.
The funds raised by Power Ledger comprised of $US17 million in cash, with the other half in cryptocurrencies, including $AU10.7 million in Ethereum, $AU6 million in Bitcoin, And $AU400,000 in Litecoin.
CEO Dave Martin told the AFR it was “a really solid war chest” as the company rolls out commercial trials in New Zealand, Western Australia, and Tasmania.
Power Ledger chair Dr Jemma Green said Origin Energy has recently announced a three-month trial with the company to explore peer-to-peer energy trading across a regulated network.
“Blockchain technology and cryptocurrency underpins our business offering,” she said.
“The POWR tokens will be transferable on the Ethereum Blockchain and can also be converted to ‘Sparkz’, which is the currency we have set up for users to trade electricity using the Power Ledger platform.”