HONG KONG SAR –
Media OutReach – 17 June 2022 – Babel Finance, announced late last month that it had secured $80 million in a fresh investment round, valuing the crypto lender and asset manager at $2 billion. Jeneration Capital, Circle Ventures, and 10T Holdings joined current investors Dragonfly Capital and BAI Capital in the Series B investment round. A number of family offices from the Asia-Pacific area also participated in the round, according to Babel.
The valuation shows confidence in Babel Finance from many of the world’s leading investment institutions and investors. With this market support, Del Wang, the Co-Founder and CEO of Babel Finance, is confident in that crypto can be a solid hedging tool to manage market volatility. Crypto miners and mining investors stand to gain.
Low-cost energy prices were formerly the primary focus for the crypto mining sector, but as Bitcoin and other tokens grew more market-oriented and mining becomes increasingly institutionalized, crypto miners require sophisticated financial services to boost asset liquidity and hedge risk.
In the crypto mining industry, there are several essential variables for successful operations, which are:
- The cost of electricity.
- The computational power of the entire network.
- The cost of mining machines.
- The currency price.
Crypto mining machines and electricity expenses are generally fixed costs. Currently, the market’s financial products are largely geared to cope with currency price swings to decrease risk and boost profits.
High Yield or High Stability Before selecting a financial product, it is vital to confirm the crypto miners’ requirements for the nature of the financial product.
Crypto mining is a capital-intensive industry. Crypto miners must invest a significant amount of capital in purchasing computing power and paying for electricity. The primary objective of miners employing financial instruments is to hedge the risk of currency price volatility. Thus they want to pay for mining capacity and costs with steady earnings and cash flow.
“Crypto mining has evolved into a mature commercial activity. Pursuing high stability as a commercial activity is not just about maximizing profits,” says Del Wang.
Financial Product Options Currently, the most common financial instruments on the market take advantage of both up and down movements in the market. Crypto miners are more likely to hoard currency if the present price is low and the future outlook is optimistic. Computers and power bills, on the other hand, must be paid on regular terms. Loans backed by crypto are frequently used by miners in this situation, which is good leverage.
Another strategy is to use futures. If the present cryptocurrency price is high, miners who are pessimistic about future currency prices and will be able to sell future un-produced bitcoins at the current higher price. Miners must select the proper leverage direction according to their liquidity and risk tolerance.
Risk hedging Hedging is a futures contract in the futures market that buys (or sells) the same commodity in the opposite direction as the spot market, trades in both markets in the opposite way, and loses money in one market while making money in the other. A profitable market exists. To meet the goal of minimizing risks, the amount of loss is about equal to the amount of profit.
The goal of hedging for miners is to eliminate or hedge risk. If miners feel that the current currency price has reached a high level and that the market may tip, they can opt to hedge to lock in gains in advance.
Risk hedging is not without costs. If the forecast for the future market direction is incorrect, and the currency price rises in the future, the benefits from the currency price increase will be lost. However, the pursuit of high risk-reward ratios is not the primary goal of institutional miners. It is critical to lock in benefits early to guarantee that miners can ride out the risk.
Final Thoughts The cryptocurrency market will continue to be volatile, especially given the Fed’s hiking of interest rates and the uncertain geopolitical situation arising amid the Ukraine crisis, believes Del Wang. No doubt mining competition will be fiercer too. The integration of financial services and crypto mining is an unavoidable tendency in the evolution of the crypto mining sector. Miners must become more self-aware, improve financial management and control skills, and avoid the raw risks associated with carrying large amounts of fixed assets. Miners can’t just go for the highest possible return for financial products. It would be best to consider their liquidity and risk tolerance before deciding on an acceptable leverage direction.
#BabelFinance
Services
Stakeholder mapping, analysis, engagement and communication needs to be detailed to avoid business losses or even worse, a crisis. How can you do this effectively to prevent failure? ...
Data-driven business decisions have never been as crucial, especially in this era. MGBF leverages off, technology, experience and market presence to aid businesses in making accurate decisions. ...
MGBF provides comprehensive strategic advice and results-focused solutions to solve clients' problems in business-government relations so they can focus on their core business. ...
A critical business challenge is meeting the right decision-makers and potential buyers through the best channel and platform. How will you improve your business competency? ...
Upcoming Events
In this episode of 'A Working Lunch with Nordin', MGBF's Nordin Abdullah and regional commentator Eddin Khoo will discuss the biggest threats and opportunities for businesses as we look to manage change in the South China Sea.
This MGBF Roundtable will feature thought leaders form Japan, Australia, Singapore and Malaysia dealing with the critical issues of manipulation of public listed companies and government and their financial impacts.
A series of networking sessions with various business associations and trade organisations exploring high-value opportunities for business leaders and entrepreneurs looking to build the relationships that matter.
This integrated event will include a forum, dedicated business matching, site visits, a gala dinner and a round of golf. Aptly themed, the focus will be on regional food security issues and trends in the context of the supply chain, agriculture technology and trade regulations and policies.
MGBF In The News
Planet QEOS and China Machinery Engineering Corporation (CMEC) are interested in investing RM10 billion to co-develop advanced Megawatt peak (MWp) agrovoltaic in Baram, to further boost Sarawak’s green energy initiative and food security. Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg was briefed on Friday by both the […]
Last week SPM results came out, 373,974 aspirants who have been waiting patiently over the last few months would now know their fate. Some 10,109 have received all A’s, the golden standard of academic success and the ticket to those looking to study the “more advanced” subjects in university. Proudly, […]
The classic knee-jerk reaction is to say, fire the coach, change the leadership of associations, and reduce the funding till they start performing better. This kind of negative reinforcement may work for kindergarten children, but we are dealing with high-performance adults – individuals much further along in their psychological and […]
Since its earliest tea plantations in 1929, Cameron Highlands has grown to become a key player in the agricultural landscape of Malaysia, producing 40 per cent of all vegetables grown. Despite Malaysia shifting its economic focus away from agriculture, the industry remains imperative for food security and the livelihoods of […]
Although at first glance the travel industry and the agricultural sector appear to have nothing in common, they actually share more than meets the eye. The economic benefits of tourism to the agricultural sector can be multiplied several times over. “Tourism brings the end consumers closer to the source, which […]
The Malaysia Global Business Forum (MGBF) recently held a high-level roundtable themed ‘Designing the Future of the Digital Economy’, attended by industry leaders and business associations. The guest of honour was Yang Berhormat Syerleena Abdul Rashid, the Member of Parliament (MP) for Bukit Bendera in Penang. The MP’s Special Session […]
The Malaysia Global Business Forum (MGBF) will be hosting a roundtable on ‘Designing the Future of the Digital Economy’ on 23 February 2023. It is the culmination of the first three MGBF Exclusive Roundtable Series titled ‘The Evolving Threat Matrix in the Digital Economy’ held throughout 2022. According to the […]
The Founding Chairman of the Malaysia Global Business Forum (MGBF), Nordin Abdullah, today spoke on Bernama TV’s leading English talk show, The Brief, hosted by Jessy Chahal, on the topic of a stable political reality and what that means for the Malaysian economy. Nordin said, “The first thing that it […]
More than 1,100 years ago, Muhammad ibn Musa al-Khwarizmi was developing the mathematical formulas that we know today as algorithms which now have become so intertwined with the business fortunes of global media giants and the very fabric of geopolitics. A series of recent high level international reports have revealed […]
KSK Land has been recognised by the Malaysia Global Business Forum (MGBF) for its role in attracting high net-worth individuals to Malaysia post-pandemic. The first challenge in investor attraction is “selling” the country. In the context of Asia, Malaysia is competing with some very established investment destinations. The second […]
Malaysia, in particular Kuala Lumpur, continues to position itself as a regional centre to do business, educate a family and enjoy a global lifestyle. One company, KSK Land, has taken the lead in positioning itself and the city of Kuala Lumpur as a property investment destination for the global citizen […]
The upcoming budget represents an opportunity to build resilience in the critical sectors that will form the backbone of the country’s future-facing economic ambitions. This however needs to be achieved in the context of managing the community sectors most impacted by COVID-19 over the past two years. The Keluarga Malaysia (Malaysian Family) […]
Malaysia Global Business Forum (MGBF) has moved to support the creative economy as the overall economy moves into a recovery phase following the COVID19 pandemic. As a step in the direction of normalcy, the MGBF has agreed to host the art exhibition “I Know You’re Somewhere So Far” by one […]
Congratulations to Datuk Seri Ismail Sabri Yaakob for taking up the mantle of the ninth prime minister of Malaysia. There is nothing normal about the situation; it could not have been scripted but it has kept the spectrum of media, mainstream and social, gripped. The first order of business for […]
In a stirring speech to the nation, President Joseph R. Biden, Jr. stamped his brand of leadership on the presidency, in his first act as the 46th president of the United State of America, it signaled several shifts. Perhaps the weather was foreboding with snow falling before the ceremony that […]
KUALA LUMPUR, 6 July 2022 – As the global economy continues to deal with unprecedented levels of disruption caused by the pandemic and the conflict between Russia and Ukraine, the convergence of energy security and food security issues has become a front-of-mind issue faced by policy makers and consumers alike. […]
KUALA LUMPUR, 23 June 2022 — Malaysia Global Business Forum (MGBF) ties up with scoutAsia to ensure that businesses are equipped with deeper regional insights. The past two years has seen a massive shift in the way businesses are conducted with digitisation, digitalisation and automation continuously being adopted to improve […]
KUALA LUMPUR, 25 May 2022 – The Malaysia Global Business Forum (MGBF)’s exclusive roundtable on ‘Security Concerns in Critical Value Chains’ was held in a hybrid setting yesterday at the Eastin Hotel Kuala Lumpur. The guest of honour was Yang Berbahagia Tan Sri Dato’ Seri Rafidah Aziz, former minister of […]
We live in the age of crisis. At the heart of any crisis is the threat of rapid change. Change too deep or too wide that the current coping mechanisms for an individual, corporation or government are unable to remain resilient. An unwelcome paradigm shift, like the proverbial spider, that […]