In this newsletter, we are profiling Helium [HNT]. In previous newsletters, we have profiled Bitcoin, Cardano, Ethereum, Solana and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
As Elon Musk creates havoc with Bitcoin prices, he also owns the world’s largest internet satellite network and will give coverage to billions of users. Helium, on the other hand, is deploying a low-powered network on the ground and in your neighbourhood that will soon give coverage to billions of devices. Your reward for participation is the HNT token.
Helium was founded in 2013 by Amir Haleem, Sean Carey, and Shawn Fanning as an Internet-of-Things (IoT) startup in California. Initial attempts at creating a centralized network failed, and they had the idea to transition to a decentralized network via blockchain incentivized by participants earning HNT tokens. Subsequently, the Helium mainnet blockchain was launched in the fall of 2019. Helium calls its wireless network “The People’s Network” and claims to be the world's first peer-to-peer wireless network based on the open-source wireless protocol, LoRaWAN, purpose-built for IoT devices and sensors.
Consensus is achieved via Proof-of-Coverage (a variant of HoneyBadger BFT), where an individual can earn rewards by running a hotspot that facilitates peer-to-peer relaying of IoT data to the Internet. Initially having an unlimited maximum supply of HNT, there is now a cap of 223 million, which was approved and added in 2020. About 5 million HNT is currently generated per month and split amongst the miners, with a halving coming in August 2021. Miners will continue to mint HNT tokens even after they hit 223 million by replacing burned tokens. Apart from HNT, there is also the non-fungible Data Credits (DC) token which is used for all transaction fees on the network. HNT is burned to create Data Credits. All IoT devices require DC to use the Helium network.
In 2019, Helium offered its first custom hotspots, sold only to be operated in America. The following year they stopped making their own devices and instead let companies like RakWireless, Nebra, Bobcat, and Syncrobit manufacture them. It was also possible initially to create your own DIY device, but as cheaters were found to be using malicious code and tactics to game the system, only official partners’ hardware can now be used to participate in getting mining rewards. For a list of official partners, see https://www.helium.com/mine.
There are currently over 37 thousand hotspots participating in Helium mining around the world. The hotspot hardware is in high demand, and with the shortage of microchips and worldwide COVID complications, obtaining one is very difficult. Many people that had purchased hotspots at the beginning of the year are still waiting for them to ship. We can expect the number of active hotspots to jump to around 200 thousand by the end of summer. You can view currently deployed hotspots using https://explorer.helium.com/coverage, which also allows you to click on individual instances and see how well they are connecting to peers and how much HNT they have earned.
Hotspot miners are rewarded for several different things, as listed below:
PoC Challenger - Rewarded to any hotspot that creates a valid PoC challenge and submits the corresponding receipt to the blockchain.
PoC Challengees - Awarded to any Hotspot that transmits a PoC packet after being targeted by the challenger.
Witnesses - Distributed to all Hotspots that witness a beacon packet as part of a PoC Challenge.
Consensus Group - Divided equally among the 16 Hotspots that are part of outgoing Consensus Group, responsible for mining blocks.
Security - Awarded to Helium Inc and other Network investors who hold Security Tokens.
Network Data Transfer - Distributed each epoch to Hotspots that route LongFi sensor data for sensors on the Network during that epoch.
Helium hotspots need to be deployed between 300m to 1km of each other for optimum rewards. It is not good to set up more than one hotspot in near proximity to another because rewards will be split between the group. The idea behind Proof-of-Coverage is to get a nice, even, well-spaced area of radio signal coverage to avoid dead zones. Hotspots are silent and use very little power. They do require to be connected to the Internet and use up data at about the equivalent rate as watching one streaming movie a month. Also, be aware that the radio frequency used is different for every country and you need to have hardware with the corresponding antenna. In North America, it is 915MHz.
Currently, each hotspot needs to host a copy of the blockchain. This will change as new validator nodes are introduced. Validator nodes will require staking 10,000 HNT and are in a testing phase right now. Hotspots will still continue to earn the majority of rewards (for providing coverage and transferring device data) even after validator nodes are fully implemented.
To see some of the more prominent companies already using the Helium network for their IoT devices, check out https://www.helium.com/use. As the Helium network is currently strictly for very low bandwidth devices, this will change once they implement 5G. Partnering with FreedomFi, they will roll out 5G hardware to select cities this year as a trial. You may someday be able to connect your 5G phone to the Helium network.
Being such a unique project, Helium does not have much direct competition. MCX does something similar, and for non-blockchain, Amazon Sidewalk could be seen as a competitor. If you are looking for something truly unique in the cryptocurrency world, Helium is definitely an interesting and exciting project that could prove to be highly lucrative in the long run.
HNT paired against BTC is up 1011% from early 2021 to its peak in April; since then, we have been creating a consolidation position.
HNT on the 4 hour chart shows it going sideways since late April. Over the last week, the lows are moving higher, and the highs are flat. There is a good possibility that HNT will break up toward the top resistance line in a few days.
Bitcoin Trend Lines
Bitcoin has come down almost 35% from all-time highs in April, partly due to Elon Musk’s tweets this past week. We are now sitting on support of $42k that is pulled from a previous high in early January. Also, the 200 moving average in yellow plays strong support for Bitcoin in a bull market.
The overall sentiment from several other analysts is that Bitcoin is still in a bull market and is now consolidating until continuing its bull run. Typical bull markets that have peaked will have a blow-off top type pattern; this does not look like that.
Here’s a chart of BTC going back to 2011 that is way too busy but some great information once unpacked. The green dotted lines are the halvings. The solid thick green lines are the start of the bull market. The red lines show the bear markets.
If we take a closer look at the correction on the down yellow arrows, you will see we went below the white fib line of 1.272 before continuing past the red fib line of 2.272 about 5-6 months later.
Now today, we are testing the 1.414 fib line sitting at about 42k. We seem to have quite a bit of support in the 40-42k area for a bounce upwards. That said, if we repeat previous cycles, we could go as low as the 30k area with the white fib line is at. Now fast forward to October and November of this year, and according to previous, we would be going for our blow-off-top of about 200-250k and then starting in January, the bear market would be in full swing. Will previous BTC price actions paint the future price similarly or not? If you are a Bitcoin holder, this would be fantastic. If you have not yet entered into Bitcoin as much as you would have liked, then if the past is a good indicator, the bear market, if it happens in 2022/23, could bring as back down to today’s price levels.
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 314% since October 1st, 2020 but down from last week. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week Bitcoin has been ranging between $42,190 and $58,000 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has a gain of 158% since the start. The USD fund value is up 590% since the start. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is up 48% against BTC. ETH is up 181% against BTC since the start. ADA has a gain of 681% against BTC and 1970% to USD. ADA continues to be the best investment of all the coins in this portfolio section.
BLWX Fund started on February 22, 2021. They all are assets we have profiled in the last few months, and we are interested in how they will perform in 2021 against BTC. BAT has a gain of 144% against BTC since the start but has not changed from last week; LINK is up 52% but the same as last week, WAVES is up 212%, XMR is up 87%. Overall, against BTC, the fund is up 124% and 82% against USD. WAVES has continued to be the best performer in this group over the last week.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some.
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Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.