Aave tokenholders mull foray into Bitcoin mining

Aave’s tokenholder community is mulling a foray into Bitcoin (BTC) mining in a bid to boost revenues and accelerate adoption of Aave’s stablecoin, according to a proposal in the decentralized finance (DeFi) protocol’s governance forum. 

The Jan. 15 proposal, which is still awaiting a tokenholder vote, was authored by Blockware Solutions, a Bitcoin mining-as-a-service provider. 

Per the proposal, Aave would enlist Blockware to operate Bitcoin mining rigs on its behalf, seeking to earn “a solid 33.03% net annualized return” for Aave’s treasury. 

Bitcoin mining “not only strengthens the protocol’s balance sheet but also opens the door to significant capital gains tax depreciation strategies,” Blockware said.

The DeFi protocol would also integrate its GHO stablecoin “directly into the Bitcoin network.” This would “introduce Bitcoin miners and retail customers to the ability to pay for mining equipment with AAVE (GHO),” the proposal said.

Comments in Aave’s governance forum show skepticism among tokenholders, including concerns about the profitability and costs of Bitcoin mining. 

Aave is a DeFi lending protocol that lets users borrow cryptocurrency by depositing other crypto assets as collateral.

Related: Aave, Sky float partnership to bridge DeFi, TradFi

Slow stablecoin adoption

In July, Aave launched its GHO stablecoin on the Arbitrum network, an Ethereum layer-2 scaling blockchain.

It joined numerous other DeFi protocols — including Sky (formerly Maker) and Curve Finance — in minting a proprietary US dollar-pegged token. 

So far, GHO’s adoption has been muted. As of Jan. 16, its market capitalization was approximately $166 million. 

That’s nearly 1,000 times less than market leader Tether, whose USDT (USDT) stablecoin touts a market cap of nearly $140 billion. 

Growth in Bitcoin mining

Bitcoin miners are expanding production as BTC’s strong performance partially offsets headwinds from April’s halving, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block.

Miners have prioritized accumulating BTC on balance sheets. In December, JPMorgan raised price targets for four Bitcoin mining stocks to reflect value from miners’ BTC holdings, the bank said.

Integrating GHO into the Bitcoin network would establish it as a “Bitcoin-powered stablecoin with real-world value,” Blockware said.

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