by Nuno Menezes
The digital currency space consumes an ever-increasing amount of energy. Today many companies are turning to cleaner alternatives that can effectively reduce costs and fuel new economies. The Sun Exchange is one of these new innovative companies trying to introduce a cleaner and sustainable alternative to the current model, offering a future where finances are backed by the value of solar power.
Through The Sun Exchange, users will be able to either lend money to a solar project or host a solar project funded by the community. You can think of it like a stock exchange that only trades in sunlight.
By offering a new way for people to invest in solar energy projects, the company hopes to establish a whole new economy backed by the sun. Though it has just started up in South Africa, the platform hopes to expand very soon.
BTCMANAGER spoke with Abraham Cambridge, the company CEO and founding father, to learn more about the Sun Exchange.
On the Sun Exchange
From 2008 to 2013 in the UK, I was running a solar installation company called the Renewable Energy Co-operative. As a co-operative business, one of our core focuses was installing for community-owned solar energy projects. By community owned, I mean projects where individual persons pool their financial resources to build solar energy systems and share the profit.
In 2014 I moved to South Africa in pursuit of an emerging solar market and to bring my solar expertise to Africa. I was immediately struck by the lack of access to finance that was preventing businesses from going solar. Times are hard in South Africa and debt is expensive.
I was also aware of the fragility of the world’s financial system in general and its over-reliance on fossil fuels. Failed economic stimulus packages, quantitative easing, cuts to social welfare, all whilst those responsible for the financial crisis reap the rewards and get bailed out time and time again. Governments around the world have their hands tied to large multinationals, and in many cases have vested interests and as a result corruption runs deep. The world needs to go renewable energy powered and to build a financial system that works for the 99 percent. If the people in power are unwilling to make those changes, it’s time we, as fellow ‘Earthlings’ build a new one, regardless.
I had been following Bitcoin since it was first created, and it struck me that this financial technology was exactly what was needed to enable crowd-investments from an international community, enabling individuals anywhere in the world to micro-invest in solar energy anywhere else in the world, quickly, cheaply and securely. And so I set out to develop The Sun Exchange, digital currency investing for solar energy.
In need of start-up capital, I ran an Indiegogo campaign in late 2015 and hit 155 percent funding, received from backers all over the world. Individuals in over 30 countries sent in donations. This was a really great validation that what we are proposing had truly global appeal. Truly all corners of the earth pledged money to help achieve the vision.
On the company business model
The Sun Exchange is a crowd-investing platform. It is a marketplace where people can get financed, and where people can lend money out for lucrative and secure returns, that just so happens to be through really cool and interesting solar projects. Just like Uber validates a driver before hosting them, we validate the projects. We perform credit checks on the borrower, check that the proposed solar installer is competent and check the energy field predictions etc.
We then ascertain debt terms that ensure the borrower is going to have day one positive cash flow, even after debt payments. We do this from performing meticulously detailed energy assessments of the premises where the solar is going, to make sure there is no surplus. Once we are satisfied that the project is bankable and have ascertained the cost of borrowing, we host it and open it to the public as a peer-to-peer loan. Our fees come from a success fee for completing the fundraising, just like any other crowdfunding platform.
On the potential of solar energy to power digital currency
You may have seen us saying on our Twitter feeds and Facebook page things like “Welcome to the age of the Solar powered money.” We truly mean that. If you recall, the value of the dollar is, to a large degree, propped up by oil, aka the petro-dollar. Now, consider that any Bitcoin miner can create digital currency from a computer. Not all digital currency mines are solar powered (for now at least) and they still need to increase in efficiency a great deal. But, the Bitcoins are still being created out of thin air, just from crunching numbers, and can now be used to install a physical solar photovoltaic electricity generator that will run for 25 years… Is that not just the most incredible thing? It still blows my mind when I comprehend it. If you doubt this amazingness of this in any way, take a look at the numbers.
The Bitcoin network, at present, doles out 3600 BTC per day. It has been estimated the the constant power draw of the Bitcoin mining network is 215MW, so 5.16GWh per day. That means that each Bitcoin embodies 1.4333 MWh. One Bitcoin is worth, let’s just say for simplicity, $400USD. The cost of a fully installed rooftop solar plant, up to 1 MW in capacity, will average out at about $1.5/W. So your Bitcoin will fund you 266W of completely installed solar system. If you locate that solar system somewhere nice and sunny like South Africa, it will generate 500 KWh per year. So, in less than three years, the energy required to mine the Bitcoin will have been paid back by the solar energy it financed. So you see, this is effectively a ‘perpetual motion’ system. But where the laws of physics would usually ensure that infinite energy is not physically possible, the human element that creates the value of the Bitcoin, ensures that this process just keeps on going. All the way to the sun!
On the potential market the company is trying to access.
The main markets we want to focus on are emerging ones, those with limited access to finance. Just look at Africa where about 70 percent of the population has no electricity. The world population is at 7 billion. By the end of the century that will be 11 billion, with 3 billion of the future increase happening in Africa. That presents a ludicrously huge challenge. Probably the greatest challenge in the world is how Africa can develop sustainably. Luckily, most of Africa has really great solar resources. So how can we electrify billions of people who at the moment have no electricity? The answer is simple. Through Bitcoin and solar energy.
On the competition in the sector
There are some really great renewable energy crowdfunding companies around the world. Last time I checked, there was about 25 firms, with each platform specialists in a certain sector and geography. Some just do wind, some hydro; some just cover America and some just the UK. We cover the whole world but just use Bitcoin. Even if other companies start to copy us, which they inevitably will do as is the obvious natural progression, that will only help fulfill The Sun Exchange’s vision of ‘A world powered by distributed renewable energy financed by decentralized money.’
On Bitcoin and the blockchain
Our view is that the technology is only just getting going. It has remarkable potential and it is wonderful to be involved at the start of this new and exciting industry. Capacity issues will be solved and side chain projects will allow new functionality. I am really intrigued by the promises of Ethereum. There is some really awesome stuff we can run on there — things that improve the transparency of our projects — and therefore it helps users trust that their investments are working as promised. My only hope is that this technology does so much good and it will distribute empowerment so fast, that it will be impossible to ‘get it back in the box’ from a regulatory standpoint.
On the company’s goals and future expectations
The goal is that we host projects around the world so that investors can have portfolios of projects that the sun never sets on. I hope we can show the world that Bitcoin is a world changing technology that has a real, positive impact, not only in the developed but in the developing world. If we can bring solar power to those with no electricity, funded by democratic, community-orchestrated cryptocurrency, than let’s do as much of it as is conceivably possible!