This flywheel has successfully subsidized costs for early miners who helped build out the network in the early days. The principal breakthrough for Helium is the crypto-economic flywheel described in this essay. There are enough deployments that people have even formally studied them across vendors to understand what works and what doesn’t. However, the business model of deploying these networks has always been the Achilles Heel. Given the range of use cases for Helium ( dog tag trackers, IoT sensors, tile-like trackers, even better mouse traps, etc.), it’s no surprise that IoT companies have tried to deploy a network like this many times over the last decade. We believe it’s reasonable to estimate that the lower bound for hotspot costs is about $50, which would bring the payback down to 3 days even with 100,000 hotspots already on the network.Īnd so this is the economic flywheel that fuels the growth of the Helium Network: Network growth means more economies of scale for hotspot manufacturers, which drives lower costs for hotspots. If we assume the price of HNT doubles while the network grows to 100,000 hotspots, the payback period for a new hotspot becomes just 23 days. This higher price will mean better ROI for Helium hotspot owners, which will further drive network growth. We believe it is reasonable to assume the HNT price will be higher in the world of the second map as the Helium Network gains more awareness and becomes more useful. This network growth would mean the map at the end of 2021 probably look something like this: Right now the coverage map looks like this: Let’s stop to visualize what this network growth means. Assuming a flat HNT price, a new hotspot would pay for itself in about 6 weeks. What if we assume the network grows to 100,000 hotspots in 2021? Then the average hotspot would earn 1.1 HNT per day. Based on conversations with 3rd party manufacturers, we expect that hotspots will be $150 within a year. The first hotspots we purchased in 2019 were $500. This average payback period is very attractive, and that is why the network is growing so fast. Assuming that the network growth does not increase HNT price, this would mean a new hotspot will pay for itself in about 14 days on average. In short order, the network will have at least 30,000 hotspots. This means that over the next 90 days the Helium network is going to grow significantly. Since then, these manufacturers have fielded enormous inbound demand. When we started mining Helium in Austin in August 2019, hotspots could regularly mine 100 HNT per day! So how much will the average hotspot mine in the future? Let’s do the math.įollowing the passage of HIP-19 in late January, new third-party manufacturers have begun offering differentiated hardware that can serve the Helium Network. Mining HNT gets more difficult as more hotspots join the network. On average, at the current $6.92 market price for HNT, a new hotspot pays for itself in about 10 days, as shown below. Mining rates vary significantly between different hotspots based on location and quality of coverage. ![]() There is an ecosystem of hotspot manufacturers, and hotspots are available for as little as $350. There are currently approximately 22,800 hotspots on the network, meaning that the average hotspot earns 145 HNT per month, or 4.82 HNT per day. The growth of the Helium Network is driven by a positive feedback loop or flywheel. The Helium community recently approved new hardware manufacturers who will ship tens of thousands of hotspots within the next several months. The network’s growth has been primarily bottlenecked by hardware production. Now there are over 22,800 hotspots deployed across the world, and growth is accelerating. We invested in Helium before the network launched. Multicoin Capital co-led the Series C round in Helium Inc in 2019 along with USV. The first wireless technology supported by Helium is LoRaWAN, a popular technology for IoT devices. Helium is a new crypto-economic protocol that underpins a new business model deploying and managing wireless networks at about 100x lower cost than traditional top-down telecom business models.
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