[Temp Check] Scaling AAVE with Bitcoin a Strategic for Treasury Growth

[1nvict_s]

Proposal Summary

This proposal is about taking AAVE (GHO) to the next level—securing a new revenue stream, increasing its Bitcoin treasury, and ultimately boosting the stability of the AAVE (GHO) stablecoin. Here’s the playbook:

A)Establish a new revenue stream for the AAVE (GHO) ecosystem by tapping into Bitcoin mining. This isn’t just any treasury strategy—it’s an untapped opportunity that not only strengthens the protocol’s balance sheet but also opens the door to significant capital gains tax depreciation strategies. As AAVE (GHO) positions itself as a market leader, this move can set the stage for massive institutional adoption.

B) Elevate the AAVE (GHO) stablecoin by integrating it directly into the Bitcoin network. This means using AAVE (GHO) to purchase turnkey mining hardware. A game-changer for how we capture market attention and attract new users to the ecosystem, this strategy will expand the reach and scalability of the AAVE (GHO) stablecoin while seamlessly adding Bitcoin to its balance sheet.

The Play

A)Bitcoin Mining for AAVE (GHO) Treasury
The idea here is simple but powerful: use part of the AAVE (GHO) treasury to earn Bitcoin via mining, with no heavy lifting required. No need for construction, development, or long lead times—just miners coming online and immediately starting to cash flow. And with the latest S21XP air-cooled unit, we’re looking at a solid 33.03% net annualized return.

We’re looking at a strategic partnership between AAVE (GHO) and Blockware Solutions**, a seasoned Mining-as-a-Service provider that’s been in the game since 2017. Blockware has a proven track record with operations across five states, hosting over 400 MW of hardware and selling more than 350,000 ASICs. They’re the real deal when it comes to making Bitcoin mining scalable and cost-effective. The goal? To introduce Bitcoin miners and retail customers to the ability to pay for mining equipment with AAVE (GHO), a true on-chain stablecoin, without any obligation to do so. It’s a seamless, trusted way to enter the market.

B)Leveraging Economies of Scale with Blockware
AAVE (GHO) wouldn’t just mine Bitcoin—it would do so at economies of scale by leveraging Blockware’s established infrastructure, which includes access to competitive electricity rates and discounted hardware pricing. On top of that, AAVE (GHO) can also participate in the hardware resale market, offering turnkey mining rigs to retail customers. Typically, these rigs come with a 20-30% premium, creating a valuable arbitrage opportunity for AAVE (GHO) to capitalize on both the mining profits and the appreciation of the hardware itself.

Why Now?

A)The Perfect Timing in the Market Cycle
We’re entering the ideal phase to get into Bitcoin mining. Historically, mining has been one of the best ways to arbitrage BTC and establish a favorable cost basis. The current bear market is exactly where you want to be, because Bitcoin mining rigs are priced at fair market value (with units like the S19J Pro currently going for $3-4K). Compare that to the peak of the last cycle when the same rigs were selling for $15K+.

This market timing gives AAVE (GHO) a rare dual exposure: both to the mining profits and the hardware’s appreciation. As we head toward the next bull market, AAVE (GHO) will not just be sitting on a stack of BTC; it will have a well-positioned asset that could appreciate significantly as the market heats up.

B)The Hidden Value: Dual Asset Exposure
The real power of this strategy lies in the dual asset exposure. When you’re mining Bitcoin with the AAVE (GHO) treasury, you’re not just accumulating Bitcoin—you’re also holding onto hardware that appreciates in value. This gives AAVE (GHO) a unique opportunity to capitalize on both the long-term upside of BTC and the value of the mining rigs, which are likely to appreciate as demand ramps up in the next bull cycle. It’s a winning combination that positions AAVE (GHO) for outsized returns.

Positives of the Strategy

1. Profits from Mining & Hardware
   AAVE (GHO) stands to profit not just from mining but also from the intrinsic value of the hardware itself. As demand for mining rigs increases, particularly in the next bull cycle, AAVE (GHO) will own a valuable asset that can be resold with a premium. The best part? The protocol doesn’t have to rely on traditional DeFi yield farming strategies to generate these returns.
2. Bitcoin Treasury Growth
   This strategy will organically grow AAVE (GHO)’s Bitcoin holdings, increasing the stability of its balance sheet and positioning AAVE (GHO) as a leader in native BTC exposure. This is about real, tangible value—Bitcoin, in the protocol’s hands, working for AAVE (GHO).
3. Capital Gains Tax Efficiency
   The capital expenditure (CapEx) on mining rigs can be leveraged for potential tax advantages, creating an additional layer of financial efficiency (you may want to verify this with a CPA, but it’s a strong potential benefit).
4. Trust Factor
   AAVE (GHO) will be one of the first to organically grow its BTC balance sheet through proof-of-work (PoW) mining. By using real-world assets like mining rigs and BTC to generate yield, it creates a massive trust factor with both institutional and retail investors, boosting adoption.
5. Minimal Marketing Spend, Maximum Reach
   This is a low-burn, high-reward play. By growing its BTC treasury and integrating into the mining ecosystem, AAVE (GHO) can attract new users without relying on heavy marketing or gimmicks. The protocol’s organic growth, driven by the tangible value it’s building, will help onboard more users, institutional and otherwise.

Conclusion

In short, this strategy positions AAVE (GHO) at the intersection of two powerful trends: Bitcoin mining and stablecoin growth. By partnering with Blockware Solutions, AAVE (GHO) can unlock a unique opportunity to mine Bitcoin at scale, profit from both mining rewards and hardware value, and organically grow its BTC balance sheet. This is about seizing the moment and making a smart, strategic move in a market that’s ripe for opportunity.

AAVE (GHO) is on the verge of becoming a Bitcoin-powered stablecoin with real-world value, and this proposal is the catalyst to get us there. Let’s talk if you’re ready to take this to the next level.

Thank you.

Telegram - dgamble88
Email - David.gamble@blockwaresolutions.com

[druchkamgar]

I am against this idea, despite being an investor and proponent of Aave, because bitcoin mining profitability is far below what dgamble88 claims. In fact, most publicly traded miners are unprofitable on a cash basis. This means capex + opex. I am happy to share more details on bitcoin mining profitability with anyone who is interested, and with anyone who is considering this proposal.

I worked for 10 years on wall street and currently run a crypto hedge fund.

[1nvict_s]

While I understand your perspective, it’s important to clarify some misconceptions about the current state of private Bitcoin mining compared to publicly traded mining companies. Most people are unaware of the key differences, so no fault to you, but the reality is quite distinct. You’d be surprised how many “crypto guys” don’t know a thing about mining.

Publicly traded mining companies (Pubcos) often struggle with profitability due to high overhead costs and expensive debt capital. Many are only now starting to break even on their cost to mine Bitcoin (illustrated in the example I shared). In contrast, Blockware is a private white glove mining as a service company, which we started in 2017, and our clients benefit from significantly lower costs than Pubco miners.

Currently, Blockware clients can produce Bitcoin at a cost of approximately $44,402.85 based on the current spot price of BTC (using the S21XP model) with an electricity hosting rate of $0.078/kWh. And yes, at the current spot price of bitcoin the net annualized yield on mining these rigs is 33.03% with the potential of an intrinsic value due to bitcoin increasing and your opex staying stagnant. I’d be happy to provide more details and share additional numbers to illustrate this further.

For context, I spent four years working on Wall Street, managed a fund with around $35 million in assets, and have been deeply involved in Bitcoin mining for quite some time—now as part of the Blockware team my aim is to bridge the gap and help shed light on creative strategies to increase there bitcoin holding without making the mistake to go with the binary option of just buying spot bitcoin. I put my contact in the original thread, happy to connect and discuss further just shot me an email.

[druchkamgar]

Thanks for providing your assumptions. First, opex per bitcoin doesn’t stay constant, it fluctuates with the hashrate of the network, which has historically risen faster than the price of BTC. Secondly, you do not mention the cash costs of acquiring these machines or hosting them. Where’s this being accounted for?

[miohtama]

Historically, it has been much profitable just hold Bitcoin itself than invest in Bitcoin mining. Is it different this time?

For a treasury management proposal, it would make sense to see figures like allocated capital, expected APY %, Sharpe ratio and such so that this proposal would be comparable with other treasury investment opportunities.

[1nvict_s]

Yeah, Let’s start by clarifying that OPEX (operational expenditure) and cash flow are distinct concepts. In mining, OPEX primarily refers to your electrical costs, which are fixed based on the electricity rate you’ve negotiated in this case with us at Blockware. Using the S21XP as an example, I’ve outlined below what it would look like for 100 turnkey-accessible machines currently available. Keep in mind there’s a premium for turnkey miners. For clarity, this example is based on Bitcoin’s current spot price of $97,404.

In this example, the OPEX—your fixed electricity cost—totals $21,152.66, calculated at a hosting rate of $0.078/kWh. Revenue (cash flow), however, fluctuates with Bitcoin’s price. The current breakeven price stands at $44,402.65, with a net cash flow of $25,248.93—delivering an impressive operating yield of 119.4% and a net annualized yield of 32.06%. This approach is perfect for investors aiming to strategically take profits while reinvesting into hardware, leveraging tax depreciation to achieve yields far exceeding those in traditional markets. The bottom line? Mining deserves a strategic spot in any portfolio. It’s crucial to understand the distinction between public mining companies and private mining operations—they operate in entirely different arenas.

[1nvict_s]

Take a look at the example I’ve outlined below, where I’ve addressed some of your questions. Historically, miners have thrived when positioned at the right point in the cycle. Why? The hardware itself appreciates in value alongside Bitcoin’s price. This means you’re not just benefiting from Bitcoin’s price appreciation with your mining yield, you’re also leveraging the hardware’s rising value. The overarching goal here is to offer a strategic alternative to the binary approach of simply buying spot Bitcoin. No shade, but that’s partly why UST collapsed, it relied too heavily on a single narrative. Don’t get me wrong, I’m all in on the power of on-chain solutions, and as a DeFi ANON/Enthusiast myself, I love what’s happening in the space. That said, I firmly believe mining deserves a strategic role in the broader picture.

[MarcZeller]

Hello,

The ACI is strongly against this proposal.

[1nvict_s]

Why? What would make this strategy a non starter?

[EzR3aL]

Also not supportive. This proposal seems like an ad for the DAO to buy hardware or online mining services by blockware solutions.
The Aave DAO is EVM native and is here already supporting the staking mechanics with Frontier, proposed by @ACI.
Aave is also tapping into the BTC ecosystem with several proposals like the one from Botanix, Rootstock and more which will also integrate GHO.
Even if Defi rates will get lower again in a potential bear market, the protocol will still do a lot more profit probably then it did before and thus is in a good situation with enough runway and cash to survive for many more years, even in a worst case scenario…

[Stengarl]

Against this proposal:

• Aave treasury already has a steady growth
• Aave and GHO are already exposed to Bitcoin with cbBTC
• Offchain assets are way too risky (MakerDAO/Sky suffered from defaults before)

[CryptoInvest]

I am against
Aave DAO should stay onchain , this investment is not liquid and not onchain

[1nvict_s]

This proposal is not an ad for the DAO to buy hardware or online services by Blockware. It’s a proposal to expand the treasuries creativity and reach towards innovative strategies that would be a net positive towards AAVE and its stable coin (GHO).

This is exactly my point. What I’m really advocating for on this proposal is ending the divide between EVM native/DeFi projects and Bitcoin—it just doesn’t make sense to keep them separate.Sure, there are projects working on Bitcoin adoption with various L1/L2s that are big in DeFi, but this approach is different. It doesn’t rely on the on-chain “magic” we all know and love. It’s straightforward: use the stablecoin(attract a new audience), buy a rig, and earn yield in native BTC. Keep in mind this is about the TAM value that we in the mining industry have that is different to that of native DEFI. Again, There’s a clear path and strategic direction for this to be a valuable move. To reiterate, on a broader scale, this approach could support the adoption of something like GHO or at least spark interest among investors whose primary focus in crypto is Bitcoin.

And to your point in a worst case scenario your naturally leveraging native bitcoin consistently bringing in cash flow to help provide stability in the treasuries balance sheet. Plus, again AAVE would benefit from tax advantages(they can talk to there CPA), allowing them to offset capital gains by depreciating the income generated with the purchase of hardware.

[1nvict_s]

Yes, there is steady growth with AAVE, and the purpose of this proposal is to expand into a new Total Addressable Market (TAM) by targeting those entering the industry through mining. The idea is to introduce GHO as an option for retail users to purchase Bitcoin mining hardware. This could enable AAVE to reach a new audience that would otherwise remain untapped. Many retail users are unfamiliar with AAVE or its stablecoin, but offering them the option but not the obligation to purchase hardware with GHO could significantly enhance audience engagement and adoption.

The second part of this proposal involves leveraging Bitcoin mining as a strategic addition to AAVE’s treasury. By introducing native Bitcoin into its treasury assets rather than relying on correlated assets AAVE mitigates risk factors. This strategy is completely different from what MakerDAO has done. Instead of holding offchain, correlated assets, AAVE would own the actual mining hardware, ensuring direct visibility and control over there rigs. Blockware would not hold this hardware on its balance sheet; it would remain AAVE’s property. Blockware’s role would focus on managing the hardware, service and facilitating a marketplace, providing AAVE with an exit strategy if it decided to sell the hardware (something that has never been an option until us).

In essence, this proposal positions Bitcoin mining as both a direct and strategic enhancement to AAVE’s treasury strategy, offering tangible diversification and long-term growth opportunities.

[1nvict_s]

That’s the point. Look, i’m pro DEFI to the core and am an ally. My goal is to help ensure Aave’s long-term relevance and importance in the industry. What I’m proposing is a way for Aave to inherently incorporate native BTC into its balance sheet without relying solely on the binary approach of just buying spot. There are significant advantages to taking this route.