- Andrew Kiguel is the co-founder and former CEO of bitcoin-mining company Hut 8 Mining.
- Now he focuses on Tokens.com, a company that provides exposure to staking tokens and the metaverse.
- He shares his approach to investing in virtual land and his outlook for the two benchmark cryptos.
Andrew Kiguel swapped one of the best jobs in crypto — as founder and CEO of leading bitcoin-mining company Hut 8 Mining — to bet on some of the most novel ideas coming out of the crypto industry right now.
In 2020, he took a gamble and launched the publicly traded company Tokens.com to provide individuals exposure to proof-of-stake tokens, similar to the way Hut 8 Mining exposed public-market investors to bitcoin.
The gamble paid off. In the past year, interest in staking has surged as more proof-of-stake blockchains entered the market and increased their dominance. Nearly half of the top 10 cryptocurrencies by market capitalization are tokens leveraging proof-of-stake consensus algorithms.
This October, Kiguel made another big bet by acquiring 50% of the Metaverse Group, one of the world’s first virtual-real-estate companies, for around $1.7 million. By mid-November, he had increased his stake to 70%.
This initial acquisition took place before Mark Zuckerberg announced his metaverse vision for Facebook on October 28. But it still placed Tokens.com in the perfect position to capitalize on the surging appetite from brands looking to increase their metaverse exposure.
Almost a month later, on November 24, the Metaverse Group made another major move to establish dominance in the metaverse arena, spending the equivalent of about $2.6 million for the largest estate of land in Decentraland’s Fashion District.
“My bet is that as the fashion world moves deeper into the metaverse and that the land we own will appreciate significantly in value because it’s one of a kind in the busy fashion district,” wrote Kiguel in an Insider opinion piece.
Metaverse investing opportunities
Prior to this purchase, in a November 15 interview, Kiguel laid out his staking strategy and broke down his approach to identifying real-estate opportunities in the virtual world.
It’s all about betting on the infrastructure, Kiguel said. It’s a similar approach to investing in layer-one tokens, he added.
“Our perspective is that we know that there are large amounts of metaverses, things like Sandbox and Decentraland, and we want to own the real estate,” Kiguel said. “And so, really, something like Decentraland has about 45,000 parcels and a few parcels available for purchase.”
The parcels that aren’t available for purchase could be traded, which provides a scarcity that could be compared to bitcoin, Kiguel said. His goal is to become a metaverse landlord with whom brands and companies want to create a presence.
“Ultimately, you want all your clients to be successful,” Kiguel said. “But if they’re not, I know we still have the infrastructure for the land and that will continue to grow in value without us having to necessarily know what is going on.”
Kiguel’s belief in the continued growth of value comes down the metaverse being the next iteration of social media, computing, and advertising. The more people that inhabit these lands, the more valuable the land becomes, he added.
“Each land parcel is unique because it has a different location,” wrote Kiguel in the Insider opinion piece. “Parcels near the busy downtown areas are more valuable than the ones in the suburbs. High-traffic areas are highly sought-after to hold events, post billboards, and even create virtual storefronts.
“Digital assets are also authenticated using blockchain technology, which allows for unique assets to grow in value and be resold — a very exciting advancement from previous attempts to popularize metaverses like Second Life.”
It won’t be a straightforward process, though.
“In terms of computing, it’s going to require an evolution in terms of the power of chips and stuff, the graphics and the interaction really takes up a lot,” Kiguel said.
Cathy Hackl, also known as “the godmother of the metaverse,” described the current stage as a building mode. Knowing where the metaverse could be in 10 years is difficult, she says, because the current decade is still critical in terms of the kind of technology that’s developed.
“I’m curious to see where it goes, I [find] myself saying, ‘Hey, let’s see what smart people are building and putting together,’ and my job is to find ways to own that and provide that exposure to our shareholders,” Kiguel said. “I can’t say that I know where it’s going, I don’t think it’s fully clear to me yet and I don’t think it should be fully clear to anybody yet because it’s still evolving.”
And while it seems like everyone is jumping in on the frenzy, the technological and ethical challenges that lie ahead have several analysts advising a cautionary approach toward the metaverse.
Bernstein analysts, led by Mark Shmulik, say the current metaverse technology doesn’t offer the necessary value proposition for many users, while Morgan Stanley analysts say metaverse adoption will not be easy or rapid, especially if there’s regulatory scrutiny.
Kiguel’s forecasts for bitcoin, ether
Despite these potential drawbacks, around $100 million in land sales took place across four of the leading metaverses in the final week of November, according to DappRadar data.
Only when bitcoin prices fell nearly 30% in a crypto crash on the first weekend in December did metaverse tokens fall before quickly bouncing back, while bitcoin and ether struggled for longer. So what does this mean for the benchmark cryptocurrencies?
Kiguel predicted this crash in the November 15 interview, and it’s actually what keeps him bullish.
“And like always, we’re gonna see another major correction,” Kiguel said. “And I recall back to May/June of this year we saw a 60% correction, I think we’re going to see more of those 50% corrections.”
The difference now is that the corrections will still be as deep but they will last for a shorter time, Kiguel said. This shows a maturation in the market.
Despite Kiguel’s bullishness, he doubts bitcoin could hit $100,000 by the end of 2021, like many analysts predicted at the start of the year. He still sees momentum, though, believing the market is in the early stages of a bull run.
Kiguel sees bitcoin potentially heading toward $80,000 to $85,000 and ether over $5,000, but notes this can always be unpredictable.
This is an outlook shared by traditional finance veteran Matteo Perruccio, who told Insider he sees bitcoin at the start of a bull run and moving toward $75,000 by the end of the year.