Huobi’s bitVC launches “Fixed-term Financial Products” backed by mining activities

Huobi’s bitVC has launched “Fixed Term Financial Products” called “digVC” with a duration of 60 days. Also termed “The World’s First

Huobi’s bitVC has launched “Fixed Term Financial Products” called “digVC” with a duration of 60 days. Also termed “The World’s First Hashing Power Mortgage”, 2000 subscriptions of 1 BTC each were made available. The advertised “interest rate” is 1.2% per month or 16% annualized, when compounded. The first 100 subscribers get a 1.4% monthly rate.

bitVC was launched by Huobi in June to reintroduce margin trading with “Yubibao”, a savings product paying interest.

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The program is part of a larger project to expand Digcoin, the exchange’s mining project, from 1.3 PH/s to 4 PH/s.

digcoin

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Huobi reportedly told Coindesk that all subscriptions sold out in the first hour, and half in the first two minutes. 70% of subscribers were from China, the remainder from other countries including USA, Canada, Australia, Japan, Singapore and Thailand.

The offer does raise some questions: how does Huobi stand to gain with this offer? Making money in mining with today’s uncertain bitcoin prices is difficult enough, let alone large returns.

Also, why for such a short period? How much can be done with the capital in 60 days even if such returns can be achieved?

The simple answer may just be that they stand to gain nothing other than generating public awareness and acquiring subscribers for the new initiative. Mining contracts have become fashionable and a stable source of recurring revenue.

Were it not for an entity of Huobi’s stature, the initiative resembles previous Ponzi schemes masked as interest-paying bitcoin loans.

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