Aave Considers Bitcoin Mining to Boost Revenue and Accelerate GHO Stablecoin Adoption

Aave community members are discussing the possibility of using Bitcoin mining to generate revenue for the protocol and promote the adoption of Aave’s stablecoin.

One proposal in the forum suggests that Aave could collaborate with Blockware Solutions, a Bitcoin mining-as-a-service provider, to operate mining rigs on behalf of the protocol.

The proposal aims to achieve a net annualized return of 33.03% for Aave’s treasury. According to the proposal, the initiative would not only strengthen the protocol’s financial position but also open up opportunities for capital gains tax depreciation.

Additionally, the DeFi protocol would integrate its GHO stablecoin directly into the Bitcoin network, enabling Bitcoin miners and retail customers to pay for mining equipment with AAVE (GHO).

However, discussions in Aave’s governance forum reveal skepticism among tokenholders regarding the profitability and costs of Bitcoin mining.

Aave is a decentralized lending protocol that allows users to borrow cryptocurrency by depositing other crypto assets as collateral.

Earlier this year, Aave launched its GHO stablecoin on Arbitrum, an Ethereum layer-2 scaling blockchain.

The protocol joined several other DeFi projects, such as Sky (formerly Maker) and Curve Finance, in launching their own US dollar-pegged tokens.

Despite its launch, GHO’s adoption has been relatively slow, with a market capitalization of around $166 million as of Monday.

In contrast, leading stablecoin Tether boasts a market cap of nearly $140 billion, highlighting the vast disparity in scale between the two stables.

Bitcoin miners are ramping up production as the cryptocurrency’s strong performance in H2 2023 partially offsets headwinds from April’s halving, which reduced mining rewards from 6.25 BTC to 3.125 BTC per block.

Miners have focused on accumulating BTC on their balance sheets, and in December, JPMorgan raised price targets for four Bitcoin mining stocks to reflect the value derived from miners’ BTC holdings.

According to Blockware, integrating GHO into the Bitcoin network would create a “Bitcoin-powered stablecoin with real-world value.”