Home Cellular science Beleaguered crypto firm Helium attempts a second act as users flee and revenue plummets

Beleaguered crypto firm Helium attempts a second act as users flee and revenue plummets

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The best thing you could do as a helium miner was to live in a skyscraper. Max Gold discovered this quickly when he installed a hotspot in early 2021 and made around $16,000 in a month.

A friend had told him about the service, where people set up radio devices in their homes to broadcast a decentralized wireless network that linked Internet of Things products like air quality monitors and keg trackers. In exchange for transferring data over the so-called “people’s network”, miners would receive a crypto token called HNT.

When Gold installed his first helium access point, he was working for an offshore drilling company, but he was laid off in May 2021 and decided to focus on helium full-time. As he learned from his own prime location, Helium devices produced more HNT at higher altitudes, so he connected hotspot owners with internet service providers who already had access to different types of tricks, taking a share of the profits. At the peak of his business, which he named Hotspot Rescue, Gold said he was making around six figures.

Helium has become one of the most notorious companies in crypto, something of a weather vane for the trajectory of the industry’s roller coaster. In February, as owners of hotspots like Gold reaped profits, the New York Times published a flattering profile of the company, describing it as one of the few crypto projects with “normed utility”. The following month, the company behind Helium confirmed a $200 million funding round and renamed Nova Labs.

As the overall crypto market plunged, Helium’s outlook fell in tandem. A Mashable July report revealed that helium had lead into error the public on its customers, questioning the practicality of its technology. The previous month, IoT companies had only spent about $6,500 in data transfer over the Helium network – an unpromising figure for a business valued at $1.2 billion. Meanwhile, Helium’s HNT token fell over 90%.

A Fortune An analysis found that the entire Helium network only received about $1,150 in revenue from demand for IoT devices over the past 30 days, a figure confirmed by the nonprofit Helium Foundation.

Meanwhile, as the likes of Gold saturated the hotspot market and the token’s price plummeted, adoption plummeted. Fortune found that only around 15,000 access points have been installed so far in September, compared to a peak of over 90,000 in November 2021. Gold’s access point, the one that originally hit around 16 $000 in HNT per month, now produces about $10 per month.

With miner profits and collapsing facilities, Nova Labs is now attempting a second act. After hint to build a 5G network last year and to acquire hardware companies, Helium announcement it would launch a separate mobile network in June, powered by a different type of hotspot and a new crypto token called MOBILE.

The question, as Nova Labs embarks on 5G, is whether the company can pull off an ambitious new project while its other is mired in turmoil. For reviews like Nicolas Tisserandresearcher at the International Computer Science Institute in Berkeley, Helium Mobile is not another attempt to create a decentralized wireless network, but a distraction.

“They’ve tried to keep the scam going by moving to a model where it’s cellular connectivity because people can understand that better,” he said. “They need to keep the grappling hook.”

“The People’s Network”

Amir Haleem, a game designer, launched Helium with Napster co-founder Shawn Fanning in 2013. Despite funding from major investors such as Khosla Ventures, the company struggled to find a foothold and was making a hemorrhaged money before switching to crypto in 2017. Its decentralized IoT-focused network launched in 2019.

A Forbes survey published this month found that Helium insiders profited greatly from the early days of the network, creating hotspots and mining half of all Helium tokens in the first three months – a practice common among blockchain projects, although contrary to the principles of decentralization.

Consumers like Gold also rushed into the project, buying around $500 million worth of hotspots. Rather than producing the devices themselves, Helium relied on third-party manufacturers, which resulted in varying degrees of quality and longer turnaround times.

“I think since [Helium’s] point of view, they didn’t want to impersonate: “We do all the manufacturing and sell you these overpriced Raspberry Pis that mine our token,” Gold said.

This allowed secondary markets to proliferate. Gold’s first miner came from a company called Emrit, who sent him a free hotspot in exchange for 80% of the winnings. He would later apply elements of this transaction model to his own business.

Even though the network spread across the United States and around the world thanks to people setting up devices, its capabilities didn’t make much sense from an economic perspective. The IoT could transfer data over the network via “data credits”, which were used to purchase HNT. Helium has touted major customers like electric scooter company Lime as using the network, although Lime later denied working with Helium beyond an initial test. (Nova Labs COO Frank Mong said Fortune that Helium had a pilot with Lime.)

Today, Mong said Helium has hundreds of customers using the network. Even so, most revenue comes from other fees, such as onboarding new devices. As Fortune found, only about $1,150 generated last month came from actual data transfers.

In an interview with FortuneHaleem, CEO of Helium, explained that the IoT network is still in its infancy.

“For Helium to be successful over a ten-year period on the IoT network, there must be hundreds of millions of devices using the network worldwide,” he said. “There is no other way to decide the answer to this question that there must be a lot of traffic.”

He declined to estimate the number of devices currently using the network.

$1,151.07

Helium data credit revenue from IoT device demand in the last 30 days
Source: Helium Foundation

Weaver, the Berkeley researcher, expressed skepticism that such an IoT network could attract enough companies to be sustainable. On the one hand, he explained, because the network relies on a decentralized network of access points, it will always be a patchwork. For IoT companies looking for consistent data transfer, Helium would not offer the most reliable service.

“[IoT Companies] also want to pay real money,” he said. Fortune. “You’re not going to want to pay a stupid third-party token that goes up and down in value.”

Enter Helium Mobile.

“Get as many lottery tickets as possible”

Haleem explained that Nova Labs as a company does not collect revenue from people paying for new access points or IoT companies paying for data transfers, which instead go to third-party manufacturers or the protocol. blockchain powering the Helium network. Instead, the company turns to other projects.

“We are now entering a phase where we will focus in the form of revenue,” he said. “Helium Mobile is an example of that.”

The project echoes the IoT network, with people setting up hotspots in their homes or other locations and mining a crypto token as a reward. The main difference is that the main customers of the network will not be IoT companies, but everyday mobile users.

The main challenge, of course, is coverage – for a cellular network to work, it cannot be disparate. Hotspots cost around $2,000 to $3,000. Currently there are only around 5,000 Helium Mobile hotspots operational, and more than two-thirds of these are “indoor radios”, meaning they would have questionable reception outside the buildings in which they are housed. report from PCMag criticized the hotspot technology – powered by Nova Labs-owned software company FreedomFi – questioning whether it could scale.

Haleem explained that Helium faces the limitations of operating in unlicensed spectrum, admitting that hotspots could never compete with cell towers. “You’re not trying to create this apples-to-apples comparison,” he said.

Instead, he argued that most cellular use happens indoors, which would be the target of the network, helping provide coverage through hotspots in places where cellular service struggles. such as rural areas or crowded places. “We’re not trying to compete with the big telecom operators,” he said. Fortune. “This is a cellular network that’s going to exist in places where traditional networks can’t or don’t exist.”

It’s a way for them to start earning real dollars to support their billion dollar valuation.”

Helium Hotspot Power User Max Gold

To help with the rest of the coverage, Helium recently announced a deal with T-Mobile where whenever Helium Mobile customers can’t access the Helium network, their devices automatically revert to T-Mobile. Wong, COO of Helium, said the price would be $5 per month for 1 gigabyte of data usage. No other plans were priced. The company’s targeted launch date is early next year.

“We believe Helium Mobile is pursuing a very nascent and exciting market segment,” Dan Thygesen, T-Mobile’s senior vice president of wholesale, said in a statement. “T-Mobile is thrilled to support Nova Labs’ innovation in this new crypto-powered space.”

Weaver described Helium Mobile as an ordinary MVNO, or mobile virtual network operator, which does not provide its own infrastructure but rather leases a network from a larger carrier.

“As a service, they don’t offer anything on consumer cellular,” he said.

Gold, the IoT hotspot mogul, has scaled back its Helium IoT hotspot business, focusing on other decentralized wireless projects like the crypto-powered rival mobile network Pollen. Rather than onboarding new IoT hotspots, he is focusing on governance issues within Helium, hoping this will lift his HNT holdings. He also founded the People’s Antenna brand, a popular merchandise and equipment platform within the Helium community.

Gold views Helium Mobile the same way Weaver does. “They call it a crypto operator, but it’s an MVNO,” he said. Fortune. “It’s a way for them to start earning real dollars to support their billion dollar valuation.”

That didn’t stop him from buying an access point, two in fact. One is inside and the other is outside of her apartment covering Minute Maid Park in her hometown of Houston.

“There’s so much luck involved in it that it spills over into different projects and you get as many of those lottery tickets as you can,” he said.