During the bear market of 2019, I found myself watching an episode of the Keiser Report, where Max mentioned a service called the Sun Exchange, a crowdfunding investment platform that generated electricity using solar energy and paid its investors in Bitcoin.
Being South African myself and having experienced load shedding and a consistent increase in energy costs, I thought it was a novel idea and worth throwing a few pennies their way.
So, in December of 2019, I eventually placed my first order, paid the Bitcoin transaction, and really just forgot about it; I would receive the monthly email but haven’t given it any attention until now.
In a surprising move, SunExchange announced its decision to exit the crowd sale model. This shift marks a significant change in the company’s strategy and raises important questions about the future of crowdfunding in the Bitcoin space.
What is SunExchange’s Crowdsales Model?
Before delving into the reasons behind SunExchange’s exit, for those who never used the service, it’s essential to understand what the company has been doing.
SunExchange has been a notable early player in the blockchain and crowdfunding sectors, leveraging its platform to facilitate crowd sales for various solar installation projects across South Africa.
Their model allowed users from around the world to invest in and support innovative ventures through fiat or Bitcoin and in exchange for a portion of cells on a solar panel; once enough cells were sold, and the funds were secured, the Sun Exchange would begin installing the solar setup.
Through its online platform, members could purchase solar photovoltaic (PV) cells for approximately $10 per cell and lease them to be installed in solar projects for businesses, hospitals, schools and other organisations, and these or businesses would pay the cell holders back the cell holders monthly over an agreed upon payment period, in my case, the period was 20 years.
Why did they call time on the founding business model?
Several factors contributed to Sun Exchange’s decision to quit the crowd sales business:
The green market is a corporate market
The Sun Exchange introduced an institutional funder programme at the end of 2022 and partnered with Absa, Allotrope Partners, Cars.co.za, CVE, Energea, Hannover Re and Jaltech to fund solar projects. These larger corporate funders make for less admin and overhead in raising funds, and the green energy footprint they create is far more beneficial to corporations than individual investors.
Shifts in Investor preferences
Crowdfunding is affected by the Bitcoin bull market; when you’re raising funds from retail, you need the wealth effect to drive interest, while in bear markets, it is hard to extract a penny. Instead of having to deal with the cycle of feast and famine, SunExchange’s exit may be a response to this shift, focusing instead on more stable and traditional investment avenues.
Projects with increased capex
Managing crowd sales involves significant operational overhead, including project vetting, compliance, and ongoing support, and it’s tougher to raise funds for larger projects.
Initially, SunExchange focused only on providing solar PV installations, but with the rise in load shedding, storage-integrated projects saw a significant spike in demand, which required significantly higher capital expenditure.
This realignment to institutional funding allows the company to focus on areas where it can leverage its strengths and expertise more effectively.
Implications for investors
SunExchange’s withdrawal from the crowd sales business has several implications for the blockchain and investment communities, namely, the crowd sale projects are sold off to third parties, and individual investors receive a settlement fee.
If you did invest in any of the crowd sale projects, you would have received the following email
Following up on our recent communications, we are writing to inform you that we have now completed the sale of several Sun Exchange solar projects to Jaltech, as part of the process to wind down the Sun Exchange crowdsale platform. As a result of this sale, you will receive a settlement for your portion of the solar assets sold to Jaltech. This email contains crucial information about the transaction with Jaltech and the process you need to follow to retrieve your settlement payment. Please read it carefully.
Context on the sale
If you have not done so already, please take a moment to review our previous emails on this matter and the blog posts below. They provide important context on why we’ve had to make the difficult decision to close the Sun Exchange crowdsale platform and sell the solar project portfolio.
- Understanding the decision to sell the Sun Exchange solar project portfolio
- Answers to your questions about the future of your solar cells
Retrieving your settlement payment
As a first step, please log in to your Sun Exchange dashboard and see the “Portfolio Settlements” tab for a list of the solar projects that you owned solar cells in, which have now been sold to Jaltech, and your settlement amount for each project. Please follow the detailed instructions in this article to have your payment allocated to your Sun Exchange wallet. You will be required to confirm you have read the indemnity notice and to ensure your ID verification is up-to-date. If you have never completed a full ID verification with Sun Exchange, you will be required to do so.
The final sale price of each project was determined based on the net present value of the project’s future cash flows, while factoring plant performance, solar power consumer payment history and other technical or legal issues with the plants. For specific questions about your settlement, please reach out to our customer care.
Any outstanding rental payments still reflected on your activity statement will be distributed to your Sun Exchange wallets via the usual process once payment is received from the offtaker.
We are on standby to help
We know this transition has significant impacts on you. We want to assure you our team continues to work tirelessly to ensure the best possible outcomes for you and all other solar cell owners, and we’re committed to providing the support you need throughout the process. If you have any questions, please don’t hesitate to reach out: hello@sunexchange.com
Sincerely,
The Sun Exchange team
I’m down bad
Back on Dec 8, 2019, I purchased solar cells to be installed at Spar Belfast. Once installed, those solar cells will generate electricity and earn you 20 years of solar-powered income.
The post-purchase communication from Sun Exchange also said I’d receive Sun Ex tokens, not that I was interested in those; I just wanted the Bitcoin payments.
That was the only mention of those tokens, and since talk on those tokens went quiet, I guess they went the way of CEL and FTT tokens and went straight to zero.
If anyone knows what happened to the Sun Ex token, let me know in the comments.
I paid at the time, 0.00623948 BTC.
Five years later, I am entitled to BTC 0.00043586
That’s a 93% loss, LOL. It’s totally rekt! While not a rug pull of any kind, it wasn’t exactly worth my time.
Yes, I was way better off holding, but you live, and you learn.
Give the funds to charity
Personally, I wasn’t too keen on having to go through KYC to claim my loss back, so I thought it was better to just zero out this experience and donate my bit to charity instead.
If you would like to donate your balances to a charity, you can contact the Sun Exchange and make arrangements to have your allocation passed on to a cause.
Turn on your own solar setup.
SunExchange’s exit from the crowd sales business represents a significant strategic shift in response to market pressures, regulatory challenges, and evolving investor preferences. While it marks the end of an era for the company in this particular domain, it also opens the door for new innovations and adaptations within the blockchain and crowdfunding sectors, with Suncash by Momint already looking to fill that void.
As the industry continues to evolve, stakeholders will need to stay agile and responsive to navigate the changing landscape effectively.
I’ve obviously learned my lesson, and I think I will stick to holding; the current Bitcoin hurdle rate remains a steep prospect to outpace, and right now, I don’t see why there is a need to take on additional risk to try and outpace Bitcoins CAGR, especially when it’s more likely than not the compensation for the risk is likely mispriced.
