How Cryptocurrencies and Blockchain Are Powering Artisanal Small Gold Miners
The rise of cryptocurrencies and blockchain technologies has opened up extraordinary possibilities that were not available before.
Specifically, by shining a light on a sector that holds tremendous promise yet has been hugely neglected – artisanal and small-scale gold mining (ASGM). Leading the charge for the next generation of fintech innovators is GoldFinX, a breakthrough platform focused on addressing a gaping need in a market that has remained underserved while breaking down barriers to entry for smaller investors. For these small-scale miners, there is a huge challenge in terms of increasing production, who usually rely on very basic, poor-quality tools and dangerous methods to do their job, severely limiting their production capabilities. Without reasonably fair and easy access to credit, they cannot increase their production. And they have no hope of increasing production without the efficiency and effectiveness achieved by having state-of-the-art equipment at their disposal.
Also, employment is scarce, and people desperate to support their families are unable to do so from agriculture alone. Local small-scale gold mining operations offer a lifeline. However, the vast majority work in ‘informal’ mines that do not comply with any industry standards or safety regulations. Child labor and inhumane conditions are devastatingly common in these artisanal operations, and with little legal support due to informal operations, illegal operators control the flow of gold in these areas and force the miners to accept much less than market value for the gold they produce. With no security or legal protection, these people face the everyday reality of serious risk to their health and, sadly, reports of injuries and death are not uncommon. Largely unskilled and untrained miners are trapped in a cycle of grinding poverty, but they have no alternative choice for survival.
In addition to the horrific working conditions, current ASGM practices pose a substantial ecological threat. The widespread use of toxic chemical processes, including mercury and cyanide, destroys the local environment and causes irreversible water and air pollution. In fact, the ASGM sector is responsible for nearly 40% of the world’s total human-made mercury emissions. At its core, the problem is that small-scale miners can’t access the financing they need for modern resources and technology to enable environmentally-friendly and safe extraction. Avoided and largely unknown by mainstream lenders, the sector faces a real blockage to progress. To prevent any further devastating social and environmental consequences, it is vital to level the playing field and accelerate the formalization of the ASGM industry.
The solution is simple, albeit not necessarily easy. Blockchain technology can address many of the issues faced by the ASGM community. For starters, it provides a decentralized way for artisanal and small miners to raise capital through the sale of digital assets. Such financial inclusion, unheard of even a decade ago, provides opportunities to an otherwise unbanked or underbanked market. For instance, these crowdfunded investments can go toward buying state-of-the-art equipment, improving processes, and gaining access to markets otherwise not available via traditional means. All these changes can help ASGMs increase their production from 2,000 to 5,000 percent with improved capabilities. This innovation also benefits the average retail investor. By harnessing the strengths of blockchain technology, GoldFinX is democratizing the process for investors of all sizes by giving everyone the same access to selected mines with considerably high-growth potential.
More importantly, blockchain technology creates supply-chain transparency and confirms the gold comes from compliant mining operations — something that can mitigate the so-called “blood diamond” or “conflict diamond” situation that had been an issue in another industry, which is diamond mining. This transparency gives investors the peace of mind that their capital is placed in businesses that stand up for best industry practices in gold mining, and not invested in industries that encourage bad labor practices. As an added benefit, the middleman is eliminated in the sales cycle of their gold, thus giving these artisanal miners direct access to global markets and allowing them to gain more profit from their mining activities, while at the same time avoiding a situation of overpricing.
Gold mining essentially leverages a finite resource, and the industry needs to look toward sustainability to ensure that mining activities are not harmful to their health and environment. The elimination of rudimentary gold extraction methods involving the use of toxic chemicals such as mercury and cyanide goes a long way to resolve these fundamental issues. Through a truly sustainable mechanism that leverages new technology, GoldFinX’s approach complements the socially and environmentally responsible investing movement that is gaining traction worldwide, as investors realise their duty to view each decision in terms of its potential impact. It is important to recognise that making good investments and helping to make the world a better place are not mutually exclusive. ‘Doing good’ is just good business sense.
Article Produced By
Heiko Closhen, Entrepreneur