Romania’s energy blockchain revolution failed before it started

Romania’s energy blockchain revolution failed before it started
By Iulian Ernst in Bucharest June 30, 2021

Two tokens were launched in Romania three years ago with a promise to significantly change the electricity markets as we know them, but Bittwatt (BWT, a cryptocurrency) and Mwatt (MWAT, a token), failed to deliver visible results — at least to those who placed tens of millions of US dollars in the respective ICOs or to the potential users of the new platforms.

In the meantime, the values of both BWT and MWAT have plunged close to zero and they are not traded on any exchange. The websites of the respective ICOs, and, are no longer active therefore the white papers can be consulted only from third-party repositories. The two tokens are in the red area of the ICO online evaluation platform with scores of 3.9 and 2.6 on a 0-10 scale with 0 indicating “total scam”.

The collapse of their values is ironic as the liberalisation of the retail energy market in Romania as of January 2021 created such a shock that consumer prices rose by 18%. That was indeed a disruptive development, as opposed to the revolution announced several years earlier ahead of the two ICOs.

The subscribers in the ICOs of MWAT and BWT placed precisely $30mn and $25mn worth of bitcoins respectively at that time — most likely money earned overnight after the surge in bitcoin prices at the end of 2017.

Restart Energy’s MWAT ICO was a success mainly thanks to market conditions. It took place when bitcoin had just increased its value five times over the previous couple of months. Timing, namely capitalising on the market’s moment, proved to be essential. The Bittwatt ICO a couple of months later when bitcoin was down was less successful — yet good enough to bring it over $25mn (versus the $30mn target) in April. 

Nonetheless, the yield was much higher for Bittwatt. While the amounts raised are similar, the outcomes are very different since they were carried out at an interval of several months — a long time in the crypto market. MWAT raising €30mn in exotic tokens when bitcoin was worth $16,000 might have generated less long-term value than raising $25mn, as BWT did, when bitcoin was worth $8,000, for the simple reason that in the former case you get fewer bitcoins. But this would also depend on the investment/exit strategies of the two entrepreneurs.

Restart Energy “sending energy to Japan”

Restart Energy is a group founded by Armand Doru Domuta. Social Democrat MEP Catalin Sorin Ivan was a member of Domuta’s team and gave Restart Energy, labeled Restart Energy Democracy (RED), a European dimension.

“A power producer in Europe will be able, will have access to a global network of retail consumers. He can sell energy to a customer in Japan — and Japan is an island, you know?” Domuta explained in an interview given in January 2018, amid ICO euphoria and ahead of his company’s MWAT ICO. 

The high-tech, crypto-mechanism develop by Restart Energy to send energy to Japan (the island) was revolutionary only to those not using traditional currencies like euros and dollars and not aware of how the electricity markets work: he was proposing to “tokenise” the energy and then convert the tokens back to energy in Japan (buy electricity through a RED franchise). Brilliant, except that this is possible with US dollars as well, aside from the tokenisation part.

At the time of the offer in 2018, Restart Energy said it expected to strengthen its revenues from nearly $20mn in 2017 to $100mn in 2018. Now, nearly three years later, it says it aims to increase its revenues by about 80% in 2021, to $55mn.

In 2021, all that Domuta was willing to disclose about the blockchain-based platform RED was that “in 2018 we started working on a platform that is unique in the world, namely RED-Restart Energy Democracy, is a platform that uses blockchain and connects the consumer with the supplier.” At the same time, it was announcing plans for $0.5bn investments in renewable power capacities, starting with a €3mn-5mn green bond issue on the Bucharest Stock Exchange.

From crypto power platforms to food delivery

Bittwatt was a group founded by Christian Hagmann and Daniela Cristina Stoicescu.

The goal as described by Bittwatt's white paper is declared as "creating a blockchain-enabled energy trading market that is simple, transparent and delivers more value to all its users."

“At this point, I would not say that [the Beta version of Bittwatt’s platform] will completely replace the market as we know it now, but definitely it will change the way the market operates these days,” CEO Stoicescu told bne IntelliNews in an interview at the time.

But Bittwatt did not change the way the market operates.

The business plan was targeting a turnover of $690mn (notably its model does not include franchises) and a 22% profit margin. Bittwatt was planning expansion to more than 30 countries, including 17 by 2022.

This was a more modest target compared to Restart Energy, which was planning to expand its energy retail business (including by franchising) to more than 45 countries with deregulated markets and generate $3.78bn in revenues through 2023 by delivering 189TWh of electricity (including through its franchisees).

Neither of the groups even moved toward their targets. Where the money went, is hard to say. Bittwatt was planning to spend only 30% of the money to develop the platform itself (a huge development budget, in any case, even compared to global IT leaders) and earmarked 55% for expansion and marketing.

After the Bittwatt project collapsed, Hagmann turned into a “serial entrepreneur, startup mentor, blockchain evangelist” in Dubai, according to his LinkedIN profile

Among his businesses, Bittwatt turned itself into BGourmet. Initially a restaurant map, it was turned into a food delivery application during the pandemic, managed by Stoicescu. BGourmet delivers shawarmas (along with virtually any fast food) over blockchain in UAE via “an encrypted blockchain based all inclusive contactless experience”, as described to customers.

The €2mn investment in BGourmet came from the British vehicle Bittwatt Financial Investments PLC, according to an interview given by Hagmann to Wall-Street. It’s not clear whether this is part of the money raised in the ICO. 

But there’s more than this: Bittwatt Financial Investments PLC, according to official records, set up in October 2018 has a capital of GBP103,697,000 (€120mn).

Initially, except for a single share held by the British lawyer who set up the company, Hagmann was the sole owner. Later, Adrian Asevoaia, the project manager in the Bittwatt project, currently responsible for regulated markets at the Romanian financial markets’ supervisory body ASF, was given 1,000 shares (worth GBP1 each). Since August 2020, the company changed its name into Syncbot PLC. In March 2021, 970,000 shares at a value of GBP1 per share were transferred to Tradex Platform (RO), a company that holds a licence for organising a centralised natural gas exchange that is in the process of implementing trading software, according to a European Union agency.

“The TXP platform [developed by Tradex] was born from the values we share: innovation, simplicity, professionalism and the in-depth knowledge of the local natural gas market,” according to the platform’s website, which is still in its beta version. Tradex platform had €1mn in equity at the end of 2020 and no revenues in the year.