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The Jabberwocky world of bitcoin

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Last week Small Talk followed Clear Leisure, a small Aim-listed company, into the Jabberwocky world of bitcoin where words — whether hash, sat or shilling — have entirely new meanings. In cryptocurrency land, a nonce is apparently a 32-bit field rather than a category of prisoner. Hodl is not a fatfinger typo but advice to hold on for dear life, sat is a millionth of a bitcoin and shilling is trickery. 

Apparently “When Lambo?” means “when will I be able to cash in my coins and buy a Lamborghini. When will I be rich?”

It is as baffling to Small Talk as Lewis Carroll’s nonsense poem Jabberwocky where “the mome raths outgrabe”. 

Yet last week Francesco Gardin, chairman of Clear Leisure, a £4m titch whose technicolour history should stimulate the senses of the most supine watchdogs, raised £600,000 to delve into blockchain and cryptocurrencies.

The 63-year-old reckons Clear Leisure has an edge over the ever-increasing mass of bitcoin bright sparks.

This is the one-time Italian lecturer on computers and algorithms who founded a technology incubator called Brainspark in 2000. He chaired it until 2011 when the group’s name was changed to Clear Leisure and its focus shifted to collecting leisure assets in Italy. That included Mediapolis, a 400-acre site it hoped — forlornly — to turn into a vast theme park. Mr Gardin was brought back to run Clear Leisure in 2015 after the shares fell below 1.5p.

Clear Leisure seems to have been its own world of nonsense for a while. In the past five years it has been embroiled in countless legal actions and had four nominated advisers. One of its nomads — Westhouse — tried in 2015 to wind up the business to extract unpaid fees. Another — ZAI Corporate Finance — was stripped of its licence last year forcing Clear Leisure to find a replacement or delist. Twice the company has suspended its shares, having been unable to publish its accounts. 

Luke Johnson, serial entrepreneur, was Clear Leisure’s chairman for a year until resigning in October 2013, days before the company revealed financial irregularities in African subsidiaries. Mr Johnson, who still owns a 5 per cent stake, is clearly scarred by the experience. Last year he wrote in the Sunday Times of his investment in an Italian company that “appeared to be trading at a fraction of its balance sheet value. Unfortunately the figures were nonsense . . . I discovered too late why Italy ranks 60th in the Transparency International Corruption Perceptions Index.”

Since Mr Gardin’s return, he has been unravelling Clear Leisure’s web of investments and establishing the group’s title to assets to sell what he can.

That is the core job, he says. But last year he turned his mathematical mind towards cryptocurrencies and particularly blockchain, the peer-to-peer digital ledger where “miners” use high-powered computers to chase down and verify transactions in return for coins.

“We saw an opportunity to explore blockchain technology with moderate investment of €200,000,” said Mr Gardin beamishly.

Clear Leisure is working with Malta-based data centre 64Bit to create a mobile mining centre which will pool its power with other miners using state of the art machines. It is starting in Serbia, but its containers will be trucked to wherever energy prices are lowest.

In December, the company said the joint venture expected an “extraction rate of about 20 Bitcoins per year at a cash break-even production cost of $4,752 per coin compared to the current bitcoin price of approximately $15,500”.

Bitcoin fell to nearer $7,300 last week on reports that the US justice department had begun criminal investigations into potential price manipulation of several cryptocurrencies.

But Mr Gardin insists the venture is far from speculative. “It is a way to enter an area of opportunity and be part of a club,” he said. He may be right.

Warren Buffett has likened bitcoin to tulipmania and “rat poison squared” and warned last month: “Beyond the fact of nothing being produced from the asset, you also have the problem of it drawing charlatans.”

But the Omaha Sage is not always correct. And perhaps cryptocurrencies and blockchain will be the disruptive, democratic, ideological and technological breakthrough that helps save the world.

Even so, it is stretching to think that Clear Leisure will be better at bitcoin mining than others.

When Clear Leisure investors ask “when Lambo?”, the answer may be never. Or in Jabberwocky lingo, go whiffle.

kate.burgess@ft.com

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