How can crypto revolutionise the mining industry?
Blockchain technology can provide a reliable and transparent way to track ownership of digital assets. Through a process called Real World Asset (RWA) tokenisation, the value or future output of a mine can be turned into digital tokens. These tokens can then be sold to investors, making it easier to raise funds, share ownership, and improve access to capital.
Each digital token represents a slice of an asset’s value, allowing investors to instantly snap up equity stakes in mining ventures. This fresh approach could open up a whole new world of funding options for miners and pave the way for smaller investors to get a foot in the door of projects previously out of reach or only open to sophisticated investors. This could be a game changer for private miners, as it offers an alternative funding model that still allows for community inclusion.
Tokenisation has the potential to make markets accessible to smaller investors by offering fractional ownership. The technology could replace or complement traditional equity shares, enabling economic rights on land or property.
The Australian Mining Review speaks with Blocksquare chief marketing officer Julia Buchholz about this innovative approach and what it could mean for mining.
Blocksquare’s model allows companies that own land or property to unlock liquidity by offering a portion of the asset’s economic rights, effectively leveraging their real estate equity.
Regulatory considerations are crucial, as the tokenisation of securities is subject to different regulations compared to direct real estate tokenisation. Transparency, legal backing, and community involvement are essential in tokenised assets to prevent fraud and ensure accountability.
Some of the potential benefits of tokenisation include…
1. Enhanced liquidity and accessibility
Traditional mining investments can tie up a hefty chunk of capital and often suffer from a lack of liquidity. Tokenisation offers a more flexible approach, with tokens that can potentially be traded on secondary markets, making mining projects more enticing and approachable.
Ms Buchholz provides an example of how this would work at Blocksquare.
“In this example, let’s say you own the title of the land, but you need to raise money to expand business on the land,” she said.
“Now you can use the land as equity instead of selling company shares.
“Let’s say only it’s worth $1m and I need to raise $100,000. I can offer 10% of the economic rights on that piece of land.
“Now, I can invite the community to fund this 10% to get that $100,000 and I can use it to expand my business, to do renovation work or pay off my mortgage.
“You might have a structure where a portion of the property is tied up in existing obligations, but you still hold significant private equity — and that’s the part you can tokenise.”
2. Greater transparency and trust
The unassailable ledger of blockchain delivers real-time, crystal clear records of ownership and transactions. This level of transparency gives investors a bird’s eye view of asset performance and project milestones.
Tokenisation can also reduce risks in high-value transactions, as it replaces assets with equivalents.
“With blockchain technology, every transaction is transparently recorded and verifiable — making it virtually impossible for someone to claim they didn’t receive it,” Ms Buchholz says.
“It’s automated accounting — you always have real-time visibility into who holds how many rights to your property. The system tracks everything for you, making it possible to automate many processes.”
3. Boosted investment
By lowering the bar to entry, tokenisation opens the door to a wider pool of investors, fostering a more inclusive investment environment.
“We are making markets accessible for people, even with smaller budgets,” Ms Buchholz says.
“Tokenisation allows you to basically buy bits and pieces of ownership similar to shares.”
“If the tokenisation structure isn’t classified as a financial product, it may create opportunities to engage retail participants more easily.
“Here, investment can start as low as $150, for example, which means it turns it into almost like an asset-backed savings account.
“Instead of putting $150 in your bank every week from your savings, you can put it into an asset backed by real estate or backed by land and what’s being generated from the land.”
Case studies: Layer One X
Contributed by Layer One X chief strategy officer M Stewart
Asset tokenisation is the process of converting real-world assets (such as mineral reserves, mining infrastructure, or revenue streams) into blockchain-based tokens that can be traded on decentralised platforms.
In mining, tokenisation can apply to:
- Physical assets: a specific quantity of mined minerals (e.g., 1 token = 1 ton of lithium). With the ability to track that token through the entire life-cycle.
- Revenue rights: investors receive a share of profits from mineral sales.
- Equity tokens: represent ownership in a mining company or a specific project.
- Infrastructure financing: fundraising for new mines, processing plants or exploration through blockchain-based capital raises.
By tokenising mining assets, Australian companies can unlock capital from retail and institutional investors worldwide, bypassing traditional financial intermediaries and market constraints.
Tokenisation allows both retail and institutional investors to own a piece of Australian mining projects, reducing barriers to entry while increasing funding opportunities for miners.
We investigate Layer One X (L1X), a decentralised layer-one blockchain platform, who is at the forefront of this transformation, providing unparalleled interoperability, scalability and security.
L1X’s proprietary technology facilitates seamless interaction between various blockchains, enabling mining companies to tokenise assets efficiently. By leveraging blockchain, mining firms can democratise investment opportunities, allowing fractional ownership and broader investor participation. This approach not only streamlines asset management but also opens new avenues for revenue generation.
Tokenising an Australian lithium mine
Scenario: A lithium mining company in WA needs $250m to expand its operations and build a new processing facility.
Traditional capital raising vs. tokenisation
| Method | Process | Challenges |
| Stock Market Listing | Issue shares via an IPO | Expensive, slow and restrictive to institutional investors |
| Private Equity | Seek venture capital | Requires giving up ownership/control |
| Bank Loans | Secure debt financing | High-interest rates and long approval times |
| Tokenisation (L1X-based) | Issue LITHIUMX tokens representing future lithium production | Open to global investors, immediate liquidity, no need for intermediaries |
The company issues “LITHIUMX” tokens, each representing a claim on 1t of future lithium production. Investors worldwide can buy and trade these tokens on the decentralised exchange (DEX), securing a share in the mine’s output without the need for traditional financial intermediaries.
Supply chain management of lithium and manganese
The origin of lithium and manganese is crucial for ensuring ethical sourcing and compliance with environmental regulations.
Scenario: A mining company in WA extracts lithium and records it on the L1X blockchain using smart contract verification.
This creates a digital fingerprint that follows the material through the entire lifecycle, from processing, distribution to final product.
With L1X-powered blockchain tracking, each batch of mined material is registered on an immutable ledger, providing:
- Proof of origin: tracking lithium from brine fields in South America or hard-rock mines in Australia.
- Environmental and labour compliance: ensuring no materials come from unethical or unsustainable sources.
- Instant audits: regulatory bodies and buyers can verify sourcing information in real-time.
Secure shipping & logistics tracking
Scenario: A shipment of lithium hydroxide leaving Chile’s Atacama Desert is tagged with an L1X smart contract, allowing Tesla and other EV manufacturers to monitor transit from the mine to their factory.
Once minerals are extracted and processed, they need to be shipped to battery manufacturers across the globe. L1X’s cross-chain technology can integrate with IoT sensors and GPS tracking, enabling real-time monitoring of shipments.
Blockchain and smart contracts can help:
- Prevent theft and fraud: every container of lithium or manganese is digitally logged and verified at each transit checkpoint.
- Improve efficiency: delays due to paperwork, manual tracking and fraud investigations are reduced with automated smart contracts.
- Enhance sustainability verification: governments and companies can track the carbon footprint of each shipment.
Integration into EV battery manufacturing
Scenario: A South Korean battery manufacturer receives a shipment of manganese from Gabon and lithium from Australia.
The L1X blockchain confirms authenticity, ensuring these materials meet the company’s sustainability commitments before integration into batteries.
Once the minerals reach a battery production facility, they are processed and combined with other materials to form battery cells. Blockchain ensures full transparency of material usage, enabling:
- Verification of certified materials: every component that goes into an EV battery is traceable back to its source.
- Supply chain optimisation: real-time data helps manufacturers predict supply needs and avoid shortages.
- Automated quality control: smart contracts can flag defective materials before they reach production lines.
Managing the lifecycle of an EV battery
Scenario: A Tesla owner in Germany needs a battery replacement.
The automaker checks the L1X blockchain and verifies that the current battery is still under warranty, automatically approving a replacement request. Later, the old battery is sent to a recycling centre, where its materials are reused for new production.
After an EV battery is installed in a car, its entire lifecycle can be monitored using blockchain technology. This is crucial for:
- Predictive maintenance: blockchain-stored data helps automakers and service centres track battery performance.
- Warranty & insurance claims: verified data allows for faster claims processing when batteries fail prematurely.
- Battery recycling & reuse: when a battery is at the end of its life, blockchain ensures it is recycled properly rather than illegally dumped.
Using a Decentralised Exchange (Quantum DEX) for Mining Capital Formation
While tokenisation via L1X enables the creation of asset-backed tokens, Quantum DEX — built on the same interoperable infrastructure — provides a highly liquid marketplace for capital formation in mining projects.
Q DEX leverages cross-chain liquidity aggregation through its proprietary X-Talk protocol, allowing tokens representing mining assets (such as future production rights, equity tokens, or revenue streams) to tap into liquidity pools across multiple blockchains simultaneously.
How it works
- Tokenised asset issuance: Mining companies issue tokens (future production rights) or equity-backed tokens representing ownership stakes.
- Cross-chain capital raising: These tokens are listed on Quantum DEX, where liquidity from Ethereum, BNB Chain, Solana, and other ecosystems is aggregated in real time, ensuring higher investor participation and deeper liquidity.
- Liquidity refill mechanism: Quantum DEX utilises randomised token diversion from its native protocol and DEX governance token pools to continuously replenish liquidity, ensuring stable trading volumes even in early fundraising phases.
- Secondary market trading: Once issued, tokens can be freely traded across supported chains, enabling investors to exit or increase their positions without waiting for the project to mature.
Benefits for mining capital formation
- Global investor access: Quantum DEX’s multi-chain architecture removes jurisdictional barriers, enabling capital inflow from retail and institutional investors worldwide.
- Immediate liquidity: Mining tokens are tradable from day one, creating an active secondary market that encourages participation.
- Reduced dependence on traditional finance: Companies raise funds directly from decentralised markets, bypassing IPOs, banks, or venture capital firms.
- Enhanced transparency & trust: Smart contracts on L1X ensure that mined production or revenue shares are automatically distributed to token holders, reducing counterparty risk.
