Good morning, and welcome to this quarterly presentation for Arcane Crypto. I'm Torbjørn Bull Jenssen, and I'm the CEO of Arcane Crypto, and today, I have some exciting updates to share with you. Ever since we launched Arcane Crypto, a core focus has been on educating and making cryptocurrencies accessible. The result of this work over many years, but also the international recognition of Arcane Research, we are now seeing large investors, wealth managers, and banks reaching out for our assistance. These are players who, for the longest time, stayed away from the crypto space but are now warming up, and they realize that they need someone to guide them as they approach this sector. They come to us because they trust us. This is very interesting because it's been a trend that has been accelerating lately.
We get more and more inbounds based on our trust and visibility, and also that gives us a unique opportunity to speak with these people and identify why are they coming to us? What do they want to achieve? What's the missing pieces in the market? Through that dialogue, through that work, and also some of these people and companies already being clients of ours, for instance, investors in our fund or trading with us on our OTC, we realized over time that there is a massive hole in the market. Over the last year or so, we've been working systematically to optimize our operation, to tweak our focus to really serve this market, to really fill this hole. What is it? What is the big problem? Well, in a very simple terms, high-net-worth individuals and family offices are missing out on digital assets.
The reason is that their private bank or wealth manager isn't able to help them. He's also not able to advise them. There are several reasons why they are unable to do so, but one of the core reasons is that the wealth managers and the private banks lack the knowledge. They don't have the industry insights. They don't know what exchanges are good, what are bad. They don't know what tokens are good, what tokens are bad. They don't have a clue. They need someone to teach them this industry. But also, they don't have the infrastructure, and they don't dare risking their own licenses serving crypto directly. They don't get signed off from compliance.
While there's been some client demand in the past, say 2%-5% of the client base or the AUM, for each and one institution, that has been too small a portion to really justify a big push. If we can go horizontally, however, and take 2.5%, 5% across different institutions and wealth managers, that's actually already a substantial market. More interestingly, we're quickly seeing a rise in this share growing from this small 2.5%, 5% to something towards 10% and continuing. The situation is that there are a lot of exchanges out there. If high-net-worths and family offices really wanted to invest in this space, why wouldn't they just sign up on Coinbase or Gemini?
Why wouldn't they use one of the tens, if not hundreds of different big international exchanges out there, serving all the different coins you can think of, all of them having more or less the same features, actually, and all of them being in fierce competition, pushing their margins down? Well, the problem is that to this segment, the private banking segment, the wealth management segment, it's less about price sensitivity, it's less about the cost of exchanging, and more about how the products are packaged. On these exchanges, you have to do all the trades yourself. You have to set up the strategies yourself. You have to figure out what is a good exposure. Also, for a wealth manager to do a managed account on behalf of his clients, he would need reporting systems.
He would need access control systems so that he could handle accounts of 10 or 20 clients of his with one master login, not asking all of those clients to share their password with him. All of these exchanges are lacking these tools. They have been built for giving retail investors a great experience, and they're succeeding there. We see now a lot of the big international players even localizing, moving into the local markets, pushing the competition on the retail front even further. These exchanges are also great for the advanced trading companies, those with a lot of in-house developers who can do deep API integrations, build up their own access management system and their own trading systems. But it's been really useless to the wealth managers, to the family offices, and to the private banks. This is where we are providing a solution.
We've already seen traction in specifically this segment, and we're going to double down on that. The way we're doing it is that we're building a wealth management platform. The Arcane platform I talked about now for a couple of quarters, the unified platforms for users to learn, trade, and invest, that is designed to be a wealth management platform, a private banking platform, if you like, offering research, bespoke research, brokerage, and investment services to high-net-worths and family offices across the EMEA region, where we provide a white-glove user experience, a premium offering, where we are sitting down with these people, identifying their needs, and solving that in the best possible way. We're picking up the phone when they're calling, which is what they're used to with a normal wealth manager.
We're building this in such a way that we're also making sure to develop the tools that wealth managers are needing so that they can leverage our platform as a software, as a service, and provide services to their own clients leveraging our platform. That's a key part of the strategy of how we're gonna scale. We're building all of this on the same fully regulated cloud-based platform on one tech stack, the unified Arcane platform, and that is why it's been so important over the last couple of quarters to really start doing that heavy lifting 'cause that's what's put us in a position to really serve this market well going forward. That means that we are not in competition with this long list of exchanges. We are building on top of them.
These exchanges are the marketplaces where we source liquidity, where we hedge out trades, where we do the derivatives trading to be able to set up a volatility product for a client that wants that. It means that once Kraken adds a new feature, that is something that we can, as a broker, offer to our clients quickly and easily. We can build on the best exchanges, and we can productize it and make it accessible to a particular segment of the market that is currently underserved, the high net worths, the family offices, the wealth managers, and the banks and financial institutions. That also means that we don't have to be in the pond of ever lower margins and ever tougher competition, where the customer acquisition cost, especially in the retail market, is skyrocketing.
We are positioning ourselves in a segment of the market where the value add we are providing in the overlaying structures can justify higher margins over time. As I said, we've already had traction in this market. The really interesting thing is that although a lot of people are not even aware of the fact that there is a private banking market or a private banking segment, it's a massive market. It's almost this hidden world where those who are in it really know about it, but the rest of the world doesn't really know. There are more than 6 million high-net-worth individuals in Europe today, and it's growing at an 8% rate a year. They have $18 trillion in investable wealth.
Our target market will even be way larger than this 6 million because we'll target clients all across the whole EMEA region and not necessarily set the bar at least one million in net worth, investable net worth, but probably a little bit lower. Of course, those who have less to invest will get probably a less of a hands-on user experience, while the ultra-high net worths are those who will get the most kind of hands-on white-glove experience with us. These people are already reading our research. Some of them are already invested in Arcane Assets and exploring the possibility of increasing that position, and some of them are already trading with us on our OTC. If you break down the trading volume you see on Kaupang, by far the biggest majority comes from a group of high net worth individuals.
We brokered NFTs, digital art. We do that for large clients who want this premium offering. Right now, we're building the service and tailoring it for this segment, the high net worths, the family offices, where we are the ones adding the white glove user experience. Our plan is not to have hundreds and hundreds of client managers in the future. We are working with these individuals directly to get the maximum learning effect, to build traction and revenue right now, but we're taking a platform approach to scaling.
Building on that insight, building on those relations, we are already working with wealth managers, figuring out the tools they need in forms of reporting, access management system, so that they can do managed accounts, so that we can have one wealth manager serving 10 or 15 of his clients on our platform, so that we can fully embrace a software-as-a-service approach and really continue to scale this offering. Then on a little bit longer timeframe, we anticipate that every private bank, every financial institution for that matter, will have crypto products. I said this in the past, and this is still something we truly believe. They will not develop that themselves. They will have research for their clients. They will have research for their market team.
They'll have different products, exposures, funds, ETPs, managed accounts, different strategies, but they will not develop all of this themselves. They will need a partner, and they'll look for a partner, and we are positioning Arcane to be that preferred partner. Very interestingly, even though the bank side, kind of the really where we can really get the big scaling might be pretty far into the future when it comes to trading, some of them are ready already today to consume research. They have to start by learning. The beautiful thing about research is that they don't need a sign-off from compliance to start buying it. That's a part of the reason why we pushed the research application as the first application we launched on the Arcane platform.
While we're building for the long term, we also expect the kind of investment application in its first iteration to come out probably during Q2 and the trading application to come out later in the year. Research was pushed first because it's a great brand builder. The visibility we're getting are a key reason why we're getting the inbound calls. When Bloomberg, Reuters, New York Times, CNBC are covering our content on a weekly basis, the wealth managers, the banks see that and they realize, "Here's a group of experts. I need to reach out to these people." This visibility has a double benefit for us. On one hand, it really drives down the customer acquisition cost. It makes it cheaper for us to attract people to the Arcane platform, the high net worth and family offices directly.
In addition, it's also a great way to secure B2B business relationships. We're already selling research to several different companies, both from the crypto sector and also some from the traditional finance sector. While research can be a great source of revenue in itself, it's also a great stepping stone towards more substantial partnerships over time. If a private bank partnered with us and started subscribing to our different research services today, who do you think they will call a year from now when they see so much client demand for crypto products that they really have to add it? Us. Who are they going to speak with in the meantime so that we can get the benefit of learning exactly what they will need a year from now? Us.
This really gives us a unique advantage to build up and tailor our solution to the specific needs of this segment. With this increased focus on the private banking wealth management segment, what we're doing, in fact, is that we're doubling down on the areas in Arcane where we had the most traction already for research, for our brokerage, and for investment. By doing so, we are in a unique position to build up a competitive advantage. There are millions of high net worths having $trillions in investable wealth, and they are starting to warm up to the idea of allocating to digital assets. They are reaching out to us because we know crypto way better than most others.
Even more importantly, we know the problems this group is facing better than anyone else, and that is what enables us to make the best possible solutions for solving their specific needs and to become their preferred platform going forward. This is where we are headed strategically. This is the culmination of what I've communicated now since last summer, where we first shared the idea of kind of bringing the services together, embrace this learn, trade, invest approach, building out a unified tech stack in Google Cloud, kind of leveraging the scaling capabilities there, and then can we really use that as a foundation to put us on a path where we can grow to become, you know, the leading crypto company in Europe in the future. Since this is a quarterly presentation, I guess it makes also sense to run through some of our financials.
Looking at the quarter, obviously the volatility and activity in the market had a sharp drop. Bitcoin volume dropped around 30% in the market overall, and that also pulled down some of our top line, especially from kind of our trading activities. This, however, was in part countered by increased revenue from our mining operation. We're able to continue the overall longer trend of growing a gross margin despite seeing a fall of around 12% compared to Q4. Looking at the numbers a little bit more in detail, as I said, it was really the top line that was hit, and that was mainly due to reduced trading volumes. Because of the increased revenue from mining, we actually managed to improve our EBITDA and had a small loss of around NOK 2 million for the quarter.
Before Christmas, we signaled that we or communicated that we expected to be cash flow neutral or positive when we were mining at full capacity, given the market conditions at the time. What's happened since is that electricity prices have continued to explode upwards in southern Norway. Today they are around 100x higher than what they were a year ago. This has really, kind of, removed the profitability from the mining, currently. The machines, however, are still in the same conditions as when we bought them. We've been working hard to secure a new hosting site in northern Norway where the electricity prices are way lower. We are very close to securing such an agreement and be able to move the machines up north.
I can't give you a precise timeline today, but I'm looking forward to share with the market, once that kind of is finalized and we kind of send the machines. While it's been frustrating to be hit with these changing market conditions, it's not really devastating to the mining operations. There are a couple of months that are kind of lost in a way, but the machines are still in good conditions. With the electricity prices in northern Norway, we expect a good profitability from the mining operation going forward and for that to have kind of a positive impact in the short run on our earnings in the future. On the balance sheet, there's been no major changes during the quarter. To round it off, I think it's important for people to realize that our journey has just started.
We've not launched a new strategy. However, we've taken all of the learning from our first year as a public company, and we have used that to inform our strategy. That's why we updated kind of the mission statement in previous quarter and shared that with you. That's why we position ourself for since the last summer to really execute on the market opportunity that we see the clearest, doubling down on where we already have success. Right now, the cryptocurrency market is in free fall together with a broader financial market. It's important for people to realize that yes, in the short run, cryptocurrency prices will follow risk appetite. In the long run, it'll be the cryptocurrency market and the size of its activity will be decided on the basis of adoption. Adoption of digital assets is continuing to accelerate.
With increased interest we see every day, despite the massive fall in the market, I keep getting incoming calls from companies and individuals who are kind of now becoming ready to make the first step into this segment. I'm more confident than ever that we in Arcane are on track to build one of the world's leading players or to become one of the world's leading players in the institutional digital asset space. Our core market is Europe and the EMEA region, but a lot of our services will also be consumable globally in the future. Thank you so much, and yes, we can now move over to some questions.
Thank you very much, Torbjørn. That's great. Some questions have come in regarding the ETP. Can you give us an update on where you see that?
Yes. As we communicated earlier, we've been working with our partner, Valour, to launch an ETP, so a listed product, on the basis of our fund. The benefit of that would be that any trader could access the fund exposure, if you like, through their normal brokerage account on Avanza or Nordnet. We got an approval from the Swedish FSA on the prospectus before Christmas, and on the basis of that, we actually expected to launch that ETP during Q1. However, since we are also on the cutting edge when it comes to this product, there is a reluctance from the different exchanges or the process of getting approval from the different exchanges to list the product is taking longer than anticipated.
There is nothing inherently blocking the launch of the ETP, but the exchanges really need to wrap their head around understanding a basket-based listed product. I'm confident that they will eventually get around to the future, and we will see listed baskets. As of right now, the process is continuing. We're working with Valour and having dialogues with several different European exchanges. In many ways, the timeline is to some degree outside of our control, so I can't kind of say when it will happen, although I'm relatively confident, very confident I guess, that we will eventually see exchanges listing such type of products and that we are on the forefront of that development.
Thank you. Regarding the mining, can you speak a little bit to the impact you mentioned maybe that some changes there? Can you speak to the impact of those changes that might occur?
Yes. As I said, we will move the machines to Northern Norway, and we expect to do that shortly. I can't give a precise date, but we will inform the market once that happens, and that will immediately have a substantial positive effect on our revenue and our profit. Even with the current Bitcoin prices, but with electricity prices in Northern Norway, it would still be highly profitable. Longer term and strategically, as I communicated earlier, what we find very fascinating and interesting is to take the mining exposure and offer it as an investment opportunity to the clients we bring into our platform. Because mining is basically generating a cash flow, something very similar to a bond, if you just look at it from an economic perspective.
What we are working on exploring is financializing that and finding interesting ways to leverage our platform and our user base and combine that with our mining. Right now, the main focus is to move those machines to Northern Norway, secure that, and then assess further development.
Well, thank you very much. I think, that's all the questions I have right now.
Thank you. Thank you so much, and have a great day, everyone.