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A publicly traded bitcoin mining operator is set to double the size of its operations in a multimillion-dollar deal, largely funded through the sale of its shares.
HIVE Blockchain announced via email this week that it is all set to acquire an existing 30 megawatt (MW) mining business in Quebec from rival Canadian mining company Cryptologic for CA $ 4 million (approximately US $ 2.8 million).
“The acquisition provides us with an advanced and operational Bitcoin mining facility ready to transition to next-generation mining hardware with access to some of the lowest electricity costs on the planet,” said Frank Holmes, interim executive president of HIVE. .
The lion’s share of the purchase price will be met through a sale of 15 million common shares of HIVE, at CA $ 0.20 each (US $ 0.14), to Cryptologic, for a total of CA $ 3 million (US $ 2.1 million). The remainder will be recovered through a CA $ 1 million ($ 700,000) placement.
The newly acquired mining facility, which already has more than 14,000 Bitmain S9 bitcoin miners, will double HIVE’s mining capacity to around 50 MW. The property has been leased, but HIVE said it plans to exercise an option that will extend the lease for an additional five years.
The news comes as Vancouver-based HIVE refocuses resources on its conventional mining operations. It is also increasing the capacity of its Swedish GPU plant, which it extracts from Ethereum, by more than 20% in the next two quarters.
The operator completely closed its cloud mining facility, which harvests processing power from remote data centers, in the second quarter of 2019 after a year of operation. Holmes said at the time that the growing difficulty of mining made cloud mining unprofitable.
This week’s purchase agreement will mean that Cryptologic will continue to own approximately 4% of HIVE’s common stock. The price of HIVE stock, listed on the Toronto Stock Exchange, has risen 10% since the deal went public earlier this week.
“Furthermore, [the deal] it is in line with the company’s green energy strategy as the plant is powered entirely by renewable hydropower, thus keeping our operations powered by 100% green energy globally, ”said Holmes.
The deal is expected to close on Friday.
