CRYPTOCURRENCY MINING OPERATION LAUNCHED BY OIL AND GAS PRODUCER IRON BRIDGE RESOURCES
Iron Bridge Resources Inc. YSX-V: IBR has formed and launched a wholly owned cryptocurrency mining and hosting operation called Iron Chain Technology Corp. ICT will own and operate cryptocurrency mining datacentres at Canadian oil and gas field sites, taking advantage of cheap, clean-burning natural gas to generate its own electricity. As a result of this structure and the current Canadian gas price environment, ICT will benefit from some of the lowest cost power in the world.
“We are very excited to be joining the blockchain movement and together with our new technology team, we hope to contribute to the ecosystem by helping to increase transaction speeds and lower transaction costs,” said Iron Bridge chief executive officer, Rob Colcleugh. “Our IBR shareholders are expected to benefit from increased natural gas netbacks as we convert our clean, low-priced gas to electricity and then direct that electricity to profitably mine cryptocurrency and host platforms for third party mining equipment.”
Iron Chain Technology expects to begin operating its pilot cryptocurrency mining facility near IBR’s oil and gas operations at Elmworth, Alta. ICT is already currently mining with equipment sourced and assembled by technology professionals who have been engaged by the company. These professionals are information technology systems architects who have extensive experience assembling mining equipment and have a history of profitably mining cryptocurrencies. ICT is providing hosting services for a limited amount of equipment from third parties, and expects this to be a growth area for the company. The company is currently mining bitcoin and intends to maintain flexibility with regard to the type of cryptocurrency coin that gets mined going forward.
While North American natural gas prices have been weak for a number of years, the market in Western Canada has been significantly negatively impacted by strong supplies and persistent pipeline takeaway restrictions. This has lead to AECO prices that trade in the $1.50 per GJ range in the futures market. This pricing environment, combined with the emergence of blockchain and cryptocurrencies as increasingly accepted and enduring technologies, provides an opportunity for ICT to become an important infrastructure player by leveraging its sustainable power cost advantage in a safe, stable, developed country.
“I am encouraged by the potential that ICT represents for our Iron Bridge shareholders,” said chairman, Josh Young. “With natural gas pipeline infrastructure constraints representing persistent pricing challenges, I support our management team’s efforts to find all means possible to improve the value received from our production streams.”
ICT’s pilot cryptocurrency mining project will involve a very modest initial cap-ex investment as a result of its ability to leverage existing infrastructure and excess power generation from IBR’s Elmworth hydrocarbon processing battery, fired by IBR’s clean-burning natural gas production, to provide power to the mining control centre. The pilot project currently has access to approximately 700 kilowatt of very low cost power with the ability to expand that power generation capability rapidly. ICT’s parent company, Iron Bridge Resources, currently produces enough natural gas to power a 45 megawatt facility and expects to significantly increase that gas production within the next two months when it brings on-stream additional Montney production. ICT is also in discussions with other natural gas producers to work with them on future commercial projects. As a result, ICT is interested in pursuing industrial-scale hosting opportunities.
Part of ICT’s strategy involves the sourcing of cryptocurrency mining rigs using processing gear that is not experiencing the high levels of demand that many rig components currently are seeing. Being located in a cold jurisdiction where power is abundantly cheap, ICT is sourcing components that would be challenging to use in typical grid-connected and warmer climates. This is expected to further reduce capital costs and could be a sustainable competitive advantage in hosting.