Categories CryptocurrencyNews

This Mining Company Soared 159% After Saying It’s Buying a Crypto Firm

Israel’s Natural Resources Holdings Ltd. is the latest company to benefit from blockchain stock magic as it shifts from from digging for minerals to mining digital currencies.

Shares of the company, which invests in metals mines located mostly in North America, rallied 159 percent to 25.40 shekels ($7.27) in Tel Aviv Monday after disclosing to regulators Sunday it is about to acquire a 75 percent stake in Canadian cryptocurrency mining operation Backbone Hosting Solutions Inc., also known as Bitfarms.

Canadian companies are riding the cryptocurrency boom, with digital asset miners to crypto investment firms and online payment platforms, springing up in the past year. Mergers like the one between Natural Resources and Bitfarms give the private company quick access to capital markets, while reviving the public company’s stagnant shares.

“It’s hard to imagine that this operation began in our basement several years ago; by reinvesting our profits, holding on to our surplus coins, and running an entirely vertically integrated operation, we’ve scaled rapidly to become the biggest operation in North America,” Bitfarms founder Emiliano Grodzki said in an e-mail. “We believe in the future of the blockchain to positively impact society and take our role as miners in this ecosystem very seriously.”

The acquisition sheds light into Bitfarms, which operates four farms and two additional facilities under construction totaling 25 megawatts and 250 petahash, or the speed at which a computer completes an operation in the bitcoin code. It ranks as the largest cryptocurrency operation in North America by installed energy and hashpower, according to the regulatory filing.

Computers held in huge warehouses mine cryptocurrencies including bitcoin, bitcoin cash, ethereum and litecoin. The company earned $4.4 million from mining the digital assets in November, with roughly 12 percent of operating costs, Sebag said. Natural Resources had $2.3 million of net income in all of 2016, according to the latest reported financial results.

Canada is an attractive cryptocurrency mining hub as it combines relatively cheap hydroelectric energy, while the cold weather during most of the year makes it easier to keep the hardware cool. Bitfarms has become one of Quebec Hydroelectic’s biggest clients, and has negotiated discounts on long-term power contracts, according to an investor presentation seen by Bloomberg.

Leave a Reply

Your email address will not be published. Required fields are marked *