HIVE Blockchain Technologies, the operator of cryptocurrency mining facilities, today announced that it has entered a non-binding letter of intent and heads of terms and a share swap agreement with Argo Blockchain, to explore a proposed strategic partnership to create the world’s largest business-to-business mining service provider aimed at large-scale enterprise and institutional customers.
The proposed strategic partnership will enable all miners to benefit from the combination of the two groups’ existing mining capacity, including part of HIVE’s equivalent mining capacity of 45 megawatts (MW) and Argo’s 10.5MW capacity and presents a significant opportunity to service strategic institutional clients that require Mining-as-a-Service (MaaS) infrastructure to mine virgin coins from safe jurisdictions like North America and Europe.
“We are excited about this strategic partnership and our analysis indicates that Argo is significantly undervalued. They have a healthy cash position with more than £16 million, as of December 31, 2018, and since then Argo has deployed some of the most efficient ASIC chips to expand Bitcoin operations while cryptocurrencies continue to rebound from lows seen at the beginning of 2019. In our view, the crypto market is ready for a mining solution focused on enterprise customers that require accountability and transparency. Our combination of scale, software and teams will be transformational in this growing market.”
“This deal makes strategic sense and demonstrates the intrinsic value of our business, our vision, and existing investment. The alliance is transformational for Argo and will deliver long-term and sustainable fiat-based revenue streams.”
This proposed strategic partnership will leverage the strengths of Argo’s Canadian infrastructure including software, capacity, team, competitive electricity prices in Quebec and hardware costs and HIVE’s industrial-scale production capacity in Iceland and Sweden, its assets located in Norway, and HIVE’s deep experience and expertise in the cryptocurrency mining and blockchain ecosystem.
As part of the agreement, HIVE and Argo are considering a share swap arrangement, by which Argo will receive approximately 5% of HIVE’s outstanding share capital in exchange for approximately 15% of Argo’s outstanding share capital. The transaction does not involve any cash payments by either side and is expected to close on May 30th, 2019 subject to among other customary conditions, negotiation and execution of binding agreements, both parties completing satisfactory due diligence, obtaining their respective board of directors’ approvals, and to completing an independent external valuation of HIVE.