Global Blockchain Tech Looks To Cryptocurrency Miners For Bitcoin Streamsbr>
Global Blockchain Technologies Corp.’s wholly owned subsidiary, Global Blockchain Mining Corp., is acquiring a 49.9% interest in Coinstream Mining Corp., which claims to be the first cryptocurrency mining company to employ the streaming model.
Coinstream’s primary goal with its underlying streaming agreements is to provide non-dilutive capital to existing cryptocurrency miners, to become the preferred source of capital for miners who want to expand and scale their operations, and to build a critical mass of diversified streams of bitcoin at a fixed price, providing exposure, certainty, and upside for investors and shareholders.
Coinstream has aggregated 10 megawatts of power in purpose-built data centers located in low power cost jurisdiction (under USD$.04/kWh) Manitoba, Canada.
The initial streaming agreements, once funded, will augment current bitcoin production and provide for the delivery over 5 years of:
- a total of 2,500 bitcoins per annum, at a fixed cost of US$1,000 per bitcoin payable at the time of delivery.
- In the event that, and at such time as the price of bitcoin trades above $15,000, the fixed cost payment would rise to US$1,500.
- In the instance where the network hashrate rises above certain pre-determined levels for a sustained period of time, the fixed cost payment would be adjusted upward.
Over the life of the contracts, the company would receive 12,500 bitcoins, which represents a current undiscounted value of approximately CAD$112,500,000 at the price of bitcoin at the time of this announcement.
In return for these streams, Coinstream will:
- provide US$10,000,000 applied to CAPEX related costs to its seasoned industry operating partners, and
- be entitled to retain 100% ownership of the underlying mining equipment, until payback of its initial contribution of capital, and
- retain a 50% ownership of the ongoing value of the equipment, thereafter, and
- retain the right to adjust the mix of cryptocurrencies received under the stream to include other major cryptocurrencies.
Chief Financial Officer Theo van der Linde answered questions submitted by Block Tribune.
BLOCK TRIBUNE: How does your version of streaming mining work?
THEO VAN DER LINDE: We provide the upfront capital to pay the capital expenditure costs of acquiring the computing power required to mine digital cryptocurrencies.
BLOCK TRIBUNE: What cryptocurrencies are being mined? Only bitcoin, or several?
THEO VAN DER LINDE: While bitcoin is favored, we are open to doing these types of deals on mining of various currencies provided that bitcoin represents a lion’s share of the mix.
BLOCK TRIBUNE: How many rigs will the capital infusion be used to purchase?
THEO VAN DER LINDE: This is deal dependent and we will evaluate the teams and operations as well as scaling capabilities of every different partner, and how to maximize efficiency, profitablity, and rapid initial return of capital.
BLOCK TRIBUNE: The fixed return will rise after $15,000 – is there another level if it skyrockets?
THEO VAN DER LINDE: We believe that a correlation between rising prices and a rising network hashrate will exist and we have factored in scaled payment on coin delivery to ensure that we always cover our partner’s OPEX or cost to produce each coin contracted to us under the stream.
BLOCK TRIBUNE: How many jobs will be created?
THEO VAN DER LINDE: I imagine that the multiplier effect is alive and well.
BLOCK TRIBUNE: What level of miners are eligible for similar investments? In other words, is that determined by their current output, number of rigs, or…?
THEO VAN DER LINDE: We want to look at opportunities in politically stable environments with access to electricity below US4c per kWh and access to power in excess of at least 5 MW