Argo Blockchain Announces Strategic Partnership with HIVE Blockchain
14 May 2019 - 1:05AM
Business Wire
£5.1 million share swap values Argo at 11.6p
per share
Argo is pleased to announce that it has entered into conditional
heads of terms with HIVE Blockchain Technologies Ltd (“HIVE”) to
create the world’s largest purpose-built business-to-business
mining service provider aimed at large-scale enterprise and
institutional customers.
The new partnership, which follows three months of discussions,
will enable miners to benefit from the combination of the two
groups’ existing mining capacity, including part of HIVE’s 45MW and
part of Argo’s 10.5MW capacity.
As a foundation stone of their proposed strategic co-operation,
HIVE and Argo have conditionally agreed to a share swap
arrangement, by which Argo will receive 16,321,281 HIVE common
shares, representing 5% of the existing outstanding share capital
in exchange for 44,062,500 ordinary shares in Argo, representing
15% of Argo’s existing issued share capital.
The transaction values Argo shares at 11.6 pence per share, a
231% premium to Friday’s closing Argo share price.
The transaction, which does not involve any cash payment by
either side, is expected to close on 30th June 2019 and is
conditional on the completion of satisfactory due diligence by both
parties as well as Argo receiving an independent valuation in
relation to the transaction for the purposes of the Companies Act
2006.
HIVE is one of the world’s leading crypto-mining companies, with
state-of-the-art mining facilities in Iceland, Sweden and Norway.
The company is listed on the TSX Venture Exchange in Toronto - with
a market value of C$179 million at Friday’s closing price - and
reported mining income of US$35.2 million in the 12 months to
December 2018.
The cryptoasset sector has appreciated dramatically since 15
February 2019 with Bitcoin (BTC) prices almost doubling from
US$3,566 to US$6,900 as of 12 May 2019. This has coincided with
increased demand from institutional customers. The Company has
previously announced the purchase of 1000 Z11 mining rigs which are
in production as of 2 May 2019 and 1000 S17 mining rigs which will
all be in production in July 2019. The Company is pleased to
announce that an additional 783 S17 mining rigs have been purchased
for a total consideration of US$1.5m. These new S17’s will be in
production in early Q3 to meet the significant demand the Company
foresees from the partnership announced today.
Institutional investors and large enterprises have shown
increasing interest in the cryptoasset sector. However, the need to
ensure compliance with a wide range of legislative and regulatory
requirements, has resulted in a cautious approach to the sector
being adopted. In particular, the lack of clarity around provenance
of cryptoassets has caused significant concern, especially for
regulated, institutional investors. If, for example, a coin was
mined in a controversial or sanctioned jurisdiction, an institution
cannot say definitively that those coins are not derived from the
proceeds of crime or that the acquisition of such a coin is
compliant with money laundering and terrorist financing legislation
or the current sanctions regime. The mining of new (virgin) coins
solves these issues.
This partnership will combine the strengths of Argo’s Canadian
infrastructure including software, capacity, team and competitive
prices on electricity and hardware, with Hive’s industrial scale
production capacity in Scandinavia (Iceland, Sweden and Norway),
its deep experience in the mining space and its significant
institutional investor base.
The Board considers that the cryptocurrency sector has hit a
tipping point with large financial institutions like JP Morgan,
Fidelity and even Facebook openly discussing different
infrastructure opportunities in the space. The regulatory
environment is also becoming clearer with anti-money laundering
(AML) and tax issues being actively worked on in prominent
jurisdictions around the world.
This new strategic partnership presents a significant
opportunity to service larger strategic institutional clients who
need mining-as-a-service (MaaS) infrastructure to mine virgin coins
from safe jurisdictions like North America and Europe and in
addition from publicly listed entities such as Hive and Argo.
Jonathan Bixby, Executive Chairman of Argo, said: “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 further long-term and
sustainable fiat-based revenue streams for the company.”
Frank Holmes, Chairman and Chief Executive of Hive, said: “In
our analyses Argo is significantly undervalued. We are excited
about this strategic partnership and investment. The crypto market
is ready for a mining solution focused on enterprise customers who
need accountability and transparency and our combination of scale,
software and team will be transformational in this growing
market.”
About Argo:
Argo Blockchain plc is a global data centre management business
that provides a flexible platform for the mining of leading
cryptocurrencies. Argo is headquartered in London, UK and operates
state-of-the art data centres in Quebec, Canada. The Company's
shares are listed on the main market of London Stock Exchange under
the ticker: ARB.
About HIVE Blockchain Technologies
HIVE Blockchain Technologies Ltd. is a growth oriented,
TSX.V-listed company building a bridge from the blockchain sector
to traditional capital markets. HIVE is strategically partnered
with Genesis Mining Ltd. to build the next generation of blockchain
infrastructure. HIVE owns state-of-the-art GPU-based digital
currency mining facilities in Iceland and Sweden.
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