Australian blockchain firm finalizes $190 million cryptocurrency mining deal

Sydney-based IoT Group, a publicly traded company, has struck a deal with Bitfury, an Australian distributor of bitcoin mining equipment, to build a digital currency mine if it can get a decommissioned coal power plant up and running again.

In an announcement to the Australian Securities Exchange (ASX) on Monday, IoT Group revealed that its blockchain subsidiary IoT has signed a “conditional binding agreement” with Royalti Blockchain Group, the Australian distributor of bitcoin mining hardware giant Bitfury.

The proposed agreement envisions IoT Group developing a "Blockchain Application Complex" (BAC) in the Hunter Valley, powered by an abandoned coal-fired power plant, Redbank Power Station. As previously reported, IoT Group is working with Hunter Energy to acquire the power plant and build a two-hectare mining center. If successful, IoT Group claims that it will be able to obtain energy from the power plant at wholesale prices.

The transaction is said to be worth more than A$190 million, according to a press release from IoT Group, but no details on the compliance aspects have been disclosed in the official ASX announcement.

Under the terms of the agreement, Royalti will install its Bitfury mining hardware on equipment provided by IoT Group and provide 20MW of power for at least five years at 11 cents per kilowatt-hour. This compares to retail prices of between 30c and 45c/KWh.

Cheap coal electricity may soon enable cryptocurrency mining operations in Australia’s Hunter Valley.

However, Hunter Energy’s acquisition and restart of the now bankrupt Redbank Power Station to power its cryptocurrency mining operations is a key focus of the plan. The coal-fired power plant closed in 2014.

In the ASX statement, IoT Group said:

Investors should note that the terms are conditional upon the satisfaction or waiver of certain conditions precedent, including the ownership and interest rate of the Redbank power station it is seeking to acquire. If Hunter Energy is unable to complete the acquisition, the agreement will lapse.

The statement also noted that a legally binding power purchase agreement will be in place by October 1, 2018.