Aussie company eyes decommissioned plant for crypto mining operations

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A decommissioned coal plant in Australia could soon be home to a large cryptocurrency mining operation in the land down under. Sydney-based IoT Group has signed an agreement with Royalti Blockchain Group, a reseller of mining hardware company Bitfury, through its IoT Blockchain subsidiary. The agreement is a “conditional binding terms sheet,” hinging on the approval of the use of the plant.

IoT made the announcement in a report submitted to the Australian Securities Exchange (ASX) on Monday. The company hopes to develop a “Blockchain Applications Complex (BAC)” in Hunter Valley that would be powered by the decommissioned Redbank power station. IoT has already partnered with Hunter Energy in an effort to have Hunter leverage its position to acquire the power station.

The deal is reported to be worth around US$142 million and would see Royalti installing Bitfury mining equipment at the plant. IoT and Hunter would supply 20 megawatts of power for a minimum of five years at a cost of US$0.08 per kilowatt-hour (KWh). The rate represents a wholesale rate, and is between US$0.22 to US$0.33 less than the normal KWh retail rate.

The Redbank Power Station shut down in 2014. If the mining operations are to get underway, Hunter has to first acquire and recommission the plant. According to IoT Blockchain, “Investors should note that the Terms sheet is subject to and conditional upon the satisfaction or waiver of certain conditions precedent, including the completion by Hunter Energy of its proposed acquisition of all right, title and interest in the Redbank Power Station to the absolute satisfaction of IoT…If Hunter does not complete its acquisition…or if competition does not occur under the terms sheet…the transaction…will not proceed.”

If the acquisition is successful, it could turn Hunter Valley into a “Silicon Valley” for Australia. It has the potential to draw numerous blockchain companies to the area for the low energy rates, which could, in turn, start an entirely new innovation sector in the country. Hunter is already working on recommissioning the plant and hopes to flip the power switch during the first quarter of next year. However, like IoT, it cautions that there are still many factors that need to be addressed, and that “investors should be aware of these risks.”

As of now, the deadline to initiate operations is October 1, 2018. If the legally binding Power Purchase Agreement cannot be effected, the deal will be cancelled.