Block One Capital Buying Majority Stake in TG12 Ventures

Early Wednesday morning, Block One Capital Inc. (TSX-V:BLOK) said that it has penned a definitive agreement to acquire up to 90% of upstart cryptocurrency miner TG12 Ventures Inc. TG12 is currently in the midsts of setting up a mining facility with 2,000 Bitmain S9 Antminers, with half of the machines expected to be installed and running this quarter.

The Vancouver-based company, an accelerator of public and private blockchain technology companies, said that it has funded TG12 for $2.91 million U.S. and may provide additional funding over the next year. Block One did not specify the stake acquired for the initial funding.

The acquisition was first announced at the end of November when it was still in the form a binding term sheet. At that time, the agreement said Block One had to invest $2.3 million U.S. for the 90% stake.

According to bitcoinmining.com, the S9 Antminer, which is listed on the site at $1,987.95, is one of the best Bitcoin mining options available today based upon price per hash (13.5 TeraHash per second) and electrical efficiency (0.098 watts per Gigahash). The mining centre, located in Montreal, is said to have operating costs (electricity, rent, cooling, general rig maintenance and management) of about a dime (U.S.) per kilowatt hour.

Using a bitcoin price of $13,900 U.S. and 2,000 rigs mining, Block One estimates TG12 will generate $25.97 million U.S. in annual revenue. When the agreement was first announced, the plan was for only 1,000 miners and bitcoin at $8,000 U.S., implying $7.8 million U.S. in annual revenue, putting a little colour as to how fast the market is evolving.

Like nearly everything else blockchain-related, shares of BLOK have been on the rise ever since saying November 6 that the company was going to focus investment on the blockchain sector.

Shares, which traded only by appointment around 10 cents each at that time, ballooned as high as $1.85 on acquisition news. Shares have cooled off to close Tuesday at $1.08, but could be in focus again on Wednesday with shoring up the TG12 deal.