We've heard of diversified mining operations, but MX Gold Corp. (TSX-V:MXL)(OTCQX:MXLGF) has taken it to a new level. The Vancouver-based junior mining company has traditional hard rock projects in Mexico and British Columbia, where it is scouring tailings and drilling holes to extract gold and copper and another molybdenum project mothballed until prices recover.
It also has mining operations in, well, cyberspace. Crypto mining involves using high-performance computers to solve cryptographic puzzles associated with cryptocurrency transactions, with the first person (or company) to solve the problem creating an irreversible "block" in the chain and receiving a reward. For bitcoin, the current reward is 12.5 bitcoin, making it easy to see why so many companies are jumping into the mix. Other blockchain-based coins, called altcoins (basically everything not bitcoin) have different payments, but still can pay nicely.
As of Monday, the diversification became official with MX Gold taking delivery of 360 AvalonMiner 741 cryptocurrency mining systems purchased from Canaan Creative Co. Embodying the fever pitch at which companies worldwide are buying mining rigs in a bid to capitalize on the cryptocurrency explosion, MX Gold expected the AvalonMiners a week after it ordered them on November 13, only to just now get them.
"Assuming timely delivery, management expects to commence cryptocurrency mining operations by mid-December," the company said at that time. Uh...no. Management steered clear of guidance in the latest news release.
The Canaan website lists the machines at $1,450 each, but out of stock.
MX Gold plans to set up its crypto mining operations in La Portage, Manitoba if it can successfully complete negotiations with 3409377 Manitoba Ltd. Presumably, that should be easy, considering MX Gold CEO Dan Omeniuk happens to own 3409377 Manitoba Ltd.
The location is ideal for it will give the company access to 2.5 megawatts of power at 5.4 Canadian cents per kilowatt hour. Operating the rigs, which are extremely energy-intensive, is the most costly part of crypto mining once the units are set-up and running, so locking-in inexpensive and consistant electricity is imperative in the ultra-competitive space.
While many cryptocurrency stocks have seen a boon in value lately, traders don't seem to know what quite to make of the move by MX just yet. Shares slid ever since the initial purchase announcement to as low as 7.5 Canadian cents per share. A recovery has been trying to happen the last several days including a surge today as high as 15 cents from Friday's close at 11 cents, although the gains weren't held and the stock ended the day right where it started.
