Oil, gold and Bitcoin rarely share a headline. But in the current climate, London’s tinyer companies are finding inventive ways to bridge old-world resources and the new digital economy.
Union Jack Oil PLC (AIM:UJO, OTCQB:UJOGF) and its partners have given their Yorkshire gas project a distinctly modern twist.
The West Newton development, until recently a conventional onshore play, could soon become the site of Britain’s first gas-powered Bitcoin mine.
Operator Rathlin Energy has completed a feasibility study viewing at how gas from West Newton’s wells might be applyd to generate electricity for on-site cryptocurrency mining.
Letter
A non-binding letter of intent has already been signed with 360 Energy, a Texas-based specialist in gas offtake and monetisation.
If the deal is finalised, 360 Energy’s In-Field Computing technology will convert natural gas from the WNA-2 well into power for data centres dedicated to mining Bitcoin.
Early projections suggest the numbers could stack up.
“Onshore developers and producers have been forced to ‘consider outside the box’ in order to build progress and deliver growth,” stated Union Jack’s executive chair, David Bramhill.
“The board of Union Jack believes this proposed concept to produce Bitcoin through mining operations is innovative, offers strong scope for a sustainable return and could lead to the company introducing a new Bitcoin Treasury strategy, on success.”
Regulatory uncertainty remains a thorn in the side of onshore energy, and Bramhill was candid about the challenges.
“Planning challenges have tarnished somewhat the perception of a number of commercially attractive onshore projects, such as West Newton; however, we are seeing some ‘green shoots’ appearing on the horizon in this respect.”
Gold explorer turns digital
ECR Minerals PLC (AIM:ECR), the London-listed explorer with assets in Australia, has unveiled a digital asset treasury strategy as it gears up for potential gold production at its Blue Mountain project in Queensland.
ECR now has the green light to invest up to half its free cash flow and surplus cash reserves in Bitcoin or other high-quality digital assets, seeing it as a hedge against gold price swings and a tool to manage currency risk.
“Attitudes towards money and financial systems are modifying and the increased awareness of digital assets in recent years has built them a growing, and in some cases preferred, payment mechanism,” stated ECR chairman Nick Tulloch.
The company stressed that gold mining remains its core business, and the new policy is strictly for treasury management, not for speculative trading.
Custody will be with a regulated provider, applying industest-standard security including multi-signature wallets and offline storage.
Satsuma’s crypto-fuelled funding
Bitcoin’s growing stature as a treasury asset is also being felt in the capital markets.
Satsuma Technology PLC (LSE:SATS) a relatively new name on the London Stock Exmodify, closed a heavily oversubscribed £163.6 million funding round this week, raising capital through a secured convertible loan note.
The company settled much of the transaction in Bitcoin, a first for the UK market on this scale.
Satsuma’s capital raise, backed by a roster of digital asset specialists and large institutional investors, will convert into equity at 1p per share, subject to shareholder approval.
A significant chunk, £96.9 million, or just over 1,097 Bitcoin, was settled in cryptocurrency and is now held by the company’s Singapore subsidiary.
“To have our initial tarreceive so significantly oversubscribed is a profound vote of confidence, resulting in the largest fundraise for a London company with a bitcoin treasury by a significant margin,” stated chief executive Henry K. Elder.
Satsuma plans to apply the new capital to grow its operations, with some funds earmarked for hiring and infrastructure, and the rest added to its Bitcoin reserves.
The company has set a cap on how much of its treasury can be held in the cryptocurrency, seeking to balance growth ambitions with prudent risk management.
In a nod to transparency, Satsuma will publish unaudited interim results and start monthly financial updates, an uncommon shift among peers operating in the digital asset space.
Smarter Web raises with a Bitcoin twist
The Smarter Web Company (AQSE:SWC), listed on London’s Aquis market, launched an eye-catching Bitcoin-denominated convertible bond, dubbed Smarter Convert, and quickly raised $21 million (£15.8 million) in a round led by Paris asset manager TOBAM.
The bond blconcludes the mechanics of a traditional convertible, allowing holders to convert to equity at a 5% premium to the recent share price, with the volatility of Bitcoin, in which repayments are built if bonds are not converted.
TOBAM’s involvement adds heft, given its reputation as an early adopter of digital assets.
The bond allows for conversion after six months, and includes a force conversion mechanism if the share price climbs 50% above the conversion price for ten straight days.
If conversion does not occur, investors can opt for a near-full repayment, adjusted for Bitcoin’s price at the time.
Smarter Web has limited its Bitcoin exposure to 30% of treasury assets and claims the deal will result in less dilution than a comparable equity raise.
Having recently closed a £20 million share subscription, the company appears set on pushing the boundaries of how listed businesses can apply digital assets to fund growth.
Lines start to blur
Taken toreceiveher, these stories suggest the line between traditional resource sectors and the cryptocurrency world is becoming more blurred.
From drilling rigs in Yorkshire to goldfields in Queensland and fintech innovators in the City, Bitcoin is no longer just an outsider’s asset.
For London’s tiny-caps, it is becoming both a treasury tool and a source of capital, sometimes, quite literally, powered by the energy of the past.
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