Squire Mining in Talks to Purchase CoinGeek for $45 Million

Squire Mining, a Vancouver-based company that designs ASIC chips, has signed a non-binding letter of intent to purchase assets owned by CoinGeek, a cryptocurrency news site and mining pool operator, according to a Squire Mining press release.

This is significant because Squire Mining (market capitalisation $35.4 million) shares are traded on a number of stock exchanges worldwide, so this deal could create the world's biggest publicly traded cryptocurrency mining operation.

Bitmain of Beijing, the world's biggest cryptocurrency mining entity, is still waiting for approval to go public in Hong Kong.

Sixty two thousand machines

Squire Mining and CoinGeek first went into partnership in August. Under the terms of that deal, CoinGeek became the sole distributor of Squire Mining products. The new deal would involve Squire Mining taking control of some of CoinGeek's operations and employees - specifically, 62,440 ASIC mining devices located on sites in Canada, the US, and Kazakhstan, and employees connected with these operations. These machines reportedly have a combined Hash Rate Hash Rate A hash rate is the measure of a cryptocurrency miner’s performance and a key security metric. In the context of mining, the more hashing or computing power in a given network, the greater its security and its overall resistance to attackMining hashrate is a key security metric. The more hashing (computing) power in the network, the greater its security and its overall resistance to attack. Hash rate is also a measurement of the output of a device that is used to add transactions to a blockchain A hash rate is the measure of a cryptocurrency miner’s performance and a key security metric. In the context of mining, the more hashing or computing power in a given network, the greater its security and its overall resistance to attackMining hashrate is a key security metric. The more hashing (computing) power in the network, the greater its security and its overall resistance to attack. Hash rate is also a measurement of the output of a device that is used to add transactions to a blockchain Read this Term of around 1 million terrahashes per second, according documents made public by the company.

The agreement would also give Squire Mining right of first refusal on other assets held by CoinGeek, valid for a year after the close of the deal.

The acquisition would cost Squire Mining an estimated $45.3 million.

Something in the Ayre

CoinGeek was purchased in August 2017 by Calvin Ayre, a Canadian billionaire who made his fortune with an online gambling operation. Ayre was a big supporter of Bitcoin Cash, the somewhat controversial spin-off of Bitcoin, and more recently became a big supporter of Bitcoin Satoshi Vision, the very controversial spin-off of Bitcoin Cash.

Ayre began CoinGeek's mining operation in January 2018 specifically to support the Bitcoin Cash Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term, and it soon became the biggest contributor of computing power to this network. When this blockchain split, CoinGeek switched its power to processing transactions for Bitcoin Satoshi Vision.

The press release indicates that Squire Mining is also a believer in Bitcoin Satoshi Vision: "With the launch of Bitcoin SV (BSV), the Squire team is confident that this Transaction would be just the beginning as the company scales to match the anticipated enterprise‐level and large volume usage of BSV’s cryptocurrency and blockchain."

Regarding the acquisition, Ayre said: "I believe the next phase of growth for this industry is upon us and that means massive scaling of the Bitcoin blockchain to accommodate the throughput needed for enterprises to make use of this technology. By vending my mining and CoinGeek branded assets into Squire, I would be doubling-down on my commitment to Bitcoin’s success. These assets would enable Squire Mining Ltd to compete at a global level to pave a path for enterprise usage of blockchain technology to flourish."

Squire Mining CEO Taras Kulyk said: "This transaction would provide Squire with a leading, recognized brand via the acquisition of the CoinGeek.com and CoinGeek name, but it would also make us the largest, publicly traded Bitcoin miner globally. It is expected to deliver significant shareholder value by enabling Squire to become vertically integrated with our growing chip design and manufacturing business, which we would seek to have commercial within 2019."

Arms race

In August, Squire Mining signed a partnership with Samsung Electronics, the largest conglomerate in South Korea, under the terms of which Samsung manufactures microchips designed by Squire Mining.

ASIC (application-specific integrated circuit) chips are microchips specifically designed to handle cryptocurrency mining. Specialised devices are much more efficient at this than computers that also handle other tasks, and because cryptocurrency mining is a zero-sum game, ASIC devices are now the only way to profitably mine cryptocurrency. Manufacturers of these machines are also in competition, constantly releasing newer models which inevitably make the older ones obsolete.