Bitcoin Miner Riot Blockchain Buys Electrical Equipment Company ESS Metron for $ 50 Million

Bitcoin mining company Riot Blockchain, Inc. (Nasdaq: RIOT) has officially acquired Ferrie Franzmann Industries LLC as ESS Metron, a company that designs and produces electrical equipment. December 1 OK which complements Riot’s expansion efforts.

ESS Metron is a key provider of Riot Whinstone’s commercial bitcoin mining data center and an important part in its efforts to expand to 700 megawatts (MW) and grow its bitcoin mining operations. ESS Metron’s high-tech electrical equipment and components, such as switchgear and power distribution equipment, benefit “Riot’s Bitcoin mining infrastructure and dramatically improve Riot’s capacity. to improve its internal engineering capacities ”. Riot added that ESS Metron had helped them develop their “custom immersion cooling technology” for their “200 MW immersion cooling expansion project.”

The agreement will ensure the rapid installation of new Riot miners due to the critical infrastructure provided by ESS Metron. This acquisition also improves Riot’s position in the power supply chain due to ESS Metron’s existing relationships as a supplier to numerous third-party customers. It will also help secure Riot’s mining facilities on time by reducing the risk of purchasing mission critical infrastructure.

Under the agreement, the total consideration of $ 50 million consists of up to 715,413 Riot common shares and $ 25 million in cash, which will be cash funded on the balance sheet. As a result, at closing, Riot retained 70,165 claims for compensation; these will be delivered to ESS Metron 18 months after closing.

According to the documents filed, ESS Metron will continue to operate as an independent subsidiary of Riot. All ESS Metron employees will be retained. The customer and supplier relationships of the two companies will be maintained. In addition, ESS Metron will continue to operate out of Denver. For compensation, the compensation limit is $ 2.55 million or 5.1% of the value of the transaction. There is a bucket of compensation, but no deductible.

“The successful acquisition of ESS Metron marks a further step in establishing Riot as a leader in Bitcoin mining,” said Jason Les, CEO of Riot, in the press release. “Riots’ strategic position throughout the electricity supply chain is significantly strengthened as the company will benefit from ESS Metron’s existing relationships with major electricity suppliers globally. In addition, Riot will continue with its accelerated expansion plan, with the company benefiting from the internalization of ESS Metron’s technical and industrial expertise.

“We are delighted to continue growing ESS Metron’s business by joining Riot Blockchain,” said Stephen Howell, CEO of ESS Metron. “We look forward to continuing to provide top-notch service to our growing customer base and to actively partner with Riot in its ongoing expansion efforts. “

ESS Metron is represented by Davis Graham & Stubbs LLP. Riot Blockchain is represented by Sidley Austin LLP and his financial advisor is XMS Capital Partners, LLC.

On November 30, Riot’s share price was $ 37.37 and when the trade closed on December 1, Riot’s shares closed at $ 35.60. A week later, on December 8, Riot shares continue to fall to close at $ 29.34.

Earlier this year, Riot completed the purchase of Whinstone, the largest bitcoin mining and hosting facility in North America. In addition, Riot bought 42,000 S19 Antminers from Hong Kong cryptocurrency mining maker Bitmain for around $ 138 million in an effort to increase its bitcoin mining hashrate to 7.7 exahash per second (EH / s), increasing the rate of nearly 93%. The hashrate is “the total combined computing power that is used to mine and process transactions on a proof-of-work blockchain, such as Bitcoin or Ethereum,” according to CoinDesk. However, in November, Riot announcement that it was increasing its forecast for this rate from 11.7% to 8.6 pe / s for 2022.