LandBridge Targets Cryptocurrency Miners In Strategy Ahead of $1.6 Billion IPO
Summary:
LandBridge, a US firm specializing in sourcing large plots of land for oil and gas production, is eyeing the cryptocurrency mining sector for future business ventures. This announcement coincides with their plan to offer 14.5 million shares in an IPO which might increase their valuation to $1.6 billion. They intend to use their approximately 220,000 acres in Texas and New Mexico to attract cryptocurrency miners and data centers, offering access to water, roads, fiber optic infrastructure, and power. However, this move is seen amid rising concerns about the strain these industries are putting on Texas’ power grid.
The American company LandBridge, which specializes in acquiring large plots of land for oil and gas production, is aiming to attract cryptocurrency miners for its future ventures. This news comes as the company prepares for its Initial Public Offering (IPO) this Monday. On June 17th, LandBridge has stated its intentions of offering 14.5 million shares, expecting the price per share to range from $19 to $22. This might lead the company to a valuation of almost $1.6 billion. Its plan is to be listed on New York Stock Exchange under the “LB” ticker. Regulatory documents highlight that LandBridge possesses approximately 220,000 acres in Delaware subbasin, an area rich in oil and gas located in the Permian Basin region of Texas and New Mexico.
LandBridge indicated that its land could prove useful for more than just oil and gas companies. Cryptocurrency miners and data centers can benefit from the land's resources such as water, roads, optic fibre infrastructure and power, which could potentially bring LandBridge considerable revenue for providing access to these resources. “We have explored and are presently working on opportunities to generate revenue through usage charges by cryptocurrency mining, data centers, power storage facilities, and commercial fueling stations."
It's worth mentioning that LandBridge already provides land for a “cryptocurrency facility”. In 2023, it made a whopping $52.1 million from non-oil and gas royalty revenue, and this includes revenue from cryptocurrency miners, showing a 56% increase when compared to the previous year. The land owned by LandBridge, heavily highlighted in dark orange, is strategically located on the border of Texas and New Mexico. LandBridge noted that it doesn't have plans of owning or managing such projects or expecting significant capital expenses from them. However, the company anticipates to receive “usage fees and other payments associated with the utilization of our land,” including fees for providing water required by cryptocurrency miners to maintain their equipment.
LandBridge's land is well-located to appeal to the cluster of cryptocurrency miners who have been drawn to Texas due to the comparatively cheaper power prices and receptive regulatory environment. However, pressure is mounting on these power-consuming cryptocurrency miners and artificial intelligence data centers due to the state legislators. It was reported earlier this week by local news that the increased demand from cryptocurrency and AI technologies is causing a significant strain on Texas’ power grid, as highlighted by the head of the organization managing it - ERCOT's head, Pablo Vegas. “These two industries need to be thoroughly examined,” texted Texas Lieutenant Governor Dan Patrick to X on June 12, criticizing them for the immense stress they put on our grid in contrast to the limited number of jobs they generate.
Published At
6/19/2024 8:30:45 AM
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