Canadian Mining Firm Abandons Gold to Focus on Crypto Mining

In 2018, mining profitability happens on a thin margin, but new hardware keeps coming online as Bitmain secures supplies.

A Canadian mining firm has abandoned digging for gold and has shifted to scouring the internet to look for a different kind of precious asset – Bitcoin, which it found to shine brighter.

MX Gold Corp. (TSX-V: MXL) (FSE: ODV) (OTCQX: MXLGF) has sold its entire mining portfolio to several private companies for CDN$14,952,000 after signing a non-binding letter of intent and four binding agreements. The said it would use the proceeds to expand its existing and successful digital currency mining pilot project of 360 mining units by buying an additional 2,000 mining units under its currency lease arrangements in Manitoba.

Dan Omeniuk, CEO of MX Gold commented:

“Last fall, the company strategically explored an alternative business model through the creation of a modest cryptocurrency pilot project in Manitoba.  The low cost of entry combined with strategic connections of the board resulted in the company initiating a small scale cryptocurrency mining operation of 360 mining units that became operational in January 2018.  To date, the company has converted 2.5 mined Bitcoins into net cash of CDN$30,750 and currently holds an additional 12 Bitcoins in the company’s Bitcoin wallet.”

The shift from gold mining to large scale cryptocurrency mining operation is the best route for the company's growth and provide a better return for its shareholders, Omeniuk said. He added that the decision is further supported by the management and the Board in light of the challenges faced by the firm in raising additional funds caused by the Cease Trade Order, as well as the capital intensiveness and regulatory issues "associated with advancing its mineral exploration projects towards production.”

He continued:

“As a result of these contributing factors, the board and management strongly believe that the proposed sale of the Company’s mining portfolio to the purchaser and the deployment of that capital into the expansion of its existing cryptocurrency operation is in the best interests of shareholders.”

MX Gold began its cryptocurrency mining operations in January after buying hundreds of units o the Avalon Miner 741 digital currency mining system in November last year.

Crypto mining is a lucrative business

A group of researchers from the University of California San Diego has found that cryptocurrency mining is a more lucrative business than speculating on them.

Danny Huang, the lead author of the study, said that there is a higher probability of earning more for cryptocurrency miners who liquidate, compared to speculators who buy the asset on exchanges.

However, the latest move may be another example of small OTC-traded companies using the hype surrounding blockchains and mining to boost their stock temporarily. And while altcoins are mined all the time, Bitcoin mining is becoming an arms race with uncertain results.