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Bitcoin miner Rhodium sets $12-$14 per share IPO guidance

By Kevin Donovan

15:44, 19 January 2022

Bitcoin mining
Rhodium Technologies plans $107.7m IPO and reverse stock split – Photo: Shutterstock

Rhodium Technologies released price guidance for its planned offering of 7.69 million shares to the public at between $12 and $14 per share to raise up to $107.7m (£78.9m).

Upon completion of the initial public offering (IPO), Rhodium will enter into a 1-to-2.679 reverse stock split as part of a corporate reorganisation to an umbrella partnership-C structure, according to the prospectus supplement filed with the US Securities & Exchange Commission (SEC).

Rhodium has applied to list its stock on the Nasdaq exchange under the ticker ‘RHDM’.

Following the reorganisation, Imperium Investment Holdings, which currently owns 92% of Rhodium, will control roughly 54.3% of combined shareholder voting power post IPO.

This Up-C structure will make Rhodium a controlled company, giving Imperium the tax advantage of its ownership in a pass-through structure. Imperium is a Wyoming-based LLC.

B Riley Securities and Cowen are acting as joint-lead bookrunners, with Needham & Company as lead manager. DA Davidson and Northland Capital Markets are acting as co-managers.

The underwriters will be granted a 30-day option to purchase an additional 1.15 million shares at the IPO price. The settlement date was not disclosed.

Immersion-cooled mining technology

Rockdale, Texas-based Rhodium mines bitcoin using liquid-cooled mining equipment designed to operate at greater efficiency, using fewer miners to yield more bitcoins. Rhodium executives claim to have spent the four years before founding Rhodium in April 2020 developing its submerged mining technology to achieve 100 megawatts of mining capacity with a 30% to 50% longer equipment life.

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Rhodium claims its liquid-cooled mining technology gives it a cost-savings relative to competing bitcoin miners, giving it an average electricity cost of $2,507 per bitcoin mined throughout 2021.

For the nine months ended 30 September, Rhodium reported $46.1m in net income, or $0.10 per share, on $82.1m in revenue. For the period from Rhodium’s inception in April 2020 through 30 September 2000, Rhodium reported a $1.06m net loss on $97,000 in revenue.

For its full fiscal year 2020, beginning in April 2020, through year-end, Rhodium lost $531,000 on $5.15m in revenue.

Rhodium attributes losses early in its life cycle to the depreciation of non-cash assets and sunk costs associated with launching its first mining site.

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Proceeds to pay down debt

Proceeds from the IPO will be used primarily to pay down existing debt incurred constructing its current mining operation and 33,600 individual bitcoin miners. Rhodium is planning a second mining site, bringing its total mining capacity to 225 megawatts by April. Rhodium had total debt of $171.7m as at 30 September.

Through the nine months ending 30 September 2021, Rhodium had $103.8m in cash on hand, $118.7m in working capital and $63.7m in retained earnings. For the prior year, Rhodium had $9.10m in cash on hand, $19.1m in working capital and a $287,000 deficit.

Rhodium is currently engaged in a trademark infringement lawsuit with Midas Green Technologies, which alleges Rhodium co-founders Cameron and Chase Blackmon of infringing on its immersion cooling patents at a previous company that is no longer in operation.

Read more: Australia’s Macquarie and Blockstream to explore green bitcoin mining

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