Crypto Mining Firm Backbone Hosting Solutions Aims to Raise $39 Million

Canadian cryptocurrency mining firm Backbone Hosting Solutions Inc. is aiming to raise $38.5 million bonds by issuing convertible bonds, the company announced in a statement on Friday.

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The company’s announcement comes two weeks before the anticipated completion of a merger with Tel Aviv-listed Blockchain Mining Ltd.

The funding will be used to expand the Backbone’s crypto mining operations under the Bitfarms brand in Quebec, Canada. The region’s low temperatures and low cost of electricity cost make it attractive for crypto mining.

Bitfarms earns crypto tokens by contributing computing power to blockchain networks like bitcoin, bitcoin cash, ethereum, litecoin, and dash.

In December, the company told Calcalist that its server farms consume the same amount of power as “35 (sports) arenas working with all power and lighting 24 hours a day.”

Backbone has obtained the support of two Toronto-headquartered investment banks, PowerOne Capital Markets Ltd. and GMP Capital Inc.The banks will collect a 6% fee and have options on of Backbone stock once it becomes listed on the TSX Venture Exchange.

The 24-month bonds will yield an interest at a rate of 8% and can be traded in for Backbone stock in the future.

Blockchain Mining was a shelf company called Natural Resources Holdings until last year when it began the process of the merging with Backbone last year. The merger is expected to be completed March 15, Backbone said in a statement. The companies’ announced plan to list on the Tel Aviv Stock Exchange resulted in a backlash from the local regulator.

“Given our ambitious capital expenditure plans for 2018 and institutional investor demand in the sector, we have made a decision along with our investment bankers to raise debt directly into Backbone while the pending transaction works its way through the final stages of the regulatory process in Tel Aviv,” Emiliano J. Grodzki, Backbone’s founder and chief executive, said in a statement.

Meanwhile, Backbone is also trying to be listed on the TSX Venture Exchange in Calgary, Alberta, according to a regulatory filing submitted by Blockchain Mining in Israel on Sunday.