TPL Puts on Laser Eyes

TPL and Mawson press release

Based on utilization of current generation Bitcoin mining hardware, these new facilities – which will be owned and operated by Mawson – could accommodate up to 2.0 Exahash of Bitcoin mining operational capacity. TPL and JAI will earn a net royalty interest and retain an option to acquire an equity stake. Mawson intends to participate in demand response programs as part of its power procurement strategy and is evaluating behind-the-meter renewable solutions. Mawson and JAI have four locations planned in Texas, with two located on TPL’s surface. Construction is expected to commence in the second quarter of 2022, and operations targeted to begin in the fourth quarter of 2022.

“This project marks the beginning of TPL’s journey into bitcoin, and we are fortunate to collaborate with Mawson and JAI as two highly regarded companies in the bitcoin mining industry,” said Tyler Glover, CEO of TPL. “We believe TPL’s extensive surface footprint in West Texas can serve as a premier destination for the bitcoin mining industry, providing site locations proximate to existing grid infrastructure and excellent solar and wind resource for future renewable power procurement. We are aligned to see this venture succeed and scale as we look to leverage our unique asset base, industry and customer relationships, and the region’s energy abundance. For TPL, our shareholders will benefit from a unique royalty stream while retaining an option to participate as an equity partner.”

Mawson press release

The sites have been selected due to the substantial local infrastructure already available to Mawson. Mawson is now working to secure Power Purchase Agreements (PPA) required to commission the facility and will update stockholders on this front in due course.

Mawson has collaborated with JAI Energy and Texas Pacific Land Corporation (NYSE:TPL) on the project, both of which will share in the revenue streams generated by the project, as well as have an option to acquire an equity interest in Luna Squares Texas LLC.

Texas Pacific Land Corporation, one of the largest landowners in the State of Texas, is the landlord of two of the sites. The other two sites are situated on family-owned private lands.

A new chapter for TPL. The royalty collector/landlord nature of the deal is certainly appealing due to low capital intensity. I’m out of my element here as far as estimating revenue contribution though it looks like there is a fair amount of work to be done before cashing checks becomes a reality. This business is in its infancy as a whole so it’s probably best to keep expectations in check.

Per Justin Ballard (JAI CEO), the project should be 100% online by the end of Q4 2022.

Glover’s quote mentions wind and solar though it looks like JAI has expertise in generating via gas that would have otherwise been flared. With that, I’m confused on the power source here. Let me know if I’m missing something.

Lastly, it’s worth internalizing TPL’s option to buy equity in the JV. Call options are nice provided they are managed efficiently.

Mawson

Mawson matches sustainable energy infrastructure with next-generation mobile data centre (MDC) solutions, enabling low-cost Bitcoin production and on-demand deployment of infrastructure assets. With a strong focus on shareholder returns and an aligned board and management, Mawson Infrastructure Group is emerging as a global leader in ESG focused Bitcoin mining and digital infrastructure.

Mawson investor deck

JAI Energy

JAI Energy was formed specifically to mine and provide Bitcoin mining services for applications involving stranded, flared, and poor economic natural gas streams. JAI Energy has its own mining farm located in Wyoming, where it is on pace to be the largest Bitcoin mining farm in the State by August 2021. JAI is also providing solutions for producers, midstream groups, and energy providers to allow them to capture value off their excess energy. JAI is based out of Casper, Wyoming which is also where all manufacturing of its portable mining data centers takes place.