The company’s announcement comes two weeks ahead of the planned completion of a merger with Tel Aviv-listed Blockchain Mining Ltd.
The funding will be used to expand Backbone’s crypto-mining operations under the Bitfarms brand in Quebec, Canada. The region’s low temperatures and the low cost of electricity make it attractive for crypto mining.
Bitfarms earns crypto tokens by contributing to the computing power of blockchain networks such as 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 running with all power and lighting 24 hours a day.”
Backbone has secured the backing of two Toronto-based investment banks, PowerOne Capital Markets Ltd. and GMP Capital Inc. Banks will collect a 6% fee and have options on Backbone shares once they are listed on the TSX Venture Exchange.
The 24 month bonds will earn interest at a rate of 8% and may be exchanged for Backbone shares in the future.
Blockchain Mining was a storage company called Natural Resources Holdings until last year, when it began the process of merging with Backbone last year. The merger is expected to be completed on March 15, Backbone said in a statement. The companies’ announced plan to list on the Tel Aviv Stock Exchange sparked backlash from the local regulator.
“Given our ambitious capital spending plans for 2018 and demand from institutional investors in the sector, we made the decision, with our investment bankers, to raise debt directly in Backbone while the transaction pending goes through the final stages of the regulatory process at Tel. Aviv, ”said Emiliano J. Grodzki, founder and CEO of Backbone, in a statement.
Meanwhile, Backbone is also trying to get listed on the TSX Venture Exchange in Calgary, Alberta, according to a regulatory filing submitted Sunday by Blockchain Mining in Israel.