Cathedra Bitcoin Inc. (“Cathedra”), a Bitcoin company that develops and operates world-class bitcoin mining infrastructure, and Great American Mining (“GAM”) (together, the “Companies”), a bitcoin mining company that provides a solution for oil and gas companies to reduce flaring and increase oil production, announce the Companies have amended their original partnership agreement to provide for the conclusion of the business relationship by September 15, 2022 (the “Conclusion Date”).
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In 2021, the Companies entered into a business relationship (the “Original Relationship”) under which Cathedra purchased 12 bitcoin mining containers from GAM and outfitted them with its own bitcoin mining machines. GAM designed and produced the containers, installed the mining machines therein, and deployed the containers on a site in North Dakota (the “Site”) throughout the course of 2021, where they have been operating using flared gas as a power source. Under the Original Relationship, Cathedra has paid to purchase the gas and lease the generators and has remitted a portion of the mined bitcoin to GAM in the form of a revenue share.
Due to severe winter weather conditions that resulted in up to four feet of snow accumulation in multiple storms, the Cathedra and GAM bitcoin mining operation saw its performance impaired throughout the month of April, operating at an average of 45% of expected hash rate during the month. Current hash rate levels and operating conditions have now returned to normal.
Additionally, the Companies were recently notified by their generator provider that the generator lease rate would be increasing by over 50%. In light of this higher cost and the adverse effect it will have on mining economics at the Site, the Companies have mutually agreed to work toward a conclusion of the business relationship and have entered into an amended agreement that governs the terms of the wind-up (the “Amendment”).
Under the Amendment, Cathedra has agreed to collect its bitcoin mining machines from the Site on or before the Conclusion Date. Cathedra intends to redeploy these machines in its own mobile bitcoin mining containers, the production of which Cathedra began in March, on an off-grid site with more beneficial economic characteristics.
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Pursuant to the Amendment, GAM will purchase the 12 containers back from Cathedra for approximately US$935,750, or net book value, on or before the Conclusion Date. GAM intends to outfit these containers with its own mining machines and redeploy them on another site of its choosing.
The Companies have also agreed to modify the terms of the revenue share for the remaining months of the business relationship. Under the Amendment, GAM will receive a flat share of 25% of bitcoin mined each month.
“GAM has been a first-class partner for Cathedra in this stage of our company’s growth. We appreciate GAM’s excellent work building and outfitting our containers, deploying them in North Dakota, and maintaining them on our behalf. We look forward to installing our machines at a low-cost site upon the conclusion of the business relationship. We wish the GAM team the very best in their future endeavors,” remarked AJ Scalia, CEO of Cathedra Bitcoin.
“Cathedra has been a great partner for us as we have scaled the company over the past year from approximately 1 megawatt to over 20 megawatts of deployed hash rate on the oil fields of North Dakota. We would like to thank Cathedra and their management team for the partnership to date, and wish them the best of luck,” commented Todd Garland, Founder and CEO of Great American Mining.
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