(Bloomberg) – Data center company Crusoe Energy Systems Inc. is investigating investor interest in a potential loan deal that people familiar with the matter say will help expand the company’s bitcoin mining business.
Crusoe is seeking a $ 100 million to $ 125 million loan, people said, who asked not to be named because the negotiations are private. Potential funding will be supported by Crusoe hardware for mining and bitcoin generation, and deal discussions are at an early stage and subject to change, people added.
According to People, Crusoe, which is working with investment bank Ducera Partners LLC on the capital raising process, is aiming to close the deal by the end of the year to take advantage of the cryptocurrency’s recent momentum.
A spokesperson for Crusoe did not respond to requests for comment. A Ducera spokesman did not comment.
Denver-based Crusoe is working with oil and gas companies to capture the surplus gas associated with energy production and convert those byproducts into electricity to power data centers and crypto mining operations.
The company’s projects are designed to alleviate flaring, a longstanding problem in the oil shale industry. Oil producers deliberately burn unwanted natural gas – a byproduct of oil drilling – because it is often more cost effective than selling it.
Regulators and investors are increasingly looking into this practice as it emits carbon dioxide and causes air pollution. New Mexico’s regulator in March approved stricter rules that would end conventional flaring of natural gas, and BP Plc said it intends to phase out scheduled onshore flaring in the United States by 2025.
The company, founded in 2018, counts Devon Energy Corp., Kraken Oil & Gas LLC and Enerplus Corp. as clients. Its activities include the Powder River Basin in Wyoming, the DJ Basin in Colorado, and the Bakken fields in North Dakota and Montana.
In April, Crusoe received $ 128 million in equity financing from Valor Equity Partners, as well as a $ 40 million project financing facility. The round also featured venture capital firms including Bain Capital Ventures, Coinbase Ventures and Winklevoss Capital. At the time, the company said it plans to deploy more than 100 data centers – up from 40 – in new and existing torch-burning markets, as well as in areas with surplus wind or solar power.
While a potential Crusoe debt deal has piqued the interest of some private lenders, the cost of financing could run in double digits, people say. Most of the company’s revenue comes from bitcoin, which is volatile and difficult to hedge, they said. Bitcoin prices have jumped from $ 9,000 over the past year to over $ 63,000.
Cryptocurrency enthusiasm has declined since Bitcoin topped $ 63,000 in April. The shift in sentiment comes amid tough regulation in China and criticism of the environmental impact of cryptocurrency. After months of falling prices, bitcoin briefly climbed above $ 40,000 on Monday, aided by short closings and speculation about Amazon.com Inc. in the cryptoindustry.
(Updates the comment line in the fourth paragraph and the company description in the sixth paragraph.)
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