Duluth — So how did Ikonics, a moderately sized manufacturer of Duluth etching and imaging products, become a target for acquisition of a cryptocurrency mining startup on the East Coast?
Tera Wulf Inc., head of Paramore at Ikonics, refused to answer the question posed by News Tribune in recent weeks.
But the most likely answer seems to be that Ikonics is a relatively cheap, vulnerable, low-trading company that is already listed on the Nasdaq exchange.
Based in Easton, Maryland, TeraWulf is the capital to launch a Bitcoin mining venture that relies on rapidly accumulating large amounts of computing power and gaining access to a stable supply of cheap electricity. I am seeking.
TeraWulf also needs investors, but bringing a company to market through an initial public offering is a time-consuming, costly and complex task. The company saw a faster route.
It acquired a business that was already listed and took a new direction.
From the beginning, TeraWulf revealed that he was not interested in building a legacy business for Ikonics. In fact, it has announced its intention to sell these assets and businesses related to screen printing, etching and photochemical applications.
Bob King / File / Duluth News Tribune
Ikonics is not a huge manufacturer at once. However, according to the company’s website, the company employs 83 people, 78 of whom are in Duluth.
This is quite a few local jobs with solid wages.
However, TeraWulf remains an ambitious seller, so it’s not clear what they will be.
At the time of the “merger,” Ikonics investors were promised to receive the following for each stake in the company they hold:
- $ 5 in cash
- 1 strain of TeraWulf
- One contingent value that gives them the right to collect a cut of revenue from future sales of legacy businesses completed within 18 months.
Ikonics began trading as WULF on December 7, 2021. Therefore, Ikonics investors are in a position to financially benefit from the sale that occurred before the window closed in June 2023.
Local Ikonics officials do not comment on Ikonics’ current business status or prospects for sale and redirect those questions to TeraWulf. As part of that, TeraWulf representatives refused to discuss this issue with the News Tribune.
But lately, there are signs of movement.
News Tribune conducts due diligence by a local nonprofit in anticipation of closing the purchase of Ikonics’ latest facility at 2302 Commonwealth Ave., located in an industrial complex built on the premises of the former Atlas Cement Plant. I confirmed that I was doing it.
The transaction has not been completed yet, but knowledgeable parties have shown that it appears imminent, assuming that there is no tentative danger signal.
The terms of the pending transaction have not been disclosed, but St. Louis County finally estimated the market value of the property to be over $ 4.5 million. Ikonics built a single-level facility in 2008 and expanded to 35,480 square feet a few years later.
Bob King / File / Duluth News Tribune
Even if the sale is complete, Ikonics will have another facility in Duluth. Chris Freej, director of planning and economic development in Duluth, was also convinced that the sale would have little impact on production as the company’s Commonwealth Avenue was said to be primarily warehouse space. Said that.
Another facility at Ikonics is an old four-story 48,160-square-foot manufacturing plant at 4832 Grand Ave. with an estimated market value of approximately $ 1.17 million.
Ikonics has also inquired about the possibility of temporarily leasing the backspace of the Commonwealth Avenue building, seeking a longer-term solution, according to a nonprofit executive considering buying the building. increase.
So far, Mr. Freej has been asked to help city officials coordinate changes in ownership at Iconix and arrange additional new spaces to accommodate ongoing local operations. He said he didn’t.
“It’s a shame to see these jobs and facilities not running, so I hope They find buyers in the same state, consider them value-added, and they can continue what they are doing and perhaps even expand. “
The buzz around TeraWulf has been intensified, especially as the company advertised plans to operate with at least 90% carbon-neutral energy sources. The company brought its first facility online in March. Lake Marinette Cryptomin in northern New York uses hydroelectric power. TeraWulf is also working to open a second nuclear Bitcoin mining facility in Pennsylvania later this year.
One of the industry’s criticisms is the amount of energy consumed as computer-filled racks compete to solve math problems, add to blockchain databases, and are rewarded with cryptocurrencies.
BitcoinEnergyConsumption.com reports that it takes 2,170 kilowatt hours of energy to generate a single Bitcoin. This is the same amount that the average American household uses in 74 days. On an annual basis, Bitcoin mining businesses around the world are now expected to consume about the same amount of energy as Thailand, with a population of approximately 70 million.
Cryptographic mining can consume so much energy that China has banned it altogether.
Still, TeraWulf promises to be able to mine and grow without harming the environment.
Mike Break / Reuters
The proposal was a compelling one and attracted investors, including some A-list celebrities. Actress Gwyneth Paltrow was part of a group that provided $ 200 million in debt and equity finance when TeraWulf launched on Nasdaq. Other well-known investors in the group include Mindy Kaling and Lilly Singh, showbiz personalities, Moji Mahadara, CEO of Beautycon Media, Nick Trang, global marketing director of TikTok, and KITH. Includes Ronnie Fieg, CEO of.
As TeraWulf’s December 7th Nasdaq debut approached, excitement grew and the company’s stock price rose.
Gary Meder / Duluth News Tribune
The day before the merger agreement was announced, Ikonics’ share price was trading at $ 11.31 per share, but new ownership news and cryptocurrencies, more specifically Bitcoin, are worth it.
However, the timing of the launch of WULF would not have been so bad for early investors. The value of stocks has fallen even more sharply than the troubled crypto market. Recently, TeraWulf was temporarily traded for less than $ 3 per share. This has plummeted by more than 90% from the Ikonics highs just before the ticker symbol was officially changed to WULF.
To be fair, all crypto mining operations have been hit as the value of Bitcoin, the largest share of the crypto market, peaked above $ 65,000 in November and has been reduced by more than half. .. Also, some analysts suggest that this is, in fact, a great opportunity for brave people to invest in devastated markets and young up-and-coming businesses such as TeraWulf.
Vivian Fang, an associate professor of accounting who teaches cryptocurrencies at Carlson Business School, says Bitcoin has recovered from the previous recession it experienced in 2017. She said it was her opinion that cryptocurrencies would remain strong despite ups and downs, not just moments.
Fang explained that cryptocurrencies are digital currencies built on decentralized systems that rely on cryptography for security. It’s completely digital. There are no actual coins.
“These are basically cryptographic techniques used to keep transactions recorded on the blockchain and not tampered with,” she said.
Fang explains what he considers to be the greatest innovation in cryptocurrencies: “They rely on this distributed ledger technology (often called blockchain technology) to record transactions.”
“These transactions are recorded because the blockchain is just a network of computers, which allows multiple parties to share data,” she said.
Fang said that new data can only be uploaded if the computers in the chain agree to approve the new transaction, trading cryptocurrencies and moving from one digital wallet to another. I will be able to do it.
“These updates or transactions are not determined by humans or central authorities, but by software-driven consensus,” she said.
For Bitcoin, the largest cryptocurrency, it relies on a “proof of work” consensus.
“It’s actually a bunch of computers trying to solve math problems with computational power. You can almost think of it as a complex puzzle looking for one missing part. And the algorithms you can use. No. All of these computers basically use brutal power. Try every piece possible and see if it fits, “she says.
“When they find the right one, they’ll announce it to the network and other computers will agree,” Fang said.
The first party to understand it correctly will be rewarded in the form of the currency corresponding to the blockchain.
