Alliance Resource Partners (ARLP), a coal miner with a NASDAQ listing, has entered the bitcoin market by mining bitcoin using excess power at its facilities.
TakeAway Points:
- Alliance Resource Partners (ARLP) used surplus power at its River View mine to mine 425 BTC, valued at $30 million.
- After earnings, ARLP’s foray into bitcoin mining helped boost the company’s shares by 5%, exceeding revenue projections.
- ARLP is not as big on bitcoin as companies like MicroStrategy and Tesla, despite its recent venture into the space.
A Novel Approach to Cryptocurrency Mining
The programme attempted to monetize the underutilised electrical load that had already been paid for. It started as a test operation at the River View mine in the second half of 2020. During an earnings call, ARLP’s chief financial officer, Cary Marshall, disclosed that the business mined 425 bitcoins as a result of this strategic move; the balance sheet value of these bitcoins is $30 million.
“In the second half of 2020, we started mining bitcoin as a pilot project to monetize the already paid-for yet underutilized electricity load at our River View mine.” Marshall said.
After deducting the net costs of property, plant, and equipment, the company declared a $7.3 million profit from its bitcoin mining activities.
“At the end of the quarter, we had 425 bitcoins on our balance sheet, which is valued at $30 million, and after factoring in the net costs of property, plant, and equipment, it was up $7.3 million.” Marshall added.
Financial Gains from Mining Bitcoin
The news of ARLP’s profitable venture into bitcoin mining came at the same time as the business reported strong financial results; after the earnings call, the stock rose 5%. This increase followed the company’s exceeding revenue projections, indicating solid financial performance. Marshall made it clear that ARLP is producing bitcoin through mining operations utilising the business’s current equipment rather than buying it outright.
“We aren’t buying bitcoin or anything of that nature and are only mining bitcoin with the equipment we have.”
In addition, ARLP is making the most of its cheap energy costs by leasing more capacity in a data centre designed with bitcoin mining in mind to other miners.
“We do have some extra capacity that we’re renting out to other bitcoin miners within the data center that we’ve effectively built for this bitcoin mining to take advantage of the low energy costs we have.” Marshall said.
Contrasting Holdings of Bitcoin
Despite being a recent development, ARLP’s bitcoin holdings are small in comparison to other businesses that have made cryptocurrency investments. Based on information from BitcoinTreasuries.net, MicroStrategy is the company with the biggest bitcoin holdings, valued at $13.5 billion. Other notable companies that hold bitcoin include Tesla, which has $615 million in bitcoin. With ARLP’s debut indicating its distinct position utilising operational resources for mining, this context highlights the variety of strategies and levels of bitcoin investment among publicly traded companies.
About
Alliance Resource Partners, L.P. produces and sells coal, mostly to industrial and utility customers in the US. It manages ten subterranean mining complexes in the Northern Appalachian, Central Appalachian, and Illinois Basin regions. Additionally, the business buys and resells coal in addition to leasing land and running a coal loading station at Mt. Vernon, Indiana, on the Ohio River.
