Undiscovered Microcap On Path To Be A Leader In Immersion Cooling Technology

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Tuesday, April 4, 2023

Immersion cooling is an innovative method of cooling electronic devices such as data center servers and high-performance computing (HPC) systems. Unlike traditional air cooling, which use fans and heat sinks, immersion cooling involves submerging the electronic components in a non-conductive fluid such as mineral oil or a synthetic dielectric fluid, thereby dissipating the heat more efficiently. The technology has been gaining momentum in recent years, driven by growing demand for HPC systems, the need to reduce energy consumption, and desire to slash costs to operate data centers.

Further, immersion-cooled systems come with the added perks of being far quieter than their air-cooled counterparts, while facilitating overclocking of machines. Overclocking, in the simplest terms, means producing higher output compared to manufacturer spec. This is possible because of the advanced cooling process.

The market opportunity for immersion cooling is significant and projected to grow at a compound annual growth rate (CAGR) of over 24.2% between 2022 and 2030, according to a report by MarketsandMarkets™. The report estimates that the market size will grow from $302 million to reach $1.71 billion by the end of the forecast period. MarketsandMarkets research provided some valuable insight about the future of the immersion market.

While there are multiple drivers, their analysts determined that the cryptocurrency mining (which are effectively just specialized data centers of HPC systems) segment accounted for the largest portion of the immersion cooling market. Regionally, North America is the biggest market. The largest segment of the market was synthetic fluids. The study also determined that, by type, single-phase immersion will be the fastest growing.

Dialing in on these findings starts pointing to certain companies. Synthetic fluids will flow by the barrel to keep up with demand. Shell (NYSE: SHEL), ExxonMobil (NYSE: XOM), and 3M (NYSE: MMM) are all looking to capitalize on this market segment. In the cryptocurrency mining space, immersion technology is starting to gain some traction, including Riot Blockchain (NASDAQ: RIOT) building an industrial-scale immersion-cooled bitcoin mining operation at its Whinstone facility in Rockdale, Texas.

As noted in a recent interview with SmallCapVoice.com, the only pure public play in immersion-cooled Bitcoin mining is BitMine Immersion Technologies, Inc. (OTC: BMNR). BitMine CEO Jonathan Bates recently spent some time with SCV’s Stuart Smith discussing some of the advantages of immersion mining, as well as the unique, and somewhat fortuitous, path that has brought BitMine to where it is today.

BitMine’s flagship operations are near launching in Trinidad and Pecos, Texas. Without getting into too much commissioning minutiae, the units are ready to go and only awaiting local utilities for energizing the mining containers. While it self-mines, BitMine also offers hosting services, which will allow customers to participate in the Bitcoin mining market by paying BitMine a fee for its services. 

As Bates explained during the interview, expectations were for operations to already be running in Trinidad and Texas, but some unexpected delays related to local utilities have pushed things back. These delays happened at a time when Bitcoin prices were plunging, which had a cascade effect across the market. When Bitcoin prices were soaring, companies were paying sky-high prices for ASIC (application-specific integrated circuit) cryptocurrency mining rigs. Many companies that aggressively expanded found themselves over-leveraged and having to complete fire sales to try and make payments when their loans were due. 

According to Bates, there were instances where rigs that cost $10,000 during the fever pitch were selling for as little as $1,000. As it went, the delays at its projects allowed BitMine to expand its portfolio of assets for mining operations at a discount. The only debt the company has is to Innovative Digital Investors (IDI), a fund run by Bates. IDI, which put $4 million into the company, is the largest investor in BMNR. Bates, who has a long history with major investment houses like Barclays, Smith Barney, and JPMorgan, runs IDI and BitMine for no salary. He only receives equity, which puts his interests squarely aligned with all BMNR investors.

Bates has assembled a team of venerable experts in immersion technology. Even better for investors, the C-Suite at BitMine is all working for equity. The Company executives have gone all-in to ensure success with this endeavor. As he points out, “A lot of bigger companies, such as Riot and others, have been touting their newly found expertise in immersion; our team has been doing it for five years, even though this company [BitMine] is new.”

BitMine in its current form has been around less than two years. Bates and partners acquired a control block in a company in the summer of 2021 to make a push into the immersion mining/hosting market. Since, he has changed the name and symbol, assembled a robust portfolio of data center equipment, set up partnerships, negotiated power agreements for the flagship locations, and completed all regulatory filings to bring the company current. With two Form 10-K’s under its belt, Bates is angling for an uplist to either the OTCQB or OTCQX in the near future with an eye for the NYSE American further up the line.

That’s a lot for a small company in less than two years and there’s no relent in management. Bates says operations in Trinidad and Texas are “imminent” and the first target is for 100 petahash – an important metric measuring computational power for Bitcoin mining – and potentially 500 petahash based strictly upon what the company has on hand today. 

Through agreements, such as a letter of intent to host services for Bit Digital (NASDAQ: BTBT), and other corporate initiatives, perhaps an exahash is possible in 2024. That would put BitMine in line with many bigger players using air-cooled systems, meaning BitMine is producing equal output using less energy, which equates to better margins and that’s what investors want to hear.

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BitMine Immersion Technologies, Inc. (OTCPK: BMNR) Full Corporate Write-Up: Click Here.

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