LandBridge, a Houston-based company that acquires land for oil and gas production, is making a splash in the IPO market with a unique twist – crypto mining. The company launched its initial public offering (IPO) on June 17th, offering 14.5 million shares priced between $19 and $22, potentially reaching a valuation of $1.6 billion. While LandBridge’s core business lies in oil and gas, it’s setting its sights on a new revenue stream: crypto mining and data centers.
LandBridge boasts a significant land portfolio – around 220,000 acres in the oil-rich Delaware subbasin of the Permian Basin (Texas and New Mexico). This land, they believe, holds value beyond just oil and gas. Crypto miners and data centers could benefit from the existing infrastructure – water access, roads, fiber optics, and power – all crucial elements for running these facilities. LandBridge sees an opportunity to capitalize by charging fees for land usage and potentially water supply for cooling crypto mining rigs.
This strategy isn’t entirely untested. LandBridge already has one “crypto currency facility” operating on its land, and non-oil and gas related royalty revenue, which includes crypto miners, saw a significant 56% year-on-year jump in 2023, reaching $52.1 million. LandBridge emphasizes they won’t be directly involved in operating these facilities, keeping capital expenditures low while potentially reaping significant returns through surface use fees and other payments.
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Texas, with its historically cheap power and perceived crypto-friendly regulations, has been a magnet for crypto miners. LandBridge’s land holdings are strategically positioned to tap into this trend. However, the future of crypto mining in Texas seems uncertain. Recent local media reports highlight concerns from the Electric Reliability Council of Texas (ERCOT) about the strain crypto and AI data centers are placing on the state’s power grid. Texas Lieutenant Governor Dan Patrick echoed these concerns, calling for closer scrutiny of these industries due to their high energy demands and minimal job creation.
LandBridge’s IPO presents an interesting case study. While the company seeks to leverage its land for the booming crypto market, the regulatory landscape in Texas, a key location for their operations, remains unsettled. Investors will be watching closely to see how LandBridge navigates this evolving environment and if their crypto play proves to be a wellspring of revenue or a risky gamble.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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