Crypto mining startup finds unlikely partner in Duluth manufacturer – Duluth News Tribune

DULUTH – So how did Ikonics, a modest-sized manufacturer of engraving and imaging products in Duluth, become an acquisition target for an East Coast cryptocurrency mining company?

Representatives of Ikonics lover TeraWulf Inc. have declined to answer that question posed by the News Tribune in recent weeks.

But the most likely answer seems to be that Ikonics was a relatively cheap, vulnerable, and little-traded company that was already listed on the Nasdaq Exchange.

Easton, Maryland-based TeraWulf has been looking for capital to launch its Bitcoin mining business, which relies heavily on accumulating a lot of computing power as well as gaining access to a steady supply of cheap electricity.

TeraWulf also needs investors, but bringing a company to market through an initial public offering is a slow, expensive, and complicated undertaking. The company saw a faster route.

He bought a business that was already listed on the stock exchange and then took it to a new address.

From the outset, TeraWulf made it clear that it had no interest in building Ikonics’ legacy business. In fact, it has announced its intention to sell those assets and operations, related to screen printing, engraving and photochemical applications.

Sue Boudrie, operations manager at Ikonics Advanced Material Solutions, looks through a perforated engine inlet liner on September 25, 2018. Ikonics uses abrasives to create thousands of small holes in the material, which is used to dampen sound in an Airbus A-320. . Ikonics, which is for sale, employs 83 people across the company, including 78 in Duluth, according to its website.

Bob King / Archive / Duluth News Tribune

Ikonics is not a big manufacturer. But his website says the company employs 83 people, with 78 of those jobs in Duluth.

That’s a good number of local jobs with a solid salary.

It is unclear what will become of them, as TeraWulf remains a motivated seller.

At the time of the “merger”, Ikonics investors were promised that for each share in the company they would receive:

  • $ 5 in cash
  • A TeraWulf action
  • A contingent value right that entitles them to collect a portion of the proceeds from any future sale of the legacy business that is made within 18 months.

Ikonics began trading as a WULF on December 7, 2021. Thus, Ikonics investors can benefit financially from any sale that occurs before that window closes in June 2023.
Local Ikonics officials did not comment on the current state of Ikonics’ operations or sales prospects, redirecting those questions to TeraWulf. For their part, TeraWulf representatives declined to discuss the matter with the News Tribune.

But there have been recent signs of movement.

The News Tribune has confirmed that a local non-profit organization is conducting due diligence in anticipation of closing the purchase of the newest Ikonics facility, located at 2302 Commonwealth Ave., inside an industrial park created on the site of the former cement plant. Atlas.

The deal has not yet been completed, but informed parties have indicated that it looks imminent, assuming no red flags appear in the meantime.

The terms of the pending transaction were not disclosed, but St. Louis County. Louis last estimated that the market value of the property exceeds $ 4.5 million. Ikonics built the single-tier facility in 2008 and later expanded it several years later to 35,480 square feet.


Guests and staff celebrate the expansion of Ikonics Commonwealth Avenue facilities with a ribbon cutting and a reception on September 22, 2016. Although the deal has not yet been completed, the sale of the property to a local organization is expected profit closing soon, except for any unforeseen complications.

Bob King / Archive / Duluth News Tribune

If the sale takes place, Ikonics still has another facility in Duluth. And Chris Fleege, director of Duluth’s economic planning and development division, said the city is confident that any sale should have little impact on production, as it has been told that the company’s location on Commonwealth Avenue is primarily warehouse space.

The other Ikonics facility is a former four-story, 48,160-square-meter manufacturing facility located at 4832 Grand Ave., with an estimated market value of nearly $ 1.17 million.

Ikonics also asked about the possibility of temporarily renting the back space in its Commonwealth Avenue building while looking for a long-range solution, according to an official from the nonprofit organization looking to buy the building.

So far, Fleege said city staff have not received any help in arranging a change of ownership in Ikonics or in aligning new additional spaces to accommodate their ongoing local operations.

Although Duluth City Council President Arik Forsman acknowledged that he did not know what a sale of Ikonics’ local operations could bring, he said: buyer who is in the same state and sees it as an added value, and they can continue to do what they are doing and maybe even expand. “

The rumor surrounding TeraWulf has been intense, especially as the company has promoted its plans to operate using at least 90% carbon-neutral energy sources. The company launched its first facility online in March: Lake Marinette Cryptomine in upstate New York, harnessing hydroelectric power. TeraWulf is also working to open a second nuclear-powered bitcoin mining facility in Pennsylvania later this year.

One of the criticisms of the industry has been the amount of energy it consumes, as racks full of computers run to solve math problems, adding to a database of blockchains, and being rewarded with cryptocurrencies as they do. reports that 2,170 kilowatt-hours of energy are needed to produce a single bitcoin, as much as the US family would use in 74 days. Annually, bitcoin mining operations around the world are expected to consume about the same amount of energy as Thailand, with a population of nearly 70 million people.

Cryptocurrency can be such an energetic pig that China has banned it altogether.

However, TeraWulf has promised that it can explode and grow without harming the environment.

Gwyneth Paltrow - Global Conference of the Milken Institute 2022

Actress Gwyneth Paltrow, founder and CEO of Goop, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, USA on May 4, 2022. She was just one of the celebrities attracted to invest millions of dollars in TeraWulf when the bag came out. .

Mike Blake / Reuters

That proposal was an attractive release, attracting investors, including some A-list celebrities. Actress Gwyneth Paltrow was part of a group that provided $ 200 million in debt and equity financing while TeraWulf launched on the Nasdaq. Other major investors in the group included show personalities Mindy Kaling and Lilly Singh, Beautycon Media CEO Moj Mahdara, TikTok Global Marketing Chief Nick Tran, and KITH CEO Ronnie Fieg.

As TeraWulf’s December 7 debut on the Nasdaq approached, the excitement grew and so did the company’s stock price.


Gary Meader / Duluth News Tribune

Ikonics shares were trading at $ 11.31 per share the day before the merger deal was announced, but the price rose to $ 42.31 on November 19, 2021 due to news of its new ownership and speculation that the cryptocurrency, and more specifically bitcoin, would continue to grow. value.

But the timing of the launch of WULF could hardly have been worse for its early investors. The value of stocks has fallen even sharper than the troubled cryptocurrency market. In recent days, TeraWulf has been trading briefly below $ 3 per share, a drop of more than 90% from the Ikonics high just before its symbol officially changed to WULF.

To be fair, all cryptocurrency operations have been impacted as the value of bitcoin, most of the cryptocurrency market, has shrunk by more than half since it peaked above $ 65,000 in November. And some analysts have suggested that this is a good time for the intrepid to invest in an oppressed market and a promising new business like TeraWulf.

Bitcoin has recovered from previous falls, such as the one it experienced in 2017, said Vivian Fang, an associate professor of accounting who teaches about cryptocurrencies at the Carlson School of Business. She said her view is that cryptocurrency is more than a flash in the pan and that it will have the power to stay in place despite its ups and downs.

Fang explained that cryptocurrency is a digital currency built on decentralized systems that rely on cryptography for security. It is completely digital. There are no real coins.

“These are basically encryption techniques that are used to ensure that transactions are recorded in the blockchain and that those records cannot be manipulated,” he said.

Fang described what she considers the biggest innovations 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. And that network allows multiple parties to share data,” he said.

Fang said the new data can only be uploaded if the participating computers in the chain agree to recognize a new transaction, which allows the cryptocurrency to be traded and transferred from one digital wallet to another.

“These updates or transactions are not determined by a human or a central authority, but by a software-driven consensus,” he said.

In the case of Bitcoin, the largest cryptocurrency, it depends on the “working test” consensus.

“It’s really just a bunch of computers running with their computing power and trying to solve a math problem. You can almost think of it as a tricky puzzle, where you’re looking for a missing piece. And there’s no algorithm you can use. All of these “Computers use a brutal force. They try every possible piece to see if it fits,” he said.

“When they find a fit, they announce it to the network, and other computers would accept,” Fang said.

The first successful part receives a reward in the form of a coin that corresponds to the blockchain.

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