PARK CITY, Utah--(BUSINESS WIRE)--Creek Road Miners, Inc. (OTCQB:CRKR) announces letter to shareholders from its Chief Executive Officer, Scott D. Kaufman. The text of the letter follows:
We are excited to share with you the new direction of Creek Road Miners, Inc. (“Creek Road”). 2021 has proven to be a significant year full of reinvigorating changes for Creek Road. In March 2020, unbeknownst to us, we produced our last pop culture live event. Now, sixteen months later, we are aggressively pursuing our planned cryptocurrency mining operations. How did we get here? Where are we now? Where are we going from here?
How did we get here?
Due to the onset of the COVID-19 pandemic, Creek Road, then Wizard World, transitioned live events to an online experience. Our fans could interact with talent via moderated live video chat rooms, acquire signatures and personalized video messages and transact within our memorabilia ecommerce platform. As part of that effort, in May 2021, we extended our ecommerce product offering to include 2D and 3D Non-Fungible Tokens. Our fans embraced the concept, and in order for us to mint purchased NFTs, we needed direct ownership of cryptocurrency. In researching how to acquire these assets, we learned that establishing our own cryptocurrency mining operations is a more efficient means of securing digital currency than buying it and brings potentially higher capital market valuations for our investors.
Where are we today?
As a result of our extensive research into cryptocurrency mining and reviewing our core business, we determined that as a company, we needed to change course. As we have publicly announced, our six (6) most prestigious live events will now be produced by Fan Expo. We wish them the best and are proud to have them continue building on our legacy. All other shows will cease production. Jevo, our Jell-O shot machine company, is a non-core asset and will be dealt with accordingly. What remains is our ecommerce platform, the Vault (www.WizardWorldVault.com). The Vault is our bridge to our new business model.
We believe that crytpocurrencies are here to stay, and that Creek Road’s evolution over this past year has laid the foundation for growth in this industry. Creek Road’s strategy is to utilize mobile power generation units and mining facilities to leverage stranded and ignored natural gas energy suppliers while acquiring our own energy sources and dual revenue streams. A pure vertical integration strategy potentially enables Creek Road to retain (rather than sell or lever) its mined cryptocurrency while avoiding dilution for our investors to cover operating expenses.
We believe that many facets of the cryptocurrency mining business are typically outside the control of mining companies, such as Creek Road. Miners, mining facilities, and power generation systems are all in high demand. Even for institutions with economies of scale purchasing power, at least currently, pricing and accessibility is determined by the manufacturers. Regardless of who you are, you must get in line and pay.
However, there are two particular aspects of cryptocurrency mining that we believe are within our control and, thus, areas of our strategic focus.
- Cost of Energy. There is an obvious focus on cost per Kilowatt hour (kwh). Eliminating the middleman should enable Creek Road to acquire energy at significant discounts to even wholesale energy pricing. Whether it be by utilizing stranded natural gas, wellhead natural gas, or even a different form of combustible clean energy we believe we can significantly reduce our cost per kwh.
- Dual Revenue Streams. We have identified additional revenue streams in our energy acquisition strategy that potentially offset most, if not all, of our operating expenses. Our ultimate goal is to be able to retain ownership of all the coin we mine. Ideally, we will not (i) have to sell or leverage any of our mined coin, (ii) have our investors suffer additional dilution, or (iii) have Creek Road Miners significantly leveraged.
So where is Creek Road Miners in our Proof of Concept?
- Acquiring Miners – As publicly disclosed, we have paid for 160 S19J Pro Bitmain miners that are scheduled to be delivered in September.
- Acquiring Operating Facilities – We have identified an UL approved mobile mining facility. We have already paid 50% of the cost of the mobile facility and delivery is scheduled for the end of September.
- Power Generation System – Our 1-megawatt mobile unit is ready and we are coordinating its simultaneous delivery with our mobile mining facility.
- Physical Location – We have identified two potential locations, each with natural gas. We are working towards documenting these arrangements and look forward to disclosing the results as soon as practicable.
- Management Team – we have expanded our team to include individuals with extensive cryptocurrency implantation and operating experience. If our proof of concept is successful, we look forward to introducing our new crypto team.
Where are we going from here?
Creek Road plans to assemble our proof-of-concept mining facilities within the next several weeks, and we look forward to announcing the launch of our mining activities. During this continued time of COVID-impacted businesses and operations, our timeline is unfortunately subject to potential logistic delays beyond our control.
From a financing perspective, given our recent capital raise of over $3,500,000 and our current cash reserves, coupled with the fact that our miners have been fully paid for (excluding delivery fees) and 50% of the cost of our mobile operating facilities has already been paid, we believe our current capital needs are fully met, allowing us to cover all remaining technology and operating expenses to launch and operate our proof of concept.
In summary, for all the reasons discussed herein, this is an exciting time for Creek Road Miners. We are prepared for what we hope will be a successful launch of our proof of concept. We are well capitalized, have strong relationships with our suppliers, and are hard at work identifying new energy sources and implementing our strategy. Thank you as always for your continued support.
Finally, we must adhere to legal guidance and note that certain statements in this letter contain "forward-looking statements" regarding future events and our future results. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the markets in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects", "intends," "plans," "believes," "seeks," "estimates," "endeavors," "strives," "may," or variations of such words, and similar expressions are intended to identify such forward-looking statements. You are cautioned that these forward-looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Such risks and uncertainties include those factors described in Creek Road's most recent annual report on Form 10-K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports filed with the Securities and Exchange Commission. The forward-looking statements are made only as of the date hereof, and we undertake no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to Creek Road's filings with the Securities and Exchange Commission.
Scott D. Kaufman
Chairman and CEO