Selfie drone maker IOT Group — which is tranforming into a blockchain power provider — has announced the first clients for its proposed coal-fired blockchain energy play.

The project was announced earlier this month with energy provider Hunter Energy which plans to recommission the controversial Redbank coal-fired power station 85km north-west of the NSW coastal town of Newcastle.

If the plan goes ahead, microcap IOT — it’s valued at $5 million — would build a “Blockchain Applications Complex” on the Redbank site and draw cheap power from the recommissioned plant for energy-intensive blockchain-related businesses.

IOT founder Sean Neylon believes the project “offers the potential to create a new Silicon Valley in Australia“.

Blockchain technology, which provides a public ledger of online transactions, is best known as the basis of cryptocurrencies such as bitcoin.

Unlike regular money, digital currencies such as bitcoin aren’t issued by a central bank. Instead they’re generated through highly energy-intensive computing processes known as “mining”.

The first clients to sign up are Abacus Merchantile and Crypto Mining Australia. The two have agreed to initial three-year deals and will pay a monthly fees on a per machine basis.

“It is expected that IOT will secure agreement for at least 10 megawatts of power in Q2 of this year with further expansion on this during Q3 and Q4 2018,” said IOT founder Sean Neylon.

The pivot to blockchain has not yet had much impact on IOT’s shares (ASX:IOT). The stock is trading at a one-year low of 0.4c. It had $923,000 in the bank at the end of December.

IOT Group (IOT) share price movements over the past year.
IOT Group (IOT) share price movements over the past year.

The potential client deals are contingent on Hunter Energy getting the old plant up and running.

Redbank was built in 2001 to deliver 150 megawatts of power, but was decommissioned in 2014.

Hunter wants to bring it back online over the next 12 months. While it has historically been a coal-fired operation there has been talk of exploring battery or solar power on the site.

Mr Neylon believes the blockchain centre will lure domestic and international projects.

IOT says it is negotiating with a major data complex developer and service provider to build the data complex. Under the plan, costs woudl be borne substantially by the third party.