Duluth-based imaging technology company Ikonics has entered into a merger agreement with TeraWulf Inc, a Bitcoin mining company based in Easton, Maryland, the companies announced Friday morning. The businesses are expected to become the new holding company TeraWulf Inc. later this year and will be publicly traded as WULF on the NASDAQ stock market.

Boards of directors for both companies have agreed to the terms of the merger, which includes leadership teams from TeraWulf taking over management for the company. Paul Prager, current chief executive officer and chairman of TeraWulf, will continue his role at the new company. All members of Ikonics' board of directors will resign and be replaced by persons designated by TeraWulf, the announcement said.

TeraWulf's goal is to generate environmentally-sustainable bitcoin cryptocurrency at an industrial scale using 90% zero-carbon energy, the release said. Bitcoin mining is a computer process that calculates and solves complicated math problems to produce new bitcoin and verify its transaction information, making the network trustworthy and secure. Miners must verify that a transaction is accurate and not duplicated.

In the release, Glenn Sandgrem CEO of Ikonics, said, "The agreement will be instrumental in securing the long-term viability of Ikonics' legacy business, allowing it to continue to meet the needs of our customers with a secure supply of our high quality products in addition to continued employment opportunities for our workforce."

The release said TeraWulf has 60,000 miners on order and expects to have 50 megawatts of mining capacity online this year. The company plans to have 800 MW of mining capacity by 2025.

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Shareholders of Ikonics, currently traded on the NASDAQ at IKNX, will receive $5 cash for each outstanding share, plus a contingent value right and a share of the combined company's common stock.

"This transaction provides ideal outcomes for our shareholders, customers and employees," Sandgrem said. "It delivers our shareholders the opportunity to realize a substantial upfront cash payment while continuing to benefit from the value of our legacy imaging business, and provides them with the opportunity to participate in the potential upside of TeraWulf at an exciting time for the cryptocurrency mining space."

Shares of IKNX stock were up more than 90% at one point on Friday, and closed Friday at an increase of 64%.

Litigation law firm Brodsky & Smith of Bala Cynwyd, Pennsylvania, who represents shareholders across the United States, announced Friday afternoon that it is investigating potential claims against Ikonics' board of directors for possible breaches of fiduciary duty. It will investigate whether the board failed to conduct a fair process, including the dilution of ownership interest in the shared company, the release from Brodsky & Smith said.

Ikonics was founded in Duluth as Chroma-Glo Inc. in 1952 and specializes in photochemistry and coated films. According to the Ikonics website, the corporation has 83 full-time employees, 78 of whom are in Duluth.