Catalyzes the oxidation of F420H(2) with O(2). May be involved in O(2) detoxification, reducing the intracellular O(2) concentration to a level allowing growth at the expense of methane formation. Cannot use NADH or NADPH as electron donor or H(2)O(2) as electron acceptor. O2 + 2 reduced coenzyme F420-(gamma-L-Glu)(n) = 2 H(+) + 2 H2O + 2 oxidized coenzyme F420-(gamma-L-Glu)(n) Binds 1 FMN per subunit. Binds 2 iron ions per subunit. Optimum pH is near 7.5. 30% of maximal activity at pH 6.5 and 8.5. In the N-terminal section; belongs to the zinc metallo-hydrolase group 3 family.