MGT Capital Investments Inc.(OTCMKTS:MGTI) has seen a wild rise in recent days after seeing its stock drop as low as $0.028 the week before last. The run on MGTI has been helped along by Bitcoins recent rise back over $4000.
In a year-end report on January 9, MGTI said to shareholders:
“We are pleased to report that we have completed the move of our Bitcoin miners from Sweden to the United States. As we have previously communicated, we entered into a hosting agreement in Colorado Springs that would provide lower costs and more control over expenses, while also providing ample opportunity to expand our operations. In order to further increase the Company’s flexibility and geographic diversity of sites, we decided to split the miners formerly in Sweden to include a site in east-central Ohio, to complement Colorado Springs. In addition, this Ohio site will provide a testing ground for the containerized solution being developed by MGT and Bit5ive. As a recap, MGT has approximately 500 Bitmain S9 miners operating in central Washington state, 3,000 S9’s currently being set up in Colorado, and 2,750 S’9s (including roughly 1,900 miners owned by third party investors) in Ohio being set up as well. We should note that the Company has suffered modest burnouts and other ordinary damage to 500 miners during the past several months. Compared to Sweden, we consider this installation process routine, and expect to be ready to mine within days. We would caution investors that ‘ready to mine’ needs to be qualified with the statement “economic to mine.” Our new hosting relationships provide the company with the ability to pay for electricity (and mine) only when Bitcoin mining economics dictate.”
MGT Capital Investments Inc. (OTCMKTS: MGTI) bills itself as one of the largest U.S. based Bitcoin miners. MGT owns and operates approximately 6,800 Bitmain S9 miners, and 50 GPU-based Ethereum mining rigs. Further, the Company continues to execute on an expansion model to secure low cost power and grow its crypto assets materially. The Company operates out of facilities in northern Sweden and Washington State.
MGTI is the brainchild of security whizz John McAfee of McAfee Antivirus who spent years in Belize than on the run and back in the US on top again. Mr. McAfee smartly realized that Bitcoin is the greatest and most disruptive technological advancement to come around in years and he has turned MGTI into one of the largest U.S. based Bitcoin miners. Bitcoin is here to stay and if you don’t own one you could be missing out on one of the greatest investment opportunities of our lifetime.
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On September 10 of last year MGTI announced Robert Ladd, its President and Chief Executive Officer, is taking a leave of absence to focus on addressing the allegations in an SEC Complaint filed on Friday September 7, 2018. H. Robert Holmes, independent director and Chairman of the Board of Directors of MGT will assume the duties of Mr. Ladd as Interim President and CEO. Mr. Holmes stated, “Notwithstanding the board’s contention that the SEC claims are without merit, and that Rob will be vindicated, we are faced with the unfortunate immediate situation of perception overwhelming reality. As we previously stated, we wish to further emphasize that the Company was not named as a defendant in the SEC complaint. Further, we can assure stockholders that the operations and activities of the Company will continue under the leadership of Robert Lowrey, Chief Financial Officer and Stephen Schaeffer, Chief Operating Officer, with the full confidence of the board.”
This comes days after Robert Ladd was named in a sec investigation. The complaint, filed Sept. 7, accused MGT Capital CEO Robert Ladd and others of inflating stock prices to boost their own wallets.
Management stated in their year-end report:
“As we write this letter, mining Bitcoin is roughly breakeven when considering the marginal costs of production. As we suspected (and frankly, hoped!) the Difficulty Rate has eased as participants exited the mining business over the past months, either by choice or otherwise. Presently, the network requires the computing power of 60 Bitmain S9 miners to mine one Bitcoin per month. On a per unit basis, the Company spends about $65 per miner per month, which is about equal to the current price of $4,000 per BTC. Management remains optimistic that interplay of Difficulty and Price will continue to move in our favor in the next several months. Furthermore, we believe as one of the ‘last men standing,’ MGT is positioned to be a consolidator in the mining industry.”
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Currently trading at a $7.8 million market valuation MGTI has $2.3 million in the treasury, debt that includes a #3.8 million note payable and some revenues reporting revenues from bitcoin mining of $589,000 in Q3 2018. As management stated: Even though MGT has clearly suffered from execution issues, we did not lose opportunity cost by not mining in Sweden during the last months; we would have been mining at a significant loss. That being said, the transition was costly, and we are very aware of current industry economics. We have reached extension agreements with our lenders, who have been accommodative, and have been able to utilize our equity line of credit as needed. Per the company’s own materials they spend about $4k to produce a BTC, this is why the current BTC move over 4k is of significant importance here. We will be updating on MGTI when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with MGTI.
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Disclosure: we hold no position in MGTI either long or short and we have not been compensated for this article.