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MGT Capital Investments (OTC:MGTI) issues year-end shareholder letter

Tony Zerucha

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2018 was a tough year for Bitcoin miners, but the management team from MGT Capital Investments (OTC:MGTI) is cautiously optimistic they have turned the corner.

In a letter to shareholders, chair and interim CEO H. Robert Holmes, COO Stephen Schaeffer and CFO Robert Lowery said a significant step was relocating Bitcoin miners to Ohio and Colorado Springs from Sweden, as it lowered costs and allowed MGT to exert better expense control. The Ohio site will also host testing for a containerized solution being developed by MGT and Bit5ive.

MGT said it has roughly 500 Bitmain S9 miners operating in central Washington state, and a total of 5,750 S9s being set up between Ohio and Colorado. That doesn’t mean those miners will necessarily get straight to work, however.

“Compared to Sweden, we consider this installation process routine, and expect to be ready to mine within days,” the trio said in the letter. “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.”

Bitcoin mining is currently a break even process, MGT explained, with an easier difficulty rate requiring the combined computing power of 60 Bitmain S9 miners to produce one bitcoin each month. Per unit mining costs are roughly $65 per month.

Take heart, for recent movement is in the right direction, the executives said.

“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.”

The move from Sweden to the United States was an expensive one, but some costs were saved but not mining in Sweden when the process was cost prohibitive, MGT explained. Still costs were incurred which forced the company to take steps.

“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,” MGT said. “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.

We remain confident that Bitcoin mining will improve, and that we are positioned to capitalize. The company is also exploring other parts of the Bitcoin ecosystem where it might add value.  In conclusion, we are happy that 2018 is over.”

The material is not to be construed as an offer or a recommendation to buy or sell a security. See full Terms of Service.

Tony Zerucha

Tony Zerucha is an alternative finance journalist with more than seven years experience in the space. The author of more than 1,000 articles, Tony was named LendIt's 2018 Journalist of the Year.

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