DMG Blockchain Solutions Inc - DMGGF stock

Introduction

DMG Blockchain Solutions Inc., (OTC: DMGGF, TSXV: DMGI) an integrated blockchain and cryptocurrency firm, was incorporated in 2011. The company mines bitcoin, manages, operates, and develops front-to-end digital solutions for monetizing the blockchain interface. DMG’s operations devolved into two segments: Core and Core+. The Core operations segment primarily focuses on mining, mainly bitcoin, provides hosting services, and distributes crypto-mining equipment for clients in the industrial mining sector. The Core+ operations segment offers data analytics and forensic services that deliver technical capabilities with software commodities, including Mine Manager, Blockseer Pool, and Walletscore, also working with audit and law enforcement organizations. The company also provides infrastructure insight services in numerous fields. Its subsidiaries include DMG Blockchain Services Inc. and, DMG-US, Inc., Datient, Inc. The firm is headquartered in Grand Forks, Canada. Its common stock is publicly traded on OTC markets under the DMGGF symbol.

Business Overview

DMG aims to become the domain expert in the blockchain mining scope and establish robust business operations with a wide range of options for innovation, risk mitigation, economies of scale, investment protection, and sustainability. The company strives to spike value in its entire asset base from the substation in British Columbia to its Blockseer software platforms and other sequential strategic investments under its strategy. The firm’s operations are divided into Core, covering Crypto infrastructure, and Core+, incorporating Data Analytics and Forensics Services. Core operations focus on revenue generation mainly through bitcoin mining. It is also the foundation of DMG’s vertical integration strategy. Its infrastructure service portfolio comprises air flow and cooling contact, location and power infrastructure review, high and low-voltage power design and engineering, and facility power distribution design and engineering.

DMG’s Core

Christina Lake Data Centre

DMG operates a fully-owned data center in Christina Lake, which incorporates an independently constructed 85-megawatt substation on the company’s thirty-three-acre property and a building stretching approximately 27,000 square feet. The company is also investigating other long-term revenue-generating investments, including solar power generation and a significant investment in hydrogen production, as part of its renewables strategy. The company is currently shifting its air-cooling blueprint to an immersion cooling system, which has numerous advantages, including improved heat transfer, reduced electrical usage, increased hardware performance, improved software lifetime, and general capital cost reduction. Success in Christina Lake Data Centre has accelerated the firm’s interest in investing in additional low-cost sites.

Core+ Operations

Blockseer’s Platforms

DMG acquired Datient Inc., a growing technology company based in Silicon Valley, in 2018. DMG acquired the company with its data Scientists, who developed an analytic tool that enabled bitcoin tracking and transactions on both Bitcoin and Ethereum blockchains. Since the close of the acquisition, DMG has advanced the development of the technology, investing in Walletscore creation on the background of Blockseer’s data. The company continues the story of its Blockseer platform that focuses on crypto Safety and Security and Regulatory and Compliance. The Blockseer Platform is made up of Blockseer Explorer and Blockseer Breeze. Blockster Explorer is an analytic tool that facilitates cryptocurrency tracking on Bitcoin and Ethereum platforms. Blockseer Breeze equips wallet users with an enterprise-grade custody solution to manage their digital assets securely with the choice of executing transactions with either single or multiple signatures.

Terra Pool, based in North America, is an audited mining pool that provides real-time AML and ensures new standard mining compliance and governance. Walletscore is a unique blockchain audit and analytic platform that detects a crypto wallet's probability of engaging in criminal activity by identifying unusual transactions anchored to crimes such as money laundering. DMG’s Mine Manager software propels the optimization of mining facilities and provides automated management of mining centers.

Bitcoin Market Trends

Accompanied by several significant market drivers, the crypto market experienced a ridged year in 2022, which saw more than $1.3 trillion worth of crypto scrapped from the market: Bitcoin, the planet’s most significant digital coin, bundled more than a 60% reduction in price. Investors in the industry incurred massive losses catalyzed by the deteriorating macroeconomic environment, a collapse in terraUSD, a stablecoin project, and the crypto exchange FTX. Interest rates across the globe have, however, been on the rise in the wake of 2023, weighing on risk assets such as bitcoin and stocks. Some market players are jumping into the pulpit with price calls for what could turn out as another year full of uncertainty. Tim Draper forecasted bitcoin to be worth $250,000 by the end of 2022 and maintains that the token is set to realize the underlying value by mid-2023. A research note by Standard Chartered dated Dec 5, 2022, predicts a sink in bitcoin to as low as $5 000, representing a whooping 70% fall from the current valuation.

Corporate News and updates

On Dec. 23, 2022, the company announced the receipt of most of the equipment it had initially ordered from Bitmain: 785 PH/s of the S19j Pro model and 10 PH/s of the S19 XP model. The company anticipates over 1 EH/s of mining capacity in the first quarters of 2023 upon the arrival of the remaining batch – 42 PH/s of the S19 XP. The firm looks to add more miners depending on its accumulated credit with Bitmain and make calculated open-market purchases. The company also granted 914,800 stock options to directors and employees of the firm, exercisable for a five years duration at $0.18 per share set to vest at 25% on the six-, 12-, 18- and 24-month anniversaries.

DMG’ss Q3 2022 financial results indicate that the company:

• Recorded a 12% decline in revenue from $11.9 million in Q2 to $10.5 million
• Its gross margin percentage decreased to 66% from 73% the previous quarter
• Realized a net loss of $12.2 million, mainly resulting from losses on digital currency
• Cash plus bitcoin holding value reduced to $11.9 million from $28.1 million in Q2

Management

Sheldon Bennett, CEO

• Has more than 20 years of management experience serving international firms, including Ernst & Young, PwC, Ernst & Young, and Baker & McKenzie, before founding DMG
• Played a significant role in engineering industrial bitcoin mining operations, comprising power optimization and government relations
• Has built and reinforced the company’s strategies to create more revenue-generating software solutions for crypto adoption by financial institutions
• Has audited numerous ESG reports and used his experience to launch two Environment and Sustainability procedures for the company.

Other team members are Steven Eliscu, Chief Operating Officer; Adrian Glover, Chief Technology Officer; and Heather Sim, Chief Financial Officer.

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OTC Symbol: DMGGF | OTC Tier: OTCQB