Stephen Schaeffer, Chief Operations Officer, MGT Capital Investments
Given the transitional state of the company, a number of rumors have circulated regarding the future of MGT and our current state of operations. In my capacity as COO, I thought it would be appropriate to respond directly to these questions, and address any rumors and speculation head on.
What is the state of operations at MGT in light of the reported class actions?
Right now, we are entirely focused on the major relocation effort from Sweden to the United States that is currently underway and on getting this company on a better path.
There have been class actions, but those are fairly predictable when share prices are down. I’m confident that those suits will be dealt with quickly. In fact, previous cases along a similar vein were proven to be without merit.
Despite any speculation to the contrary, MGT has no intention of restructuring via bankruptcy. Our number one priority is improving the company’s short- and long-term viability, with the crucial first step being the relocation from Sweden.
Where are you relocating your miners?
We’re currently negotiating with a number of facilities in the north central United States with far more attractive operational costs. At this stage, we’re hopeful that we will have a deal signed and our miners operational in Q4 2018.
When do you anticipate the miners will be back on?
While management is diligently examining facilities that can quickly accommodate our mining needs, we are not willing to compromise long-term. Based on the current state of our negotiations with various facilities and hosts, our goal is to have the Swedish miners relocated and operational in 2018. Management has no interest in an arrangement that compromises stable, predictable operational costs and long-term viability, and will take the appropriate time to find the most suitable facility.
We want to be well-positioned before the anticipated growth in bitcoin in 2019. That is our primary focus. The hardships facing the mining industry have also presented a number of opportunities for expansion. Management is working to ensure those opportunities are not missed, and will keep investors informed of any updates in the near future.
I’d like our shareholders to know that despite the move back to the United States, we are not losing income. The current difficulty rates and pricing of bitcoin would have resulted in a negative operating revenue if we stayed the course in Sweden. Many miners are feeling the same pains of a market that has suffered a six-fold increase in difficulty rate, coupled with a decreased bitcoin price in 2018. The recent economics of mining will, over time, result in the failure of many mining companies. Our current 2019 strategies are being formulated to give us the best positioning to be ahead of the bitcoin curve and provide a funding mechanism to expand as the market allows.
Why are you relocating from Sweden?
We had high hopes for our Swedish facilities, but in our rush to expand our operations we were forced to use external vendors who did not meet our needs. We were able to mine in this facility, but the unexpected costs made it so that continuing our operation there would have resulted in a negative operating revenue.
When you combine that with the availability of potential new hosting facilities in North America fueled by the cool down in the bitcoin market, it simply made more sense for our long-term operations to relocate domestically. You can read about it in greater detail here.
Were you able to mine in Sweden?
Yes, our miners in Sweden were operational starting Q1 2018 and bitcoin was produced. The issue rests in our power costs being considerably higher than historical rates, primarily due to a drier and warmer spring and summer in the region. The spot price agreements in Sweden are not a “fixed” price arrangement, so even though we can lend from historical prices to model for any new mining location, the reality was we saw power costs that were materially higher than anticipated.
Are any of your miners currently operational?
Yes, we currently have approximately 500 miners operating in our Washington facility, which have been operating since September 2016. Those facilities have not been and will not be affected by the transition of our Swedish operations.
We also are open to expanding in Washington State if and when the right opportunity surfaces. This is unlikely as many of the municipalities in the mining towns have put a medium- term moratorium against any new mining deployments.