MIT [Dec 10th]: “Blockchain technologies will do for transactions what the internet did for information.” MIT Technology Review (one of the world’s most respected tech publications), is hosting a one day Blockchain conference in May at $1700 US per person. They announced it Monday but what caught my attention was the headline above.
After the huge blockchain sector rally last winter, investors have all but written off blockchain stocks. But if MIT is right, and we have to assume they are given their reputation, now may be the time to bottom fish some leaders in this industry – while everyone else is ignoring them. DMGI in this 15 to 17 cent range continues to offer very attractive value.
Here is an excerpt from MIT and at the bottom, my DMGI research report from last week.
Dec 10th MIT Technology Review [Event]
Blockchain-You’ve heard the term, now understand the impact Digital technologies let people who’ve never met do business across borders and continents in an instant. But how can they trust one another without relying on bureaucracy and middlemen? How can security, identity, and ownership be guaranteed while still operating at the speed of the Internet?
Blockchains, or distributed ledgers, may provide the answer.
Our 2019 program will explore: » The strengths and weaknesses of the underlying technology » Lessons learned from early blockchain projects, and how the most promising new initiatives are attempting to transform key global industries » How legal and regulatory environments around the world are adapting to the arrival of cryptocurrencies » The potential for blockchain to address pressing social challenges, from expanding access to financial services to tracking war crimes.
MicroCap.com DMGI Research [Dec 11/18]-The jury is out on the future of bitcoin, but Blockchain is far from a write-off
DMGBlockchain (DMG.V 15 cents / DMGGF: OTC) https://dmgblockchain.com/investor-info/
Shares Outstanding: 105 million
Trading near (what I estimate) is the current net cash value
With the recent collapse in the price of Bitcoin,every public company with exposure to this industry has been destroyed. But DMG is fundamentally different and I explain why below. If my burn rate assumptions are correct (for the past few months – before financials are released), then this should be an attractive speculation in the 16/18 cent range during December.
DMGI is diversified enough that they provide a cushion against extreme volatility or collapse in the price of bitcoin (or an outright disappearance). The odds are good that bitcoin will emerge as the predominant crypto currency, and big traders will keep it around like any other commodity. It will likely be used as a digital currency in one format or another but trading it as a commodity / currency should also have longevity.
Unlike the pure miners, DMG provides mining as a service and this helps shelter them from the extreme currency fluctuations we have witnessed in 2018.
In fact, within weeks of Bitcoin collapsing from the $6000 range to $3,800 they (surprisingly) announced a material contract (Dec 5th) for contract mining.
DMG BLOCKCHAIN SIGNS 7 – MEGAWATT BITCOIN MINING CONTRACT
DMGBlockchain Solutions Inc. has signed a mining-as-a-service (MaaS) contract with a major blockchain industry company to host approximately seven megawatts of bitcoin mining capacity.
Pursuant to the terms of the agreement, the new customer will pay DMG’s hosting fee for approximately 4,200 newer-model bitcoin miners. The agreement term is three months, with automatic renewals every three months.
Supporting DMG’s ability to fill its mining capacity is the recent large drop in Bitcoin network computing power (hash rate), which enables large-scale industrial miners, like DMG customers, to still be profitable on an operational basis, even at current bitcoin pricing.
DMG CEO, Dan Reitzik stated, “We are pleased that, just as we energized our new substation, we added a significant new client and we are now filling our capacity in accordance with DMG’s MaaS growth strategy. We have been very careful to preserve capital in our first year as a public company by focusing on our MaaS hosting model. Given our solid position, we are thus prepared to fill the remainder of our capacity with new generation mining equipment in the new year, which should result in additional cash flow generation for both DMG and our clients.”
The Company also announced that an existing client is expanding its hosting contract with DMG to include an additional 1,850 miners (approximately 2.5 megawatts).
As well, 1,650 older-model bitcoin miners (approximately 2 megawatts) from previous MaaS contracts have recently been turned off for up to 90 days for two clients with the option to turn back on at any time during the 90 days before their contracts would terminate.
June 30th, excluding assets held forsale of $4 million and $600k in processed Bitcoin, DMG had $18.4 million incash and $3.8 million in accounts receivable. Debt was $2.6 million. I am estimating they spent $1 million in Q3 admin and operating costs and another $1million (to date) completing the build on their 85-megawatt substation (used for hosting Bitcoin mining computers – which they provide under contract to third parties). If my burn rate assumptions are correct, they should end the month of November with NET Cash and receivables near $17 million or 17 cents per share.
In theory, this means a person can buy the stock near current liquidation value but get the Blockchain / Artificial Intelligence division (Blockseer) for FREE + the 85 MW substation and crypto mining equipment.
This assigns zero value to the future of mining Bitcoin (or other currencies) – and I believe this is the best (most realistic) way to speculate on a beaten down stock in this sector. If Bitcoin continued to collapse (or failed to recover), a person holds DMGI cash but still gets to speculate on the value of Blockseer – which could still hold substantial value
Although, judging by the news last week (of new contract bitcoin miners), maybe the substation and associated services hold more value than I am willing to give them credit for.
When DMGI traded near $1.50 in Feb/March 2018, they acquired Silicon Valley based Blockseer for almost $15 million (cash and stock). Right now, the market is valuing Blockseer at ZERO – that is an incorrect assumption.
If we gave them no value for Bitcoin mining equipment or the future value of that business model, the future of Blockchain technology is still sound. And if Bitcoin ever recovered, that is upside a person isn’t paying for (at least if buying the stock in the 15 to 18 cent range).
DMGI and Blockseer are working closely with the following companies:
Element Fleet Management (EFN: TSX) owns 9.9% of DMGI – working on fleet management inefficiencies and how to utilize the Blockchain to improve and secure that. Through a partnership with Arval, the Element-Arval Global alliance has more than 3 million fleet vehicles under management in over 50 countries.
Emerald Health (EMH:TSXV) – Developing blockchain solutions for the Cannabis Industry supply chain.
DMG Blockchain to develop blockchain tech with IBM
October 4, 2018
DMG Blockchain Solutions Inc. has entered into an agreement with IBM Canada Ltd., and has selected IBM technology and services to jointly develop and deploy blockchain-based, global supply chain management solutions. These solutions will enable complete provenance, regulatory compliance, inventory management and on-time payment of products along the entire supply chain for regulated products such as pharmaceuticals.
Under the agreement, DMG expects to spend approximately $3-million in the first 12 months to develop the global supply chain platform and up to a total of $10-million over three years through the hiring of IBM’s personnel. DMG expects to finance these costs through existing cash on hand, revenues, and, if required, further financings or collaborations with other companies.
Further due diligence can be done on the DMGwebsite: www.dmgblockchain.com
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