MGT Capital Investments Inc. (OTCMKTS:MGTI) has been in a tailspin – there’s no denying that fact. But, frankly, when you strategically position your company as – to paraphrase – “the biggest big deal in the bitcoin mining space”, you’re going to stumble during the most significant and durable correction in Bitcoin in at least a year. The coin is down as much as 70% in the past 6 weeks, in a move that has its roots in the creation of the Chicago Mercantile Exchange version of the Bitcoin Futures contract on December 17, 2017.
But that isn’t going to stop these guys. The company just announced that it has executed a new purchase order with Bitmain Technologies for 1,000 S9 Antminer mining rigs, with shipment expected in March 2018. Also, the company purchased and has received an additional 1,000 new S9 Antminers from a third party.
MGT Capital Investments Inc. (OTCMKTS:MGTI) recently pivoted its operations entirely into the cryptocurrency space, ramping up its Bitcoin mining operations in the state of Washington and northern Sweden, and divested itself of its cybersecurity segment.
MGTI engages in bitcoin mining operation and recently also ramped up its Ethereum mining operations as well. MGT Capital Investments, Inc. was founded in 1979 and is headquartered in Durham, North Carolina.
According to company materials, “With facilities in northern Sweden and WA state, MGT Capital Investments, Inc. (OTCQB: MGTI) ranks as one of the largest U.S. based Bitcoin miners. Further, the Company continues to execute on an expansion model to grow its crypto assets materially. The Company also owns a portfolio of cyber security technologies, including the Company’s first product, Sentinel, an enterprise class network intrusion detector which was released in October 2017. The Company also owns the intellectual property associated with developing and marketing a mobile phone with extensive privacy and anti-hacking features. The cybersecurity products were guided by John McAfee, the Company’s former Chief Cybersecurity Visionary. MGT is presently evaluating various alternatives for its cybersecurity business.”
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As noted above, MGTI has been on a slide since committing itself to the Bitcoin mining strategy full stop. It was a double-down move, involving parting ways with John McAfee and now the purchase of another massive regiment of Bitcoin mining “rigs”. The stock has bounced a bit in response. However, this one is highly correlated with Bitcoin at this point, and the coin has bounced over the past 48 hours.
According to the company’s release, “following shipment and setup, and in conjunction with the Company’s current rigs in operation or undergoing deployment, MGT’s cryptocurrency mining operations will be comprised of over 7,000 Bitmain S9’s plus 50 GPU-based Ethereum miners. The Company expects all rigs announced to date to be operating by the end of the first quarter of 2018, at which point the machines are expected to generate nearly 100 Ph/s of total hash power.”
“Notwithstanding the recent weakness in Bitcoin pricing, our operating efficiency and debt-free balance sheet allow MGT to grow and generate substantial free cash flow. This swift selloff will solidify our standing as a world-class leader in crypto mining. Moving forward, we are extremely confident of our further expansion opportunities,” stated Stephen Schaeffer, President of the Company’s Crypto-Capital Strategies business unit.
Recent action has seen 17% piled on for shareholders of the stock during the trailing week, but this action is running counter to the larger trend in the name. Market participants may want to pay attention to this stock. MGTI has a track record that includes a number of dramatic bounces. Furthermore, the company has seen a growing influx of trading interest, with the stock’s recent average trading volume running 3% above its longer-run average levels.
At this time, carrying a capital value in the market of $178M, MGTI has virtually no cash on the books, which is balanced by virtually no total current liabilities. MGTI is pulling in trailing 12-month revenues of $1.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 871.7%. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $MGTI stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $MGTI, either long or short, and we have not been compensated for this article.