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Thursday, November 26, 2020

MGT Capital Investments Inc. (OTCMKTS:MGTI) is Acting Like a Viable Proxy for Bitcoin

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As we have seen renewed momentum in Bitcoin over the past two weeks, it’s all the more important to keep a close eye fixed to stocks in the Bitcoin mining space such as MGT Capital Investments Inc. (OTCMKTS:MGTI). The stock has made a comeback in concert with this resurgent energy in the cryptocurrency space, breaking back above its 50-day simple moving average in trading action early this week on a jump in volume.

The correlation cannot be denied. In fact, in Bitcoin’s $40B run higher over the past couple weeks, MGTI is actually up slight more in percentage terms. And that’s important for traders who would prefer to stick to equity markets as their primary vehicle given the resources and security so far still superior in that implementation scheme. In any case, the apparent bottom in Bitcoin has meant an apparent bottom in MGTI. The action has resulted in a broken downtrend line and a number of key levels retaken for the stock as we have watched BTC move up and nearly test its own 200-day simple moving average.

MGT Capital Investments Inc. (OTCMKTS:MGTI) pivoted its operations entirely into the cryptocurrency space last year, ramping up its Bitcoin mining operations in the state of Washington and northern Sweden, and divesting 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 cybersecurity 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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The chart shows 27% piled on for shareholders of the stock during the trailing month, a bounce that has taken root amid largely bearish action over the larger time frame. In addition, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running 47% beyond what we have been seeing over the larger time frame.

Following the company’s big capital raise in early June, Stephen Schaeffer, the now-COO of MGTI further commented on the Company’s operations in northern Sweden.

There he stated, “We believe we have successfully overcome the many challenges this project has presented, in large part by MGT taking full operational control of the facility. Steady progress over the past several weeks has allowed us to turn on slightly more than 5,000 of the 6,300 S9’s located in the facility, and with the installation of some infrastructure improvements, we expect to be at full capacity by the end of next week. From a longer-term perspective, the problems and delays we endured due to issues with our Swedish contractor has allowed MGT to capture a big slice of additional profit from reduced power costs by directly dealing with the electric utility.”

At this time, carrying a capital value in the market of $71.7M, MGTI has a chunk ($483K) of cash on the books, which compares with virtually no total current liabilities. MGTI is pulling in trailing 12-month revenues of $3.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 206.4%. 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.

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