Will MGT Capital Investments Inc. (OTCMKTS:MGTI) Spring to Life on Bitcoin Strength?

Will MGT Capital Investments Inc. (OTCMKTS:MGTI) Spring to Life on Bitcoin Strength?


It might be a good idea to keep a close eye on MGT Capital Investments Inc. (OTCMKTS:MGTI). Bitcoin bottomed at the key $7,500 level a few days ago, which came in concert with a test of the 200-day moving average. To help spark a sharp bounce off that level, Chinese authorities, headed by “Leader for Life” Xi Jinping, expressed official interest in backing investments in a blockchain-based investment in digital currencies sponsored by China.

Amid that torrent, the company recently provided an operating update to investors, including a sense of where things stand relative to its key milestones. According to the release, “the company has begun Bitcoin mining at its fully owned and operated facility in LaFayette, GA. While we await delivery of our previously ordered next-generation miners from Bitmain, we have begun mining using a newly designed container solution with a capacity of 456 Bitmain S9 miners. In addition to energizing the first transformer to power this first container, phase one of the site is on track and on budget. Most property improvements, such as access roads, security fencing and underground high voltage electrical feeder lines are at or near completion. The other four transformers are on site along with the associated concrete vaults and pads.”

MGT Capital Investments Inc. (OTCMKTS:MGTI) is a chronic beneficiary of enthusiasm coming into the Bitcoin space. The company officially engages in bitcoin mining.

According to its materials, in September 2016, MGT commenced its Bitcoin mining operations in the Wenatchee Valley area of central Washington. Throughout 2017 the company expanded its mining capacity with the purchase of additional miners and by entering into hosting and power agreements with Washington facilities owners.

The company also entered into management agreements with third party investors whereby the investors purchased the mining hardware, and the company will receive both a fee to manage the mining operations plus one-half of the net operating profit.

Due to the lack of availability of adequate electric power in Washington to support the company’s growth, MGTI decided to move its principal operations to northern Sweden at the end of 2017. During the first quarter of 2018, it took delivery of additional Bitcoin mining machines in Sweden and moved or sold most of its Bitcoin mining machines from Washington.

During the fourth quarter of 2018, the company commenced the move of its mining machines back to the U.S., to both Colorado and Ohio. The move was completed in early January 2019.

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As noted above, MGTI just provided an operating update to investors, including a sense of where things stand relative to its key milestones.

The chart shows 5% during the past week in terms of shareholder gains in the company. In addition, the name has seen interest climb, with an increase in recent trading volume of 70% beyond its prior sustained average level.

According to its most recent release, “Our agreements with third-party hosting facilities have been reduced to 1,200 S9 miners in Colorado Springs, and a location in Coshocton, Ohio, where MGT operates 576 S9 miners housed in the first production model of the Pod5ive container. After two months of use, the performance of the Pod5ive has been proven consistent and productive. As a result, MGT has ordered two Pod5ive containers designed for the new S17 miners for delivery to LaFayette.”

Currently trading at a market capitalization of $7.9M, MGTI has a significant war chest ($3.1M) of cash on the books, which compares with about $987K in total current liabilities. MGTI is pulling in trailing 12-month revenues of $763K. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -82.9%. This may be a very interesting story and we will look forward to updating it again soon. 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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