Bitcoin

MGT Capital Investments, Inc. announced today that it entered into a hosting agreement for a facility in Colorado Springs to support its Bitcoin mining operations.

MGT had been analyzing various options to relocate approximately 6,300 S9 Antminer Bitcoin Miners, presently housed in northern Sweden, it said in a news release today.

With facilities in Washington state, MGT ranks as one of the largest U.S.-based Bitcoin miners, overseeing the operation of approximately 6,800 Bitmain S9 miners, and 50 GPU-based Ethereum mining rigs, according to the release.

MGT COO Stephen Schaeffer said the company had “identified and successfully negotiated a deal with a U.S. facility that nicely suits our needs. This location is capable of not only providing a cost-effective solution to our relocation needs, but also facilitates our growth plans for 2019. As part of this strategy, the Company is confident it has minimized the transition risks, as this new facility is literally in ‘plug and play’ readiness.

“The Colorado Springs facility has a dedicated standalone building for MGT’s use with an initial capacity of 10MW of electricity,” Schaeffer said. “Other areas of this former semiconductor campus have electrical infrastructure to support an additional 30MW of power. The Company hopes to complete the move and commence mining at full capacity before the end of December.”

Schaeffer said MGT “is committed to the present and future of the Bitcoin eco-structure, and we have the capabilities to be opportunistic during this period of market stability. I believe that sometimes we must run into the burning building to find the greatest opportunities. Further, we plan to reassert our stature as one of the leaders in U.S. Bitcoin mining through an enhanced outreach program with the financial and business communities.”

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MGT’s announcement follows a Sept. 27 letter issued to shareholders from H. Robert Holmes, chairman of the board and interim CEO, Schaeffer and CFO Robert Lowrey, which addressed “tremendous challenges to the Bitcoin mining industry, and to MGT itself” over the previous months.

In the letter, MGT’s leaders said the company’s expansion into Sweden had been “mired with challenges, as MGT was forced to address the inexperience and thinly-stretched capital of our hosting vendor. The company was forced to concentrate a significant amount of management efforts to the facility, as engineering errors and issues with the electric utility continued to arise.”

They said MGT had therefore “concluded that any further monetary investment in Sweden would be a misuse of capital, and began the process of palletizing and shipping our S9 miners to North America. Aside from a breached contract by our hosting vendor, MGT has signed no commitments with either the facility owner in Sweden or the electric utility.”

The letter expressed MGT leadership’s “confidence that this transition will materially reduce MGT’s costs while establishing the conditions for stable, secure growth.”

On Sept. 10 MGT announced its president and CEO Robert Ladd would take a leave of absence to focus on addressing the allegations in an SEC Complaint filed Sept. 7, and that Holmes, independent director and chairman of MGT’s board of directors, would assume the duties of interim president and CEO.

In an online statement, Holmes said the board contended that “the SEC claims are without merit, and that Rob will be vindicated… . As we previously stated, we wish to further emphasize that the Company was not named as a defendant in the SEC complaint.”

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