Crypto Miners Adapt to the Quickly Shifting Market Landscape

FinancialBuzz.com News Commentary

NEW YORK, Oct. 6, 2021 /PRNewswire/ -- The price of Bitcoin was once again above the USD 50,000 mark after Bank of America Corp. strategists announced support for crypto as a new asset class. As reported by Bloomberg, with its latest rally, Bitcoin has broken through two key resistance levels and is now trading at the higher end of its two-month-long consolidation range, according to a report from Arcane Research. The coin hovered around USD 45,000 for a while before finally breaking out. That means the USD 46,000 – USD 48,000 range is a strong support level and the coin could trade in that area for some time, the report said. ISW Holdings Inc. (OTC: ISWH), Riot Blockchain, Inc. (NASDAQ: RIOT), Hut 8 Mining Corp. (NASDAQ: HUT), SOS Limited (NYSE: SOS), Sphere 3D Corp. (NASDAQ: ANY)

This increase in the price of Bitcoin comes despite China's full-blown crackdown on cryptocurrencies. The Wall Street Journal reported that Huobi Global, which is one of the world's largest cryptocurrency exchanges, said it would close all user accounts in mainland China by the end of the year, just days after the country's central bank declared all crypto-related transactions illegal. The exchange will also gradually retire existing accounts in China by the end of 2021 to ensure the safety of its customers' assets. Nevertheless, cryptocurrency miners are adapting to the new conditions by moving to countries that are open to digital currencies and the related mining operations.

ISW Holdings Inc. (OTC: ISWH), transitioning to "BlockQuarry," pending name change, announced last month for current and prospective shareholders with a more detailed discussion about, "the Company's recent landmark deal with Bitmain Technologies ("Bitmain"), the world's leading producer of cryptocurrency mining hardware and a leading global cryptocurrency mining firm.

Total Mining Capacity and Timeline to Launch. The deal will involve 56,000 Bitmain mining rigs pairing with 200 megawatts ("MW") of power at the Company's "POD- CITY" location in Georgia. The Company expects to have the first 20 MW of power paired with rigs and running full-out by October 2021. The schedule calls for having all 56k miners hooked up to all 200 MW of power and running full-out by October 2022.

Estimated Topline Revenue Impact. The Company estimates that this full complement running at full capacity will be capable of driving estimated annual revenues well in excess of $100 million (over $10 million per month) for ISW Holdings/ BlockQuarry in hosting service fees. This is not contingent upon cryptocurrency pricing.

Key Partners. The partnership is tripartite, between Bitmain, ISW Holdings, and Bit5ive, LLC ("Bit5ive).

Bitmain will bring mining machines, capital, and expertise into the bargain, consuming hosting services and power up to and potentially in excess of 200 MW for a five-year term.

Bit5ive will bring power, hosting services, project management services, and expertise to the table.

ISW Holdings will provide funding, expertise, hosting services, mining services, access to power, and access to public market investors.

Costs Involved. For ISW Holdings, the cost for the entire roll-out to setup and activate mining machines using 200 MW of power will be a total of $62 million. $6 million of this has already been paid. $56 million remains.

Current Mining Operations (excluding Bitmain deal). The Company is currently running 700 miners, representing a mix of Bitmain Antminer S17's, BitMain S19 95TH/ s's, and Canaan Avalons. Those miners are running in POD5 units in Stronghold,Pennsylvania at a site managed by Bit5ive. The current hashrate is 36,000 TH/s, with an upside potential of 54,000 TH/s given current capacity. This operational state is capable of producing annual revenues of $4.8 million to $6 million given current three-month trailing average pricing for major cryptocurrency markets. The Company is also actively expanding its mining operations as the business scales up.

Management Commentary. 'The nature of our business changed significantly last summer when we partnered with Bit5ive and began designing state-of-the-art mining pods with a bold vision and a deep conviction in the value proposition of the cryptocurrency marketplace,' remarked Alonzo Pierce, President and Chairman of ISW Holdings. 'Now, just a bit over a year later, we are on the verge of becoming one of the top players in the cryptocurrency world after bringing Bitmain to the table in a deal that will see all parties unlock significant value. Looking ahead, our hosting service revenues will be stable and substantial, and capable of strong growth. And our mining revenues will fluctuate with prices in the cryptocurrency space. That will give us a strong foundation and enormous growth with a significant non-volatile component. This should put us in position to meet requirements to migrate shares to a major national listed exchange in due course. We have a number of additional catalysts in the works as well, and I look forward to providing more insights in the very near future.'"

Riot Blockchain, Inc. (NASDAQ: RIOT) announced earlier in June its May production and operational updates, including its unaudited Bitcoin ("BTC") production for May 2021 and its latest miner delivery status. The Company plans to continue to provide monthly operational updates and unaudited production results through the end of 2021. These updates are intended to keep shareholders informed of Riot's mining production as it continues to deploy its expanding miner fleet. On May 26th, 2021, Riot announced it completed its previously announced acquisition of Whinstone U.S. ("Whinstone"). Whinstone's Bitcoin mining facility in Rockdale, TX is the largest Bitcoin mining facility in North America, as measured by its 300 MW in developed capacity. The Company announced its plans to immediately commence further development of additional capacity at Whinstone in order to rapidly bring the property to its current capacity of 750 MW. This expansion will be driven by Whinstone's industry leading development team of over 100 employees.

Hut 8 Mining Corp. (NASDAQ: HUT) announced last month its financial results for the quarter ending June 30, 2021 ("Q2-2021") Hut 8 continues to strategically emphasize its "hodl" strategy, taking active steps to generate Canadian and US dollars to help fund operating expenses, so as to avoid selling Bitcoin. During Q2-2021, 100% of self- mined Bitcoin was deposited into custody. As of June 30, 2021, the Company had a total Bitcoin balance of 3,824 with a market value of $166 million. Hut 8's current Bitcoin balance, including 2,000 Bitcoin loaned as part of the Company's fiat yield strategy, is approximately 4,240 Bitcoin, reflecting a market value of approximately $245 million. Hut 8 currently has an installed hashrate of 1.37 exahash ("E/H"). Given pending orders, we have additional contracted hashrate of 1.3 E/H (including 1,600 gigahash equivalent), bringing contracted hashrate to approximately 2.7 E/H. Based on current network dynamics, we anticipate daily settlement once all contracted equipment is hashing will equate to 20 – 25 Bitcoin per day.

SOS Limited (NYSE: SOS) reported back in June that it has entered into a joint venture agreement with Niagara Development LLC ("Niagara Development"), a New Jersey limited liability company, for a joint venture to be based in Niagara, Wisconsin. The joint venture, FD LLC, is expected to carry out crypto-currency mining operations and construct an international standardized Digital Super Computing Custody Operation Center. Under terms of the agreement, Niagara Development will be responsible for providing up to 150MW of electricity, including electricity generated from renewable sources, and construction the Digital Super Computing Custody Operation Center. SOS will be responsible for the management, operations and financing of the joint venture. SOS remains committed to its block-chain strategy and strive to become a sustainability leader in the industry.

Sphere 3D Corp. (NASDAQ: ANY) announced this June that it has entered into an Agreement and Plan of Merger with Gryphon Digital Mining Inc. ("Gryphon"), a privately-held company focused on the mining of bitcoin using renewable energy. Upon completion of the merger, the Company will change its name to Gryphon Digital Mining Inc. The merged company will focus on expanding Gryphon's digital mining operations and utilize Sphere 3D's proprietary enterprise solutions to optimize Gryphon's processes. "Gryphon's future focus on mining using 100% renewable energy will set the bar for mining companies of the future. We have been engineering GPU-based converged systems for many years and are excited to leverage our experience to enhance the performance of Gryphon's operations. We believe the merger of the two companies provides an excellent opportunity to create meaningful value for our shareholders," said Peter Tassiopoulos, Sphere 3D's Chief Executive Officer.

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