Chinese Cryptocurrency Miners Finding a Home in North America

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Jul 22, 2021, 09:00 ET

NEW YORK, July 22, 2021 /PRNewswire/ -- The burgeoning popularity of numerous cryptocurrencies has resulted in major financial institutions, like banks, paying attention to the developments in the crypto market. In addition, fin-tech companies are now stepping into the arena. For example, PayPal recently announced plans to acquire Curv, a cryptocurrency startup based in Tel Aviv, Israel. Additionally, in October 2020, PayPal announced its commitment to help shape the role digital currencies will play in the future of financial services and commerce. There has also been an influx of companies all around the world buying Bitcoin and accepting it as payment. In addition, from a political perspective, after the crackdown of the Chinese government on crypto mining, Bitcoin miners in China have begun looking to relocate their operations to U.S. states like Texas, South Dakota and Tennessee, The Washington Post reported. ISW Holdings Inc. (OTC: ISWH), Hut 8 Mining Corp. (NASDAQ: HUT), Sphere 3D Corp. (NASDAQ: ANY), Riot Blockchain, Inc. (NASDAQ: RIOT), Marathon Digital Holdings, Inc. (NASDAQ: MARA)

The U.S. in now the new hub of the bitcoin mining market. It is the second-biggest mining destination on the planet, accounting for nearly 17% of all the world's bitcoin miners as of April 2021. That's a 151% increase from September 2020, according to CNBC. "For the last 18 months, we've had a serious growth of mining infrastructure in the U.S.," said Darin Feinstein, founder of Blockcap and Core Scientific. "We've noticed a massive uptick in mining operations looking to relocate to North America, mostly in the U.S."

ISW Holdings Inc. (OTC: ISWH) just announced breaking news regrading the, "signing of a cryptocurrency mining hosting agreement (the "Agreement") with Bitmain Technologies ("Bitmain"), the world's leading producer of cryptocurrency mining hardware and a leading global cryptocurrency mining firm.

The Agreement will form the backbone of the Company's Phase One launch of its cryptocurrency hosting and mining operation in Georgia. Further details related to this Agreement will be discussed in the near future.

Irene Gao, Antminer BD Director NCSA Region, Bitmain, said, 'We are excited to have signed this new pioneering project to begin cooperation with ISW Holdings, a new milestone for the industry for creating hosting facilities overseas. The 200 MW facility is the first phase of our long-term partnership, utilizing renewable energy as its source. We expect to further expand this project into the future to support the development of the industry.'

'Bitmain is probably the most recognizable name in the mining space, and we are excited that they will be a major piece of our success in Georgia,' remarked Alonzo Pierce, ISW Holdings President and Chairman. 'Once our 200 MW power tranche is fully utilized, we anticipate annualized revenues of over $200 million, but that will only close the first phase of our vision. We look forward to discussing our next phases in due course. If we are able to execute according to our full vision, we have the potential to drive exponential revenue growth ahead.'

Management notes that a recent crackdown in China has taken roughly 54% of the global hashrate offline. This resulted in the largest ever single day easing of bitcoin mining difficulty (~28%) through the bitcoin algorithm adjustment that took place on Saturday, July 3, 2021.

It has also resulted in increased demand for cryptocurrency hosting services outside of China as mining operations seek to relocate geographically.

Pierce added, 'We are grateful for the opportunity to work closely with some of the best in the business. Bitmain has solidified itself as a trailblazer in the cryptocurrency mining industry, and we look forward to a bright future together in Georgia.'"

Hut 8 Mining Corp. (NASDAQ: HUT) reported last month a corporate update. All figures are in Canadian dollars unless otherwise stated. Hut 8 has executed on a $44.373 million purchase of 11,090 MicroBT M30S, M30S+ and M31S miners from SuperAcme Technology (Hong Kong) Limited ("SuperAcme"), representing approximately $44/Terahash. The miners are expected to be delivered starting in October 2021 and full deployment is anticipated to be complete by December 2021. This purchase complements a smaller purchase of 863 M30S+ and M30S miners made earlier this week that is expected to be delivered and fully deployed in July, 2021.

Sphere 3D Corp. (NASDAQ: ANY) announced last month 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.

Riot Blockchain, Inc. (NASDAQ: RIOT) reported this month its June production and operations updates, including its unaudited Bitcoin ("BTC") production for June 2021 and its miner deployment status. In June 2021, Riot produced 243 BTC, an increase of approximately 406% over its June 2020 production of 48 BTC. Year to date through June 2021, the Company produced a total of 1,167 BTC, an increase of approximately 130% over its pre-halving BTC production during the same 2020 period of 508 BTC. As of June 30, 2021, Riot held approximately 2,243 BTC, all of which were produced by its mining operations. The exodus of Bitcoin mining from China has resulted in a downward difficulty adjustment and lower global network hash rate. As such, Riot is currently mining more Bitcoin per day than at any time in the Company's history. While it is broadly expected that many Chinese miners will eventually relocate, the Company estimates that it could be quite some time before the global Bitcoin mining hash rate returns to its previous high of 180 exahash per second ("EH/s"), last observed earlier this year.

Marathon Digital Holdings, Inc. (NASDAQ: MARA) reported last month published unaudited bitcoin ("BTC") production and miner installation updates for May 2021. Produced 226.6 new minted bitcoins during May 2021, increasing total bitcoin holdings to approximately 5,518 with a fair market value of approximately $203.4 million. Cash on hand was approximately $191.8 million and total liquidity, defined as cash and bitcoin holdings, was approximately $395.1 million. "In May, we produced 226.6 bitcoins, which is a 40% increase from the 162.1 bitcoins we produced in April, and we increased our hashrate to 1.9 EH/s after installing another 5,571 miners," said Fred Thiel, Marathon's CEO. "As a result, we were producing nearly 10 bitcoins per day on average at the end of the month. Given our current delivery schedule and the macro events affecting the global network hashrate, Marathon is particularly well positioned to scale and thrive in the current mining environment. Delivery and installation of new miners continue to progress well, and we remain on track to meet our objectives of transitioning our operations to 70% carbon neutral and having all our previously purchased miners online by the end of the first quarter of next year."

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