Marathon Patent (MARA) announced acquisition of Global Bit Ventures (GBV) on November 2. Stocks associated with the blockchain started to break out last week as crypto-currencies continue to hit new highs.
Management hosted a call last night to discuss the GBV acquisition. The stock is getting hit this morning as the market grows more skeptical of the GBV deal...
- Global Bit Ventures (GBV) has 1000 GPU mining servers capable of 250 GH/s for mining Ethereum (ETH).
- 700 servers are installed (300 now running and producing rev, 400 imminent); final 300 will come on line shortly.
- Plans to add 14PH/s of ASIC hashing servers (for mining Bitcoin BTC) as well.
- Low-cost data center/infrastructure in Canada with room to add capacity.
- Will be the only pure-play crypto mining operatinn on the Nasdaq.
- Expects cash flow positive business; gross margin initially expected to be 80%
- Will have balance sheet with no debt (MARA retired all long-term debt in August with DBD Credit Funding restructuring agreement) and cash flow will purchase more mining servers.
- No revenue or break-even guidance.
- Look to close GBV deal in coming months.
- Expects to issue 127 mln shares of stock (as disclosed in 8-K filing); MARA shareholders will own 19% of combined company.
- Shareholder meeting and vote on GBV will take place in 1Q18
- A shareholder in Q&A expressed belief that the company was overpaying for GBV by issuing 127 mln shares (> $600 mln at $5/share).
- Mgmt sees value in deal which was negotiated on fixed exchange ratio.
- The S4 will be filed soon (hopefully within 2-3 weeks).
- Management note that Hive Blockchain (HIVE.TO, PRELF) is a competitor.