Mr. Sheldon Bennett reports

DMG BLOCKCHAIN SOLUTIONS REPORTS SECOND QUARTER RESULTS ENDING MARCH 31, 2023

DMG Blockchain Solutions Inc. has released its second quarter ended March 31, 2023, unaudited financial results.

Recent highlights:

• Revenue of $7.6-million on 255.8 mined bitcoin, net loss of $3.8-million and two-cent net loss per share;
• Realized first Petra-based revenue for placing ordinals during the quarter;
• Realized average hash rate of 0.89 exahash per second;
• Purchased 350 Bitmain S19 Pro (35 PH/s), 350 Bitmain S19 XP (49 PH/s) and 850 Bitmain S19j Pro+ (104 PH/s) miners, totalling 1,550 units contributing 188 petahashes per second;
• Cash and digital currency balance up 98 per cent from the prior quarter with $4.8-million in cash and $16.9-million in digital currency; $1-million of debt.

Readers are encouraged to review the company's March 31, 2023, quarterly unaudited financial statements and management's discussion and analysis thereof for a fulsome assessment of the company's performance and applicable risk factors, available at SEDAR.

Sheldon Bennett, DMG Blockchain's chief executive officer, commented: "DMG is poised to grow Terra Pool along with Petra-based carbon-neutral ordinal inscriptions and bitcoin transactions. We are now focused on execution of our Blockseer software platform to more meaningfully contribute to DMG's results. Additionally, the improved bitcoin market environment is allowing DMG to speed up its implementation of immersion cooling technology, which should enable greater mining capital efficiency to well position us ahead of the next bitcoin block subsidy halvening expected to occur in less than a year."

Steven Eliscu, chief operating officer, added: "While the company continues to manage its spending prudently, with a focus on its software and immersion cooling initiatives, DMG is actively looking at how it can grow its hash rate beyond the announced one EH/s of installed and 0.2 EH/s of ordered capacity. Additionally, we believe we can expand our base of software as the advent of ordinal inscriptions has opened up new possibilities for the bitcoin blockchain. While our goal of monetizing bitcoin transactions is unchanged, bitcoin is evolving to be much more than that -- we aim to stay nimble to capture these new opportunities."

Financial highlights

Revenue for the second quarter ended March 31, 2023, was $7.6-million versus $11.9-million in the year-ago quarter, a decrease of 36 per cent, driven primarily by a 41-per-cent year-over-year decline in the quarterly average bitcoin price, partially offset by a 31-per-cent increase in the amount of mined bitcoin to 255.8 from 195.9 in the prior-year period.

Operating and maintenance costs for the quarter ended March 31, 2023, were $4.6-million as compared with $3.2-million in the year-ago period. The majority of this increase was due to utility costs, which increased $1.2-million during the period. This increase was the result of an increase in digital currency mining activity from additional miners acquired during the year. The company had 9,282 miners installed as at March 31, 2023, up from 6,378 installed as at March 31, 2022.

General and administrative expenses declined to $777,000 in the quarter ended March 31, 2023, versus $972,000 in the prior-year period. This decrease was primarily due to lower professional fees and lower regulatory and filing fees during the period.

Net loss for the quarter was $3.8-million, versus a net profit of $57,000 in the prior-year period. The loss for the period ended March 31, 2023, compared with the prior-year period, was primarily the result of lower revenues combined with increasing operating and maintenance costs, and higher depreciation expenses, which were partially offset by lower share-based compensation expenses and lower research and development. It was also offset by a gain on the writedown in accounts payable in the year-ago quarter that were not repeated in the current quarter, as well as a realized loss on sale of digital currency in the year-ago quarter versus a gain in the second quarter of 2023.

Earnings per share for the second fiscal quarter ended March 31, 2023, were negative two cents versus nil in the prior-year period.

As at March 31, 2023, the company had cash of $4.8-million, digital currency of $16.9-million and total assets of $94.3-million. For more details, please refer to the company's filings.

Management call

Today, the company also announces that it will host its second quarter 2023 financial results and corporate update call on May 31, 2023, at 4:15 p.m. ET. Participants are asked to preregister. A replay will be available on the company website.

Although there will be no live question-and-answer session, management will address presubmitted questions during the call. Those who wish to submit a question may do so at investors@dmgblockchain.com using the subject line "Conference call question submission" through May 31, 2023, at 2 p.m. ET.

About Terra Pool

Terra Pool is a cryptocurrency mining platform operated by DMG Blockchain's Blockseer software company. Terra Pool is the world's first bitcoin mining pool focused on clean energy. The purpose of this initiative is to accelerate the shift from conventional power to clean energy and reduce the impact of bitcoin mining on the environment.

About DMG Blockchain Solutions Inc.

DMG Blockchain is an environmentally friendly vertically integrated blockchain and cryptocurrency company that manages, operates and develops end-to-end digital solutions to monetize the blockchain ecosystem. DMG Blockchain's sustainable businesses are segmented into two business lines under the Core and Core+ strategies and unified through DMG Blockchain's vertical integration.

We seek Safe Harbor.