Mr. Patrick Gray reports
HASHCHAIN TECHNOLOGY REPORTS FIRST QUARTER FISCAL 2020 FINANCIAL REPORT AND PROVIDES UPDATE ON PROPOSED REVERSE TAKEOVER
Hashchain Technology Inc. has released its financial and operating results for the quarter ended Nov. 30, 2019.
- Mined approximately 200 newly minted bitcoin;
- Recognized operating revenue totalling $2.3-million from digital currency mining.
The company's net losses resulting for the three months ended Nov. 30, 2019, were $2,269,384.
General and administrative expenses for the aforementioned three months were $172,670 and consisted primarily of legal and professional fees.
Operating and maintenance costs for the three months ended Nov. 30, 2019, were $3,730,540, consisting primarily of fees transferred for electricity, daily monitoring and maintenance, facility costs, application of deposits to rent, and all other costs directly related to the maintenance and operation of the company's mining equipment. Included in this total is a non-cash charge for depreciation of $699,060.
A comprehensive discussion of Hashchain's financials and operations is provided in the company's management's discussion and analysis and financial statements and filed on SEDAR and can be found under the company's profile on
On March 28, 2019, the company announced that it has entered into a definitive agreement with shareholders of Digihost International Inc. whereby the business and assets of the company and Digihost will be combined by way of a share exchange between the company and shareholders of Digihost, constituting a reverse takeover of the company by Digihost under the policies of the TSX Venture Exchange.
Due to increasing costs of cryptocurrency mining and volatility in the valuation of mined cryptocurrencies, the hosting expenses paid by Hashchain to its co-location facility per coin mined are currently greater than the value of the coins mined. Completion of the proposed
transaction will vertically integrate the hosting business to be acquired by Digihost with the mining operations of Hashchain, such that the cost of mining is significantly reduced.
Management of the company anticipates that the completion of the proposed transaction would provide a number of benefits to Hashchain, including:
- Reduced costs of cryptocurrency mining through the vertical integration of Hashchain's operations and the termination of the hosting service agreement with Bit.Management LLC, which the company currently pays for rent for the physical space of its rigs and for the electricity used in its cryptocurrency operations;
- Release from accrued liabilities owing to Bit.Management pursuant to the hosting service agreement;
- Increased access to capital as a result of the minimum $5.4-million concurrent financing of Digihost to be completed prior to completion of the proposed transaction.
Upon completion of the proposed transaction, the mining operation will have 12,895 bitcoin mining rigs with the ability to expand to 17.5 megawatts of computing power with electricity at an average all-in cost of five U.S. cents per kilowatt-hour. The operating facility is located in Buffalo, N.Y., with over 70,000 square feet under a five-year lease and an option to lease additional facility space totalling 240,000 square feet after three years. Hashchain will focus on validation through mining, hosting solutions and blockchain software solutions.
The proposed transaction was approved by the shareholders of the company at the annual and special meeting of the company, held on Jan. 14, 2020. The completion of the proposed transaction remains subject to a number of additional conditions precedent (as described in prior press releases of the company), including approval of the proposed transaction by the exchange, and there can be no assurance that the proposed transaction will be completed as proposed or at all. Review of the proposed transaction by the exchange remains in progress.
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