BTCS Inc(OTCMKTS:BTCS) has not been particularly strong in recent days as the price of Bitcoin continues to to rise. The stock has a long history of volatility between a dime and $0.40 exploding to $0.578 in August.
Bitcoin has had a very strong last few weeks running well over $7,500 a coin after the CME Group, the world’s largest futures exchange announced it intends to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.
BTCS Inc(OTCMKTS:BTCS) describes itself as an early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on blockchain technologies. BTCS goal is to enable users to engage in the digital currency ecosystem through one point of access – the Companys universal digital currency platform. As a firm believer in the blockchain technology, we offer various solutions including Bitcoin Shop – our ecommerce store which accepts a variety of digital currencies, BTCS Wallet – our secure storage solution and more. We deliver each solution by leveraging innovative technologies. We also leverage the services offered by our strategic partners. To date we have made investments in and partnered with 4 key digital currency companies including: GoCoin, Gem, Expresscoin, and Coin Outlet.
BTCS plans to create a portfolio of digital assets including bitcoin and other “protocol tokens” to provide investors a diversified pure-play exposure to the bitcoin and blockchain industries. BTCS intends to acquire digital assets through: open market purchases, participating in initial digital asset offerings (often referred to as initial coin offerings). Additionally, BTCS may acquire digital assets by resuming our transaction verification services business (often referred to as mining) through outsourced data centers and earning rewards in digital assets by securing their respective blockchains. BTCS is also keenly focused on growth through acquisition. The blockchain is a decentralized public ledger and has the ability to fundamentally impact all industries on a global basis that rely on or utilize record keeping and require trust.
In August BTCS announced it signed a non-binding Letter of Intent (“LOI”) to merge with Blockchain Global Limited (“BCG”), an Australian blockchain company, which will be subject to a number of conditions detailed at the end of this press release.
BCG operates four distinct business lines, an institutional exchange platform, transaction verification services (bitcoin mining), a blockchain start-up accelerator, and a blockchain technology consultancy. BCG generated AU$5.9 million (approximately US$4.4 million) revenue in FY16, a 300% increase over FY2015 revenue. BCG has approximately US$3.5 million in assets comprised of bitcoin and cash as of July 1, 2017, and is currently supporting its business through profit from operations. The reported revenues are audited in accordance with International Financial Reporting Standards and are financial measures not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). See the section below under “Non-GAAP Financial Measures”.
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BCG wholly owns and operates ACX.io, an Australian Bitcoin Exchange and liquidity provider. Leveraging BCG’s asset security, exchange IP, and a proprietary liquidity engine, ACX provides a process to buy and sell bitcoin. Further, through ACX, BCG operates a proprietary arbitrage engine which captures a spread across multiple liquidity pools. BCG currently owns approximately 6 petahash (“PH”) of mining capacity in a purpose-built outsourced facility in China. BCG’s China operation has access to electricity at approximately US$0.04/kwh. BCG also provides blockchain technology advisory services including the preparation and support of crowd-sourced Blockchain token sales and Initial Coin Offerings.
On October 25 BTCS announced it has closed on the remaining balance of its previously announced financing, which was co-led by Blockchain Global Ltd. (“BGL”). The Company received a total of $1.1 million from the sale of its Series C -1 Convertible Preferred Stock (the “C-1”) and Warrants. On October 10, 2017, the Company closed on the initial $100,000 of a $1 million minimum financing which included $250,000 in bitcoin paid directly to BTCS and $750,000 in cash. The Escrow Agent was permitted to release $100,000 to BTCS which allowed BTCS to pay its auditors, a valuation consultant, an accounting advisory firm and counsel so it could file its Form 10-Q for the six months ended June 30, 2017. The Form 10-Q was filed on October 24th after which the Escrow Agent paid BTCS the $650,000 held in escrow as well as an additional $100,000 paid by a new investor.
“We’ve now secured the necessary funds to settle all of our debt, excluding derivative liabilities, a key step in moving forward with our planned merger with BGL,” stated Charles Allen, CEO of BTCS. “With the filing of Form 10-Q and other key BTCS merger conditions now met from the C-1 financing, we’re well-positioned to execute on what we believe will be a transformational milestone for our companies.”
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Currently trading at a $20 million market valuation BTCS has minimal assets or revenues and rising debt that has caused significant dilution here in the past. But BTCS is an exciting story developing in small caps; the Company is as an early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on blockchain technologies. The LOI announced with Blockchain Global Limited (“BCG”) could be huge for shareholders as BCG already does significant sales and already has a large footprint in the crypto space with its institutional exchange platform, transaction verification services (bitcoin mining), a blockchain start-up accelerator, and a blockchain technology consultancy. A breach of the $5,000 mark and bitcoin could go parabolic again and take any bitcoin related stocks with it. We will be updating on BTCS when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with BTCS.
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Disclosure: we hold no position in BTCS either long or short and we have not been compensated for this article.