Sphere 3D Corp. Provides December 2023 Production and Operation Updates
- 311% YoY increase in Bitcoin mined
- Month-end operating hash rate was 1.3 EH/s
- Mining revenue of $3.1 million
- Settlement with Core Scientific, Inc. for expected additional capital of $10 million
- Termination of master services agreement with Gryphon Digital Mining, Inc. for an additional 22.5% in gross profit
- None.
Insights
The reported increase in Bitcoin mining output by Sphere 3D Corp signifies a robust year-over-year growth, which is a positive indicator for the company's operational performance. The decision to terminate the Master Services Agreement with Gryphon, alongside the settlement with Core Scientific, could potentially streamline operations and enhance margins. The anticipated 22.5% increase in gross profit margin post-termination of the MSA with Gryphon suggests improved profitability, assuming other costs remain constant. However, the reliance on Bitcoin prices and the market's volatility must be considered when assessing the company's financial health. The reported holding of 41.2 Bitcoin aligns with a strategic reserve approach, but the liquidation strategy in response to market conditions remains unclear.
The settlement with Core Scientific, resulting in non-dilutive capital, is an advantageous development for Sphere 3D, as it avoids shareholder dilution and provides additional resources for strategic growth. Nonetheless, the outcome of the settlement in terms of equity received will be dependent on the post-reorganization performance of Core Scientific, introducing an element of uncertainty. Investors should closely monitor the resolution of the outstanding funds from Gryphon, as this could influence Sphere 3D's cash flow and investment capacity in the short term.
The legal proceedings between Sphere 3D and Core Scientific, culminating in a settlement, are significant as they eliminate ongoing litigation costs and provide Sphere 3D with an allowed unsecured claim of $10 million. The nature of this claim, as part of the bankruptcy plan, indicates Sphere 3D's strategic positioning to recover from Core Scientific's restructuring. The mutual release of claims is a standard legal closure that prevents future disputes on the same grounds.
The unresolved issue with Gryphon, where Sphere 3D is awaiting the return of funds, highlights the importance of timely legal action and the potential impact of legal disputes on a company's liquidity. Sphere 3D's consideration of regulatory and legal options against Gryphon indicates a proactive approach to asset recovery, which is crucial for maintaining financial stability.
The mention of 'havening' refers to the Bitcoin halving event, which typically occurs every four years and reduces the reward for mining new blocks by half. This event can lead to significant changes in the cryptocurrency market, including potential increases in Bitcoin's value. Sphere 3D's preparation for this event demonstrates strategic foresight, as it could impact mining profitability. The company's consideration of growth options such as mergers, acquisitions and organic expansion into exahash operations indicates an aggressive growth strategy in the highly competitive cryptocurrency mining sector. However, the impact of the halving on the broader market and Sphere 3D's operations should be carefully evaluated, as it could affect the company's revenue streams and investment returns.
Toronto, Ontario--(Newsfile Corp. - January 4, 2024) - Sphere 3D Corp. (NASDAQ: ANY) ("Sphere 3D" or the "Company"), dedicated to becoming the leading carbon-neutral Bitcoin mining company, is providing the results of its Bitcoin mining operation for December 2023.
Key Highlights:
- 73.5 Bitcoin mined in December, up from November and up
311% YoY. - Month-end operating hash rate was 1.3 EH/s, flat from November and up 4X YoY.
- Uptime was
77% due to issues at our hosting partner's Missouri site.
| Metrics1 | Dec 2022 | Nov 2023 | Dec 2023 |
| Bitcoin Mined | 17.9 | 71.7 | 73.5 |
| Bitcoin Sold | 4.3 | 65.0 | 50.4 |
| Mining Revenue* | |||
| Bitcoin Holdings | 103.0 | 18.1 | 41.2 |
| Deployed Miners | ~2,500 | ~12,800 | ~12,800 |
| Month End Deployed Hash Rate (EH/s) | 100 PH/s | 1.3 EH/s | 1.3 EH/s |
*Unaudited
1 - Includes Sphere 3D assets temporarily custodied by Gryphon related to the terminated master services agreement.
CEO Comments
"What a year it has been as we end 2023 on a high note! We brought over 1.3 EH/s online, cancelled our master services agreement with Gryphon Digital Mining, Inc ("Gryphon") which we expect to result in an additional
Core Scientific Update
On December 21, 2023, Sphere 3D agreed to terms outlining a settlement with Core Scientific and its debtor affiliates, subject to the approval of the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The terms of the settlement include the following:
- An allowed general unsecured claim in the amount of
$10,000,000 - Treatment afforded to General Unsecured Claims in the Core Scientific bankruptcy plan of reorganization (the "Plan")
- Mutual release of claims and causes of action between Core Scientific and Sphere 3D
The Plan currently contemplates that General Unsecured Creditors such as Sphere 3D will receive equity of reorganized Core Scientific, which equity is expected to freely trade after the effective date of the Plan. The settlement terms provide Sphere 3D with non-dilutive capital to focus on its strategic growth, while realizing significant savings on litigation expenses.
The terms of settlement expressly does not waive any claim Sphere 3D has against Gryphon Digital Mining. Sphere 3D is seeking recovery from Gryphon for damages in connection with Gryphon's failure to file a timely proof of claim in the Core Scientific bankruptcy proceeding before the deadline. Core Scientific previously argued that Gryphon's failure to file the proof of claim before the passage of the bar date was a defense to Sphere 3D's proof of claim against Core Scientific.
Gryphon Update
As previously disclosed, on October 6, 2023, Sphere 3D terminated, effective immediately, the Master Services Agreement ("MSA") between Sphere 3D and Gryphon, dated August 10, 2021, as amended on December 29, 2021. The termination of the MSA is expected to result in an additional
In November 2023, Gryphon indicated, through its counsel, that upon receipt of certain information it would be remitting outstanding proceeds, less fees and expenses, generated under the MSA that Sphere 3D asserts is currently held by Gryphon on behalf of Sphere 3D, which Sphere 3D believes amounts to approximately 21.6 bitcoin, or
Havening Update
Sphere 3D has anticipated the havening and is preparing accordingly. We are focusing on various alternatives and considering all options for growth, including, but not limited to, adding exahash organically, mergers and acquisitions, as well as other options. Sphere 3D is currently focused on strategic opportunities and on maintaining operational efficiency.
About Sphere 3D
Sphere 3D Corp. (NASDAQ: ANY) is a net carbon-neutral cryptocurrency miner with more than a decade of proven enterprise data-services expertise. The Company is growing its industrial-scale Bitcoin mining operation through the capital-efficient procurement of next-generation mining equipment and partnering with best-in-class data center operators. Sphere 3D is dedicated to growing shareholder value while honoring its commitment to strict environmental, social, and governance standards. For more information about the Company, please visit Sphere3D.com.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "experts," "plans," "anticipates," "could," "intends," "target," "project," "contemplates," "believes," "believes," "estimates," "predicts," "potential," or "continue" or the negative of these words or other similar terms or expressions. Expectations and beliefs regarding matters discussed herein may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from the projected. The forward-looking statements contained in this communication are also subject to other risks and uncertainties, including those more fully described in filings with the SEC, including Sphere 3D's reports filed on Form 10-K, Form 10Q and Form 8-K and in other filings made by Sphere 3D with the SEC from time to time and available at www.sec.gov. These forward-looking statements are based on current expectations, which are subject to change.
Sphere 3D Contacts
Kurt Kalbfleisch CFO, Sphere 3D
Investor.relations@sphere3d.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/193121
FAQ
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