Sphere 3D Corp. Provides February 2024 Production and Operation Updates

Rhea-AI Summary

Sphere 3D Corp. reports mining 40.3 Bitcoin in February 2024, a 15% YoY increase. Operating hash rate remains steady at 1.2 EH/s. Revenue at $1.9 million. CEO discusses fleet refresh and potential mergers. Legal action taken against Gryphon for return of Bitcoin holdings.

Insights

Financial Analyst

The reported increase in Bitcoin mining output by Sphere 3D Corp. is a positive development, with a 15% year-over-year growth indicating improved operational efficiency or increased capacity. However, the flat month-end operating hash rate suggests a potential plateau in the company's expansion or technological upgrades. The decrease in Bitcoin mined from January to February raises questions about the consistency of production, which could be a red flag for investors looking for steady growth.

The termination of the Master Services Agreement with Gryphon Digital Mining and the subsequent legal actions to recover assets may have implications for the company's liquidity and operational costs. The potential 22.5% increase in gross profit post-termination is significant, but it hinges on the successful resolution of the dispute. Investors should monitor the situation closely as it unfolds, considering both the potential recovery of assets and the costs associated with legal proceedings.

Cryptocurrency Market Analyst

Sphere 3D's decision to refresh part of its mining fleet and engage in merger discussions could be indicative of a strategic pivot to maintain competitiveness in the rapidly evolving cryptocurrency mining industry. The collaboration with Fabiano Consulting could bring valuable expertise, potentially enhancing the company's strategic planning and execution.

The company's Bitcoin holdings and the strategy to sell a portion of its mined Bitcoin to fund operations is a common practice in the industry, balancing revenue generation with asset accumulation. The reported uptime of 60% is suboptimal, as it could significantly affect mining efficiency and profitability. This metric, along with the company's future plans to improve operational uptime, should be closely watched by stakeholders.

Legal Expert

The ongoing legal dispute with Gryphon Digital Mining highlights the risks associated with partnerships and contractual agreements in the cryptocurrency mining sector. The return of cash to Sphere 3D is a positive step, but the decision to continue with the conversion action will depend on a cost-benefit analysis of potential recoveries versus legal expenses. This case exemplifies the importance of due diligence and robust legal frameworks in protecting a company's assets and interests.

Stamford, Connecticut--(Newsfile Corp. - March 22, 2024) - Sphere 3D Corp. (NASDAQ: ANY) ("Sphere 3D"), a Bitcoin mining company operating at an industrial scale, is providing the results of its Bitcoin mining operation for February 2024.

Key Highlights:

• 40.3 Bitcoin mined in February, up 15% YoY.
• Month-end operating hash rate was 1.2 EH/s, flat to January due to machine transfers.
• Uptime was 60%.

Metrics1	Feb 2023	Jan 2024	Feb 2024
Bitcoin Mined	35.1	61.0	40.3
Bitcoin Sold	41.5	76.4	42.3
Mining Revenue	$0.8 million	$2.6 million	$1.9 million
Bitcoin Holdings*	14.1	25.8	23.8
Deployed Miners	~4,330	~12,300	~12,300
Month End Deployed Hash Rate (EH/s)	0.4 EH/s	1.2 EH/s	1.2 EH/s

 

*Unaudited
¹ Includes Sphere 3D assets temporarily custodied by Gryphon Digital Mining, Inc. under the now-terminated master services agreement.

CEO Comments

"In February 2024, we mined 40.3 Bitcoin, representing a 15% increase year-over-year. We mined fewer Bitcoin because our hosting partner in Springfield, MO was down for the month due to technical issues. We are pushing them for a resolution. We are currently in discussions to refresh part of our fleet and are continuing discussions with several potential merger partners. Finally, we are excited to announce that we are working with Fabiano Consulting to assist us with refreshing our fleet and with the M&A process. We believe that Amanda Fabiano's industry knowledge and crypto acumen is unparalleled," said Patricia Trompeter, CEO "I look forward to the next several months as we work to transform Sphere 3D."

Gryphon Update

As previously disclosed, on October 6, 2023, Sphere 3D terminated, effective immediately, the Master Services Agreement ("MSA") between Sphere 3D and Gryphon Digital Mining, Inc. ("Gryphon"), dated August 10, 2021, as amended on December 29, 2021. The termination of the MSA is expected to result in an additional 22.5% in gross profit.

In November 2023, Gryphon indicated, through its counsel, that upon receipt of certain information it would remit outstanding proceeds, less fees and expenses, generated under the MSA that Sphere 3D asserts is currently held by Gryphon on behalf of Sphere 3D, and which Sphere 3D believes amounts to approximately 21.6 bitcoin or approximately $1.3 million, at February 29, 2024, before factoring in fees and expenses. Sphere 3D believes it has sent the requested information.

On March 19, 2024, Sphere 3D filed a conversion claim with the Southern District of New York to secure the return of Sphere 3D's bitcoin held from Gryphon. On March 21, 2024, Gryphon returned cash of $1.2MM to Sphere 3D that it was previously holding in custody. Sphere 3D is presently evaluating the return and whether it will continue to prosecute the conversion action.

About Sphere 3D

Sphere 3D Corp. (NASDAQ: ANY) is a cryptocurrency miner with more than a decade of proven enterprise data-services expertise. Sphere 3D 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 Sphere 3D, 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 10-Q 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/202851

FAQ

How many Bitcoins were mined by Sphere 3D in February 2024?

Sphere 3D mined 40.3 Bitcoin in February 2024.

What was the year-over-year increase in Bitcoin mining for Sphere 3D in February 2024?

There was a 15% year-over-year increase in Bitcoin mining for Sphere 3D in February 2024.

What was Sphere 3D's month-end operating hash rate in February 2024?

Sphere 3D's month-end operating hash rate in February 2024 was 1.2 EH/s.

How much revenue did Sphere 3D generate from Bitcoin mining in February 2024?

Sphere 3D generated $1.9 million in revenue from Bitcoin mining in February 2024.

What legal action did Sphere 3D take against Gryphon regarding Bitcoin holdings?

Sphere 3D filed a conversion claim with the Southern District of New York to secure the return of Bitcoin holdings from Gryphon.