DMG Blockchain Solutions Inc. Announces MOU to Purchase 10-Megawatt Data Center Infrastructure

Rhea-AI Summary

DMG Blockchain Solutions (OTCQB: DMGGF) has signed a memorandum of understanding to purchase infrastructure for a 10-megawatt prefabricated data center meeting Sensitive Compartmented Information Facility (SCIF) specifications for Generative AI computation. The parties aim to reach a definitive agreement within 90 days, with DMG currently conducting due diligence following an initial inspection.

The payment structure includes a US$5 million upfront payment with the balance financed through future revenue from Gen AI computing off-take agreements. The data center's modular design allows deployment across multiple locations. DMG is targeting off-take agreements with entities requiring SCIF capabilities, including federal agencies and enterprises.

The infrastructure excludes medium-voltage power distribution, battery storage, backup power, computing systems, networking, and storage systems, all of which require additional investment. CEO Sheldon Bennett stated this move accelerates DMG's Gen AI entry by at least a year while providing credibility to secure premium-priced off-take agreements for SCIF-grade facilities.

Positive

• Acquisition accelerates Gen AI market entry by at least a year
• Military-grade SCIF specifications may command premium pricing
• Modular design allows flexible deployment across multiple locations
• Vendor financing structure minimizes upfront capital requirements
• Potential new revenue streams from government and enterprise clients

Negative

• Significant additional investment required for power distribution, computing systems, and storage
• No secured off-take agreements yet
• 90-day period before definitive agreement
• Counterparty remains undisclosed
• No timeline provided for revenue generation

VANCOUVER, British Columbia, Feb. 24, 2025 (GLOBE NEWSWIRE) -- DMG Blockchain Solutions Inc. (TSX-V: DMGI) (OTCQB: DMGGF) (FRANKFURT: 6AX) (“DMG” or the “Company”), a vertically integrated blockchain and data center technology company, announces it has signed a memorandum of understanding (MOU) with an undisclosed counterparty (“Counterparty”) to purchase the infrastructure for a prefabricated 10-megawatt air-cooled data center (“PDC”) that meets Sensitive Compartmented Information Facility (SCIF) specifications (which is generally a military requirement) for its deployment of Generative Artificial Intelligence (Gen AI) computation facilities. DMG and Counterparty have agreed to work towards a definitive agreement within the next 90 days, during which time DMG will perform its due diligence as a follow-up to its already performed initial inspection of the PDC at Counterparty’s site. DMG will issue an additional news release related to the final structure and terms of the potential transaction, and other material information if and when it becomes available.

Upon execution of the definitive agreement, DMG would pay Counterparty for the PDC US$5 million as an upfront payment and the balance of the to-be-agreed-upon price based on future DMG revenue resulting from Gen AI computing off-take agreements as part of vendor financing being offered to DMG. Revenue from off-take agreements may be derived from either GPUs that DMG purchases or the colocation of customer-purchased GPUs. DMG is currently focused on securing off-take agreements, which may be sourced from entities that require SCIF requirements, such as federal government agencies/departments, non-governmental entities (potentially with enterprise SCIF requirements), Counterparty and/or with other parties with whom the Company has a relationship to develop Gen AI business opportunities, which may be outside of Canada.

DMG intends to deploy the PDC at one or more locations, as the PDC can be partitioned into smaller units due to its modular nature. While the infrastructure forms the basis for a Gen AI data center, it does not include medium-voltage power distribution, battery storage or backup power generation, the configuration and amount of which have yet to be determined. Additionally, the PDC is not facilitated with computing, networking nor storage systems, all of which will need to be installed to realize revenue from off-take agreements.

DMG’s CEO Sheldon Bennett stated, “This MOU catalyzes our entry into Generative AI in a very meaningful way. Not only does the PDC shorten our time to deployment by at least a year, but it also gives us the needed credibility as a new AI entrant to secure off-take agreements in a timely manner. Given the SCIF (military-grade) nature of the infrastructure, we will be focused on off-take opportunities that prioritize this need, as we believe we can garner a revenue premium for offering this capability. This MOU also enables us to proceed with our Gen AI strategy in a most-capital efficient manner, helping us to maximize our return to shareholders.”

About DMG Blockchain Solutions Inc.

DMG is a publicly traded and vertically integrated blockchain and data center technology company that manages, operates and develops end-to-end digital solutions to monetize the digital asset and artificial intelligence compute ecosystems. Systemic Trust Company, a wholly owned subsidiary of DMG, is an integral component of DMG’s carbon-neutral Bitcoin ecosystem, which enables financial institutions to move bitcoin in a sustainable and regulatory-compliant manner.

For more information on DMG Blockchain Solutions visit: www.dmgblockchain.com
Follow @dmgblockchain on X and subscribe to DMG's YouTube channel.

For further information, please contact:

On behalf of the Board of Directors,

Sheldon Bennett, CEO & Director
Tel: +1 (778) 300-5406
Email: investors@dmgblockchain.com
Web: www.dmgblockchain.com

For Investor Relations:
investors@dmgblockchain.com

For Media Inquiries:
Chantelle Borrelli
Head of Communications
chantelle@dmgblockchain.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Cautionary Note Regarding Forward-Looking Information

This news release contains forward-looking information or statements based on current expectations. Forward-looking statements contained in this news release include the execution of a definitive agreement for the MDC and the timing thereof, the expected benefits and outcomes of the MDC including the potential Gen AI computing off-take agreements, the Company’s strategy for growth, the planned monetization of certain product and service offerings, developing and executing on the Company’s products, services and business plans, the launch of products and services, events, courses of action, and the potential of the Company’s technology and operations, among others, are all forward-looking information.

Future changes in the Bitcoin network-wide mining difficulty or Bitcoin hashrate may materially affect the future performance of DMG’s production of bitcoin, and future operating results could also be materially affected by the price of bitcoin and an increase in hashrate and mining difficulty.

Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations, or intentions regarding the future. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, market and other conditions, volatility in the trading price of the common shares of the Company, business, economic and capital market conditions; the ability to manage operating expenses, which may adversely affect the Company's financial condition; the ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; access to equipment; market conditions and the demand and pricing for products; the demand and pricing of bitcoin; security threats, including a loss/theft of DMG's bitcoin; DMG's relationships with its customers, distributors and business partners; the inability to add more power to DMG's facilities; DMG's ability to successfully define, design and release new products in a timely manner that meet customers' needs; the ability to attract, retain and motivate qualified personnel; competition in the industry; the impact of technology changes on the products and industry; failure to develop new and innovative products; the ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect the business; the ability to manage working capital; and the dependence on key personnel. DMG may not actually achieve its plans, projections, or expectations. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, the ability to successfully develop software, that there will be no regulation or law that will prevent the Company from operating its business, anticipated costs, the ability to secure sufficient capital to complete its business plans, the ability to achieve goals and the price of bitcoin. Given these risks, uncertainties, and assumptions, you should not place undue reliance on these forward-looking statements. The securities of DMG are considered highly speculative due to the nature of DMG's business. For further information concerning these and other risks and uncertainties, refer to the Company’s filings on www.sedarplus.ca. In addition, DMG’s past financial performance may not be a reliable indicator of future performance.

Factors that could cause actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, lack of supply of equipment, power and infrastructure, failure to obtain any permits required to operate the business, the impact of technology changes on the industry, the impact of viruses and diseases on the Company's ability to operate, secure equipment, and hire personnel, competition, security threats including stolen bitcoin from DMG or its customers, consumer sentiment towards DMG's products, services and blockchain technology generally, failure to develop new and innovative products, litigation, adverse weather or climate events, increase in operating costs, increase in equipment and labor costs, equipment failures, decrease in the price of Bitcoin, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, the Company undertakes no obligation to comment on the expectations of or statements made by third parties in respect of the matters discussed above.

FAQ

What is the upfront cost for DMG Blockchain's new data center infrastructure?

DMG Blockchain (DMGGF) will pay US$5 million upfront for the 10-megawatt prefabricated data center infrastructure, with the remaining balance financed through future revenue from Gen AI computing off-take agreements.

What makes DMG Blockchain's new data center infrastructure unique for AI applications?

DMG's new infrastructure meets Sensitive Compartmented Information Facility (SCIF) specifications, which are typically military-grade requirements, potentially allowing DMGGF to target premium-priced contracts with government agencies and enterprises requiring high security.

When will DMG Blockchain (DMGGF) finalize the data center infrastructure purchase?

DMG Blockchain aims to reach a definitive agreement within 90 days from February 24, 2025, during which time the company will complete its due diligence on the 10-megawatt prefabricated data center.

What additional components will DMGGF need to purchase beyond the data center infrastructure?

DMG Blockchain will need to invest in medium-voltage power distribution, battery storage, backup power generation, computing systems, networking equipment, and storage systems to make the data center fully operational for Generative AI applications.

How does the data center acquisition align with DMG Blockchain's business strategy?

The acquisition aligns with DMG's expansion into Generative AI, providing the company with military-grade infrastructure that can be deployed flexibly across multiple locations while pursuing a capital-efficient approach through vendor financing tied to future revenue.

What types of clients is DMGGF targeting for its new AI data center?

DMG is targeting federal government agencies, departments, non-governmental entities with enterprise SCIF requirements, and other parties requiring secure Generative AI computing capabilities, potentially including clients outside of Canada.