EcoChain, Inc. Shares Answers to Common Investor Questions

Rhea-AI Summary

EcoChain, a subsidiary of Mechanical Technology (MKTY), provides an update addressing shareholder inquiries as of February 3, 2021. The company plans to develop ultra-low cost green data centers for crypto mining without holding cryptocurrencies on its balance sheet. EcoChain aims to ensure profitability even during crypto price declines. The relationship with Soluna as a technology provider is clarified, with independent agreements and management fees. CEO Michael Toporek’s compensation is noted as $170,000. Forward-looking statements indicate potential risks in executing the business strategy.

Positive

• EcoChain plans to construct ultra-low cost green data centers, potentially allowing for optimized capital deployment.
• The company intends for its data centers to remain profitable through volatile crypto market conditions.

Negative

• No direct ownership of mined cryptocurrencies could limit potential capital appreciation.
• The projection of profitability relies heavily on power cost estimates and market conditions.

ALBANY, N.Y., Feb. 3, 2021 /PRNewswire/ -- EcoChain, Inc. ("EcoChain" or the "Company"), headquartered in Albany, New York, a wholly owned subsidiary of Mechanical Technology, Incorporated, a publicly traded company (OTCQB: MKTY) shares answers to common investor questions. 

As part of the Company's ongoing efforts to keep investors informed during this dynamic time for the Company, MKTY issued the following shareholder update:

On December 23, 2020, the Company wrote to its shareholders to provide a yearend update and a blueprint for its 2021 objectives.  During the past several weeks since that letter, we've received numerous questions from our shareholder base.  To assure adequate communication with our shareholders, we are releasing this update in a framework to easily address several of the inquiries we have received:

Crypto Coin Markets

1) Will EcoChain hold the Bitcoin or Alt coin it mines on its balance sheet? Will EcoChain use any of its cash to buy BTC or other Alt coins? 

Currently, EcoChain's business plan does not contemplate direct ownership of BTC or ALT coins mined, nor does it intend to use its capital to purchase BTC or ALT coins.

EcoChain has announced that it bought land to build out a 25MW ultra-low cost green data center. Although the Company has not yet announced the power cost, its current estimates lead it to believe that the ultimate power cost will be significantly below that of several well-known public companies that also compete in this space.  If the Company's estimates are correct, the ultra-low cost will enable EcoChain to optimize its capital deployment since it could easily buy lightly used current generation processors, monetize second and third generation processors and avoid paying a premium and waiting for the latest generation miners. EcoChain expects to have a mix of equipment and supply arrangements that will seek to optimize its return on invested capital. Ultra-low cost power gives EcoChain that possibility.

2) Is the Company concerned about Crypto coin prices and that they may collapse?

Crypto prices are volatile. The Company continues to monitor the movement of crypto valuations and its potential impact on its business plan. To that end, EcoChain's plan is to construct ultra-low cost data centers such that they would have been profitable even through the last crypto winter and ideally be poised to weather future periods of volatility and potential significant declines.

Furthermore, the Company believes that mining profitability and return on invested capital depends on more than Crypto prices --network difficulty and the cost of equipment are also key variables. That is why rising, static or declining crypto prices don't always directly impact profitability in a straight line Additionally, as noted above, because the Company does not contemplate holding crypto on its balance sheet, we believe our business plan is better suited to deliver more stable returns and hence share prices; however, there are no guarantees that our expectations will be successful.

The MKTY Organization, Including Soluna and EcoChain

1) Please describe the relationship with Soluna and how related expenses are billed and passed through the income statement?

Soluna is a key technology provider to EcoChain. Brookstone Partners, which owns 39% of MKTY, controls about 62% of Soluna. Any and all agreements between the Company and Soluna are negotiated by independent directors of the Company, directly with the CEO of Soluna and represent arms-length practices. This is more fully described in our public filings.

Soluna is paid a per MW annual management fee, a percent of the profits once EcoChain has its capital returned with a pre-specified rate of return, and an initial transaction/set up fee. Soluna does not provide the personnel at the data center that service the physical machines. Soluna directs those personnel. Currently those resources on the ground are retained by EcoChain on a contract basis, but as the Company scales up it will periodically reassess this arrangement.

2) What is the CEO's current compensation arrangement?

Michael Toporek is an employee at will. His total cash compensation is $170,000. He is also a Director, and as other directors do, he receives the same compensation in shares and options. Brookstone Partners, an investment firm he helps to manage, controls about 39% of the Company which currently provides sufficient alignment of incentives.  Any changes to Mr. Toporek's compensation or our company's relationship with Brookstone or an affiliate of Brookstone, will be prominently reflected in our filings with the SEC.

3) Will EcoChain ever need its own employees, or will all activities always be handled by Soluna?

EcoChain continuously assesses its resources and the economics of outsourcing or insourcing. As such, current contract relationships may change with certain activities brought in-house as the Company continues to scale and the economics of insourcing become more cost effective. The goal is to retain the best talent economically.

4) How many Soluna employees are actively working on EcoChain activities?

Soluna has four people that are actively working on matters for EcoChain in addition to certain engineers and consultants which are regularly retained.

About EcoChain, Inc.

EcoChain is engaged in developing and operating ultra low-cost green data centers focused on crypto currency mining.  For more information about EcoChain, please visit https://ecochainmining.com/.

Forward-Looking Statements for Mechanical Technology, Incorporated:

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectations, as of the date of this communication, and involve certain risks and uncertainties. Forward-looking statements include statements herein with respect to the successful execution of the Company's business strategy. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Such risks and uncertainties include, among other things, our ability to establish and maintain the proprietary nature of our technology through the patent process, as well as our ability to possibly license from others patents and patent applications necessary to develop products; the availability of financing; the Company's ability to implement its long range business plan for various applications of its technology; the Company's ability to enter into agreements with any necessary partners; the impact of competition, the obtaining and maintenance of any necessary regulatory clearances applicable to applications of the Company's technology; and management of growth and other risks and uncertainties that may be detailed from time to time in the Company's reports filed with the Securities and Exchange Commission.

Please visit https://www.mechtech.com under News & Events.

Contact Information:

Lisa Brennan
518-218-2592
lbrennan@mtiinstruments.com

Kirin Smith, President
PCG Advisory, Inc.
646.823.8656
Ksmith@pcgadvisory.com

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SOURCE Mechanical Technology, Incorporated

FAQ

What is the current business plan of EcoChain regarding Bitcoin and Alt coins?

EcoChain does not plan to hold Bitcoin or Alt coins on its balance sheet or purchase them with its capital.

How does EcoChain plan to manage the volatility of Crypto coin prices?

EcoChain aims to construct data centers profitable even during crypto market downturns by focusing on low-cost operations.

What is the compensation for CEO Michael Toporek?

Michael Toporek's total cash compensation is $170,000, with additional compensation in shares and options.

What is the relationship between EcoChain and Soluna?

Soluna serves as a key technology provider to EcoChain, with structured agreements negotiated to ensure arms-length practices.

How many employees from Soluna are working on EcoChain activities?

Soluna has four employees actively working on EcoChain projects, alongside additional engineers and consultants.