Welcome to the Big Show, DMG Blockchain (DMGI.V): Up 23% in second day of trading

Back in the 45 days of deep 2017 when the entire world thought everything blockchainy would be a billion dollar deal by Christmas, which ended on the day HIVE Blockchain (HIVE.V) let founders stock trade early, thereby (and properly) stepping on an insane tulipmania run, all that was needed to make a pubco double were the words “exploring opportunities in cryptocurrency and blockchain.”

Well that was fun, but over quickly. One company that you couldn’t get on the phone during that time, for all the fighting for financing that was going on in their pre-market listing raise, was DMG Blockchain (DMGI.V).

DMG was, simply put, going to put crypto rigs in shipping containers and drop them wherever the power was cheap, at the behest of clients who would rent said rigs from them because setting up their own was no fun.

It was a nice little strategy, but the market guys refused to leave it as a ‘little’ strategy. Money was tossed at DMG with no respect for seniority. If grandma happened to be standing in front of the DMG booth at a trade show, grandma was going out on a stretcher.

She’d had a good run. It was time. Also, money.

But DMG didn’t rush to market during those heady early days, despite the clear and obvious potential for it to multiply like fruit flies in a mango patch.

“We’re in no hurry,” said Dan Reitzik, the CEO of DMG at the time. “We have a very long term view of the potential of this sector and this company within it. The dumbest thing we could do would be to jump on the gravy train without a plan of where to go from here.”

He added, “Not everyone shares our viewpoint on that.”

He weren’t lyin’. If I had a dollar for every blockchain company that has pivoted before they’ve earned a dollar in revenue, I’d be walking around with money in a wheelbarrow.

The key to making it in blockchain is relatively simple; first, acknowledge that there is no blockchain. It’s not a thing. It’s a way of doing things.

I’ve long said, if you’re saying “I’m investing in blockchain” today, it’s like saying “I invested in TCP/IP” during the dotcom boom.

The reply you should expect is, “You’re investing in blockchain and….?”

Blockchain isn’t a sector, it’s a functionality that will apply to multiple sectors. If you’re in the cannabis space, blockchain will apply to you. If you’re in banking, blockchain will apply to you. If you’re in insurance or real estate or Big Data or government or policing.. there’ll be a blockchain application involved in your future, even if you don’t know it from looking at it.

So when DMG Blockchain said, “Shipping containers with rigs inside,” a few people (myself included) said, “and…?”

The ‘and’ has come thick and heavy in the weeks since.

VANCOUVER, British Columbia, Dec. 14, 2017 — Aim Explorations Ltd. (TSX-V:AXN.H), a capital pool company, is pleased to announce that its qualifying transaction target, DMG Blockchain Solutions Inc. (“DMG“), recently launched a bitcoin mining model, Mining-as-a-Service (“MaaS“), at the annual Bitmasters Conference in Kobe, Japan, attended by more than 1,500 members of the Bitmasters network.

The Bitmasters network is comprised of tens of thousands of members who are bitcoin owners and influencers, many of whom are personally interested in mining bitcoin, in addition to buying via traditional bitcoin exchange channels.

That’s fun, but it usually takes a little time for such business plans to bear fruit. In DMG’s case?

MaaS interest from the Bitmasters network was strong and DMG received an order in excess of CAD$3 million for the hardware purchase and set-up, with monthly recurring hosting revenues to begin upon completion.

Real business. That’s legit. But it’s also only phase I.

Here’s phase II:

VANCOUVER, Jan. 23, 2018 /CNW/ – Mogo Finance Technology Inc. (TSX: MOGO; OTCQX: MOGOF), one of Canada’s leading financial technology companies and a provider of innovative financial products to consumers, today announced the formation of a new subsidiary – Mogo Blockchain Technology Inc. – which will serve as the main vehicle for Mogo’s blockchain operations, including new product development and strategic partnerships.  As the first strategic initiative, Mogo Blockchain plans to begin bitcoin mining, through an agreement with DMG Blockchain Solutions (“DMG”), a Vancouver-based company focused on bitcoin mining hosting (mining as a service (MaaS)) and diversified blockchain platform development.

MOGO is a big ass fintech firm that capitalizes on the laziness of millennials to offer expensive short term financing online. They want to also be a crypto exchange, but will need a little crypto of their own to kick things off. Enter DMG.

Under the agreement with DMG, Mogo will initially lease 1,000 bitcoin mining machines, which the Company expects to be operational later this quarter. The machines will be managed and operated by DMG under its MaaS model and will be located at DMG’s facilities in British Columbia. Mogo and DMG have also entered into a letter of intent to form a dedicated joint venture for bitcoin mining.

Business is kicking along.

Phase III is the weed phase.

VICTORIA, British Columbia, Jan. 26, 2018 (GLOBE NEWSWIRE) — Emerald Health Therapeutics, Inc. (TSXV:EMH) (OTCQX:EMHTF) and Emerald Health Sciences, Inc.and DMG Blockchain Solutions Inc. have completed a letter of intent to form a joint venture, to be named CannaChain Technologies, to develop a foundational blockchain-based supply chain management system and e-commerce marketplace for the legal cannabis industry.

Note: This deal has nothing to do with shipping containers.

See, DMG has stepped up a little with every deal into more and more complex arrangements. From straight hosting to co-mining to blockchain development with a billion-dollar Canadian LP.

From Licensed Producers, through testing, distribution and other steps, to the consumer, the cannabis supply chain includes many touchpoints. CannaChain’s supply chain management system platform will aim to provide total transparency and assurances for end consumers about where a cannabis product came from and regarding an array of related attributes. The platform will also assist in ensuring adherence to Health Canada reporting requirements. By logging each step along the supply chain on the blockchain – a decentralized, timestamped, and unhackable digital ledger – this ground-breaking platform is expected to provide an irrefutable record outlining the journey the product has made, from beginning to end.

To be fair, they’re not the only ones looking at this use of blockchain tech. Little Calyx Bio-Ventures (CYX.V) have been working on this, with B2B messaging and an ecommerce platform tied in, for well over a year. They’re pretty far along this path and had, in fact, started developing their early seed-to-sale weedco product several years ago with Vodis Pharma (VP.C).

But DMG has a war chest filled with dough, and a boardroom filled with blocknowledge, and can likely play catch up fairly quickly.

So let’s look at this with a broad scope. If DMG is getting a piece of crypto mined by Japanese players, and a piece of MOGO’s Bitcoin mining haul, and likely a piece of their future crypto exchange dealings, and a piece of sales executed through the Emerald Health platform, you’re looking at real world revenues tied to low cost facilities and skinny overhead costs.

That’s EXACTLY the promise of blockchain. It isn’t about developing one app that will take over the global banking industry. It isn’t about cornering the market in developing a crypto currency for hockey players to keep track of their equipment or artisan vodka makers to apply value to their bottle tops. (note to self: Pitch this one to Canaccord)

It’s about taking an existing business and making it better, and earning a piece out the back of that, and then moving on to the next opportunity.

Blockchain is a land grab, not a gold rush. We need to be looking for who will apply it to BMO and Boeing and Loblaws and meat inspections and car rentals and air travel and education. DMG is doing what we need all blockchain companies to be doing, and earning money at the front of the deal AND the back, rather than simply raising dough on a promise.

When I see companies brag that they’ll ‘invest in blockchain opportunities” I want to punch a small child in the balls because that’s what WE’RE ALL DOING and nobody is handing me $28 million to do so.

You know how, when blockchain stocks got a bit shredded, and the retail money all poured into crypto and weed, and then crypto got shredded, so that all went to weed as well, and then weed got shredded, it looked like the sky might be falling?

In Vancouver and Toronto, in the boardrooms of companies who employ many quants and make millions putting together deals that you and I will want to invest in for the rest of the year, they weren’t saying, “Well that’s it for blockchain then” and cracking open their panic rooms filled with cocaine and self-loathing ’til the next big thing showed up.

No. While you were selling your HIVE and your Hashchain and your Glance Pay, those dealmakers were taking $28m in cheques and handing them over to DMG with smileys and gold stars drawn on the back. They were popping champagne corks building new blockchain deals because you were handing them cheap LTV and XBLK and HS and LOTO, and because those guys ARE NOT DONE WITH BLOCKCHAIN BY A LONG SHOT.

The Cantech Conference last week in TO was wall-to-wall blockchain deals with a small corner of VR/AR tossed in, and it was crawling with YOUNG AND OLD investors who are just getting started and were in no way concerned that they might be betting on something that is over.

DMG hit the market yesterday at $1.10 and moved up to $1.20 by day’s end. As I write this it’s now shifted up to $1.52. In the blockchain sector, such that it is, DMGI is killing it while others lag behind.

Part of that is because, while I was writing this, the company dropped news of Phase IV on our asses.

DMG Blockchain Solutions Inc. has acquired Datient Inc., doing business as “Blockseer,” pursuant to which DMG’s United States subsidiary will acquire all of the issued and outstanding securities of Blockseer, and will close upon the TSX Venture Exchange’s approval.

[..]

Blockseer’s mission is to make blockchain data and applications accessible to everyone by providing valuable analysis of patterns, useful metrics, clear visualizations and actionable intelligence. Blockchains are a new platform that enable transactions and applications (or smart contracts) in a decentralized setting. Blockseer provides the analytics tools for these transactions and applications on the blockchain.

Transaction value: $16 million. And, as of today, the Blockseer crew just got 23.8% richer.

Me too.

— Chris Parry

FULL DISCLOSURE: DMG is an Equity.Guru marketing client, as are other companies mentioned in the piece, such as Leonovus, ExeBlock, Calyx Bio-Ventures, and Hashchain. The author has owned or does own stock in those companies, as well as LOTO, HIVE, and HS. Glance Pay has, at various times, discussed engaging Equity.Guru for marketing services but has no commercial arrangement with the company, nor do we own stock in the firm. 

Don’t buy or sell any stock without understanding the full opportunity and your risk tolerance level, preferably with the assistance of a financial advisor. Don’t invest in cryptocurrency unless you like playing roulette and have the constitution of a Viking.

 

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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