DMG (DMGI.V) Closes Private Placement

DMG (DMGI.V) has announced the closing of its $70-million private placement offer with institutional investors.

“We are very pleased to complete this equity financing above current market prices. The net proceeds from this financing will allow DMG to rapidly advance its business plan, its operations and pursue a variety of new projects. We are also very pleased to expand our institutional presence in the United States and abroad,” commented Dan Reitzik, chief executive officer, and Sheldon Bennett, chief operating officer, who jointly managed this process for DMG

DMG is a vertically integrated blockchain and cryptocurrency company. It manages, operates, and develops end-to-end digital solution to monetize the blockchain ecosystem. The Company’s businesses are divided into three main divisions: data center operations, data analytics, and forensic and developing enterprise blockchains. DMG’s data centers focus on earning revenues from block rewards and transaction fees by mining Bitcoin. In addition to mining, DMG also provides hosting services for industrial mining clients.

Regarding DMG’s closing, H.C. Wainwright acted as the exclusive placement agent for the Company’s private placement. In doing so, H.C. Wainwright received a cash commission of roughly $3.85 million, equaling 5.5 per-cent of the private placement’s gross proceeds. Additionally, it received 1,283,333 non-transferable compensation warrants. Each warrant entitles the holder to purchase one common share at an exercise price of $3.75 each at any time on or before March 5, 2024.

The Company closed the sale of its common shares and warrants to U.S. and foreign institutional investors enabling the purchase of common shares towards the Company’s aggregate gross proceeds of approximately $70-million. In accordance with the private placement, the Company issued 23,333,334 common shares and warrants to purchase up to 11,666,667 common shares at a purchase price of $3 per common share and associated half warrant. Whole warrants can be exercised any time on or before March 5, 2024 and enable holders to purchase one common share at $3.55 each. Once exercised, the total amount of warrants issued will equate to an additional 41-million.

With all the exciting details out of the way, what does this actually mean for DMG? This lucrative private placements puts the Company in a position to roll out numerous upgrades to their facilities, infrastructure, and equipment. At the top of their to-do list is the retrofitting of their 30-magawatt up to 60-megawatt capacity from air cooling to immersion cooling.

Immersion cooling is a lot cooler than it sounds. Put simply, rather than relying on air cooling, immersion cooling submerges system components in dielectric liquid. Imagine going to your local pool during the summer to cool off except for some inexplicable reason its filled with dielectric liquid. You could jump in with your phone and it would come out completely unscathed. Water is typically the first think we think of when discussing coolants, however, dielectric liquid is non-conductive making it the most efficient and effective way of cooling electronic components without frying them. With this in mind, dielectric coolant is used to cool a variety of electronic system including servers and bitcoin miners. Namely, DMG Blockchain relies heavily of immersion cooling to operate their bitcoin mining operations.

This, combined with reduced capital expenses, lowers return on investment time per megawatt of deployed mining, by up to 25%. Let’s take their existing substation at Christina Lake. It’s rated for 85MW. They have 60MW already operational and the rest is being installed. Their Bitcoin mining capacity is 2.0 exahashes of mining with air-cooled systems, which is a good rate, but would be 30% better in hashrate per miner, and therefore in overall bitcoin yield,” writes Equity Guru’s Joseph Morton

Speaking of Christina Lake, the Company plans to use the net proceeds of the private placement to further expand its self-mining infrastructure and hash rate at the facility. The Company hopes to achieve a hash rate of 2.0 exahashes per second via immersion cooling with the first exahash per second planned for this summer. By switching to immersion cooling, DMG can expect to see a significant decrease in its air conditioning bill and an increase in its mining efficiency.

Overall, DMG Blockchain is in a comfortable position to invest in cryptocurrencies, expand marketing and sales activities, develop software, research prototypes and a variety of other profitable ventures.