DMG Blockchain’s (DMGI.V) stock price is up about 25% (.20-.25) in the last 2 days trading.
DMG uses artificial intelligence (AI) and machine learning (ML) technology to monitor cryptocurrency exchanges, examining the currency flow through the blockchain in order to establish the “provenance and destination of crypto wallet funds.”
Blockchain Forensics & Analytics Group has secured contracts from several international auditing and consulting firms.
Confirmed: the business model is not as sexy as electric vehicles, weed-infused highballs or thick veins of near-surface gold.
The DMG investor presentation dumbs it down like this:
On May 30, 2018, DMG reported Q2, 2018 financial results.
Key Second Quarter 2018 Highlights:
- Completed listing on the TSX.V
- Revenue of $3,344,699 (552% quarter-over-quarter revenue growth)
- Purchased 2,650 new mining rigs
- Completed acquisition of Blockseer
- Constructing flagship data center with up to 85 megawatts of mining capacity
- 40 megawatts project to come on line in Q3.
- Appointed Charlie Lee, creator of Litecoin to DMG’s advisory board.
“DMG continues to build its presence both in Japan and North America thanks to its expanding mining operations and development of blockchain analytics tools,” stated Daniel Reitzik, CEO & Director, “DMG received an order in excess of $3 million from Japanese based ‘Forside’ for mining hardware purchases and set-up.”
Reitzik explained that most of DMG’s current revenues come from “hosting and management of Bitcoin mining facilities on behalf of 3rd parties” (MaaS business).
DMG’s MaaS revenues are insulated from Bitcoin spot price volatility.
DMG’s stock price is not.
In the same way that gold juniors tend to move in lock-step with the price of bullion – blockchain investors take their clues from crypto-currency prices.
That leaves a few neglected gems on the side of the road.
On June 27, 2018 Equity Guru’s Chris Parry suggested that a better strategy is to invest in “the people who do real business, not crypto.”
“DMG has been slashing its broadsword with fury, knocking down some decent deals, and wondering what they have to do to get some respect,” wrote Parry, who quickly keyed on DMG’s Chief Technology Officer (CTO), Dr. Danny Yang – as someone worth investing in.
Yang has a BA in Chemistry and Physics from Harvard, and a PhD in Computer Science from Stanford. He is also the CEO of Blockseer, a blockchain analytics company that specializes in data analysis and anti-money laundering for digital currencies.
“Dr Yang is creating the Bloomberg of crypto,” wrote Parry, “You want to look up who has the most Dash? Blockseer is going to let you. Want to track the Ethereum you’re getting from its origins? Blockseer. Want to see whether that dude who is promising to buy your bike actually sent the money for the last three he bought? Blockseer.”
Blockseer’s roadmap of analytics tools includes Bitscore, a risk-scoring tool for analyzing cryptocurrency holdings, Graph Intelligence, which traces bitcoin flows through the blockchain, and Market Factors, a blockchain data feed for market trading algorithms. Existing Blockseer clients include the US Department of Homeland Security, F.B.I., and I.R.S.
On May 29, 2018 DMG entered into a licensing agreement with Japan Credit Information Service, a Japanese company engaged in fintech to market and sell DMG’s proprietary blockchain data analytics and forensics software tool – Bitscore into the Japanese market.
Japan is the first country to officially regulate bitcoin markets, and as such is the ideal jurisdiction for KYC (Know your Customer) and AML (Anti Money Laundering) technology products.
“This partnership opens up a significant new Asian market and distribution channels for our data analytics software,” confirmed Reitzik.
On April 26, 2018 DMG announced that it has signed an L.O.I with Blackchain to license DMG’s Prometheus technology for deployment as part of BlackChain’s P2P Lending Platform.
Under the proposed license, BlackChain will retain exclusive rights for use of the technology for P2P Lending. DMG will be entitled to a royalty on commercial revenues generated by Blackchain using the technology.
On April 04, 2018 DMG announced that it is contributing core code to a protocol known as Lightning, which can increase blockchain transaction throughput and make the Bitcoin network more scalable.
The code that DMG is developing for Lightning is called atomic cross-chain swaps, which allows Bitcoin-related businesses to speed blockchain processes such as real-time payouts.
“The Lightning protocol is not all that easy to access for the everyday user,” a Null TX article stated, “There is no convenient user interface to speak of, which is always a big concern when it comes to cryptocurrency. This is where DMG Blockchain Solutions comes in, as one of its developers is working on a user-friendly visual swapping tool which will highlight one particular aspect of the Lightning protocol.”
Clearly, DMG is has its fingers in a few different pies.
Analyst Daniel Kim of Paradigm Capital recently gave DMG a “Buy” rating with $1.50 12-month target price.
“DMG’s diversified business strategy gives it a revenue mix advantage over pure-play miners who are solely dependent on the price of Bitcoin,” stated Kim. “The company’s goal is to become the blockchain domain expert across multiple industries and it is very cleverly and quickly leveraging relationships with world-class companies.”
Since hitting a high of $1.91 on February 15, 2018, DMG has experienced an epic slump which has infected many blockchain companies.
Although investors typically gravitate to stocks that are climbing mountains (on a long upward swing), a diversified, smart, beaten-down stock with solid revenues, is often a better investment.
Full Disclosure: DMG Blockchain is an Equity Guru marketing client, and we own stock.