HashChain Technology (KASH.V) started trading again on the 11th of December, giving long-suffering bagholders the opportunity to cut their losses on the cryptocurrency miner. The resulting loss was 33.3% of their stock price and as of today, they’re down to $0.01 and desperately looking to complete their proposed RTO with Digihost International.
“The proposed transaction with Digihost International provides a great opportunity for the company to reduce its cost of mining and deploy capital to acquire new miners to expand the business. We are very excited by what Michel Amar and the rest of the Digihost team bring to the table and look forward to the company’s future,” said Patrick Gray, chief executive officer of HashChain.
A long time coming
Saying that 2018 wasn’t a good year for HashChain is so much of an understatement as to approach absurdity.
They spent the majority of this year under a trade halt while they scrambled around to appease the regulators. Now the company is going to be submitting the proposed transaction and related matters tot he existing shareholders at an annual general and special meeting of its shareholders.
When the transaction is complete, the company will have 12,895 bitcoin mining ASIC-rigs with the ability to expand to 17.5 megawatts, with electricity at an average cost of USD$0.05 per kilowatt-hour. The Buffalo, N.Y. facility has 70,000 square feet under a five-year lease and an option to lease an extra 240,000 square feet after three years. HashChain will focus on closing blocks, hosting solutions and blockchain software solutions.
Here’s how HashChain stands to benefit:
- Reduced costs of cryptocurrency mining through the vertical integration of HashChain’s operations and the termination of the hosting services agreement with Bit.Management, LLC, who the company currently pays for rent for the physical space of its rigs and for the electricity used in its cryptocurrency operations;
- Release from accrued liabilities owing to Bit.Management LLC pursuant to the hosting services agreement;
- Increased access to capital as a result of the minimum $5.4-million concurrent financing of Digihost to be completed prior to completion of the proposed transaction.
What is Digihost?
Digihost is a private company focused on providing cryptocurrency hosting services for miners.
So far, Digihost has bought equipment and other hosting infrastructure and equipment from Bit.Management, Bit Mining International and NYAM, and two leases and a power contract for the two Buffalo, N.Y. area warehouses formerly used by HashChain to mine cryptocurrency. It’s a sensible move on HashChain’s part because as of right now the hosting expenses the company is paying to Bit.Management per coin mined are more than the value of the coins themselves.
If there’s a moral at the heart of the HashChain saga it’s that cryptocurrency mining isn’t a particularly lucrative business arrangement. It’s high cost and low probability of reward in a saturated market. If the ass falls off the market like it did in 2018, then some companies are going to flail, weaken and some are going to die. HashChain is hanging on for dear life right now and searching around for anyone to buy them.
And with good reason. They can’t afford to do business anymore and the cost of maintaining the rent on the warehouses holding their expensive high-tech paperweights. It was (and is) only going to get worse next year when the halving reduces the block reward and enhances the cost.
The smart bet’s in diversification. Bitcoin’s expensive, and it’s going to get worse. If Digihost wants a chance at staying alive—let alone competitive—after the halving, they’re going to have to take that into consideration.
There’s more out there than just Bitcoin.