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MGT Capital Investments Inc. (OTCMKTS:MGTI) Is Cashing In On Bitcoin

MGT Capital Investments Inc. (OTCMKTS:MGTI) Is Cashing In On Bitcoin
Written by
Chris Sandburg
Published on
August 24, 2017
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It took longer than we expected, but MGT Capital Investments Inc. (OTCMKTS:MGTI) is finally starting to jump on the bitcoin train and putting out press releases detailing its operations in the space. We say starting, that's not strictly accurate. This is one of the most established players in the sector and has been active in mining and transaction processing for at least a year. While scores of other technology companies have been pumping out press releases detailing their bitcoin-based operations, however, MGT has remained relatively quiet on that front over the last few months.This is now changing and the company is benefiting from the speculative volume that's rushing into the sector right now. This week alone, MGT is up around 12%. Go back three months and this number rises to 350%.We’ve tracked this appreciation closely as it's played out and we have long been of the opinion that MGT has plenty of growth potential if it continues to execute on its current operational strategy. Bitcoin is showing no signs of slowing down and as the value of the underlying asset appreciates, so will MGT.The company just put out a press release detailing a capital injection and outlining the use of proceeds for said injection. While companies at this end of the market usually take a bit of a hit after they announce they are raising capital, MGT is holding onto its strength and looks set to rise into the end of the week.So what did the latest announcement tell us?It details an agreement with an entity called UAHC Ventures, LLC Partners, with the latter giving MGT $2.4 million in cash and receiving a Secured Convertible Promissory Note and a warrant to purchase shares of MGT’s common stock in return. As per the terms of the deal, monthly redemption payments due under the financing begin three months following the close of the transaction (and won't exceed $160,000), and may be made in cash or by converting redemption amounts into shares of MGT’s common stock.For us, this is a smart move by MGT. The company is going to use the cash to fill out its current bitcoin mining operations and open a third location and the deal is structured so as to minimize dilution from a shareholder perspective. Further, the maximum $160,000 monthly redemption payments should easily be covered by the output from the bitcoin mining operations as things are (so, even without the extra miners that the capital is going to fund), removing any liquidity risk from the transaction.All in, MGT is quickly becoming one of the biggest bitcoin miners in the US. With the price of bitcoin pushing through fresh highs almost daily, and currently sitting somewhere in the region of $4500 a coin, the ability to process large volumes of transactions (an ability that MGT has given its current hash power) amounts to quick and easy revenues for the company.The cybersecurity side of things is also developing fast and we've got a couple of key catalysts during the coming six months or so that could serve to boost MGT outside of its cryptocurrency operations. Specifically, the Sentinel product should hit shelves during September this year and the Privacy phone (which MGT is developing in collaboration with Nordic IT) has a tentative release of February 2018.Bottom line here is that this is a company that is seeing topline growth month on month from its bitcoin operations and this growth is allowing it to fund its cybersecurity projects without having to dilute shareholders to any real degree. The latest capital injection exemplifies this and the market response to said injection points to strong sentiment and, in turn, some real potential for upside revaluation during the coming 12 months.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on MGTI, sign up below!Image courtesy of BTC Keychain via FlickrDisclosure: We have no position in MGTI and have not been compensated for this article.

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