BTCS Raises $1.45 Million in a Funding Round; Immediately Increases Stake in Spondoolies-Tech

Bitcoin mining firm BTCS, formerly known as Bitcoin Ship has completed a $1.45 million round of financing on December 16, led by Cavalry Fund LP.

Originally known as Bitcoin Shop, BTCS was an e-commerce retailer that shifted its business model to bitcoin mining. The company was in need of a cash-boost after a recent SEC filing raised concerns of the company’s ability to even exist in the long term.

The SEC filing shows a net loss of $8.4 million for nine months ending September 2015. An excerpt from the SEC filing read:

Because of recurring operating losses, net operating cash flow deficits and an accumulated deficit, there is substantial doubt about the Company’s ability to continue as a growing concern.

With the new round of funding, BTCS seems to have immediately dug into the funding round by taking $750,000 from the investment to increase its stake in Spondoolies-Tech, an Israeli bitcoin mining company. The cash will see BTCS increase its stake in Spondoolies from 6.6% to 9.6%.

CCN.com previously reported on BTCS’s original investment of $1.5 million in the Israel-based mining company with a merger that is pending and expected to come through in a few months from now.

Charles Allen, CEO of BTCS stated the following in a press release:

The successful closing of this round of financing is an important milestone for BTCS. It enabled us to invest an additional $750,000 in Spondoolies-Tech…and sets the stage for the rollout of their next-generation SP50 servers.

The company also notes key ‘milestones’ in the release, which makes for a more positive reading than the SEC filing. Citing a capacity expansion to 3 MW at its North Carolina facility, the company also noted a 2,481% grown in bitcoins earned this year in nine months ending September 2015 compared to 2014 as a whole. The press release made no mention of the bitcoins mined.

The capital from the latest round of funding was raised through a note, convertible into shares of BTCS common stock at a conversion price of $0.30 per share. The note has a 9-month maturity period and includes stipulated warrants to purchase 6.77 million shares of common company stock at an exercise price of $0.375.

Furthermore, $325,000 from the investment was advanced to CSC Leasing Corp to help with an international purchase of transaction verification servers. The purchase was facilitated through a sale-lease-back arrangement which the BTCS sees will grow its mining capacity from 891 TH/s to 1,800  Th/s.

Making note of the cash boostto ramp up production of its SP50 miners, Spondoolies CEO Guy Corem said:

The new capital we received from BTCS is expected to accelerate our SP50 server rollout. With an estimated 400% efficiency improvement over its predecessor, the SP35, getting the SP50 to market should provide us a strong competitive advantage in 2016.

Last modified: March 4, 2021 4:46 PM

Samburaj Das: Samburaj is Editor of CCN.com, one of the earliest and foremost publications covering blockchain, and financial technology news. Now focusing on Markets, Showbiz, Sports, and Gaming. He has authored over 2,000 articles for CCN.com. Reach him at samburaj@ccn.com. Visit his LinkedIn profile here.