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.
