A former beverage producer has completed a pivot into the blockchain space with the purchase of 1,000 bitcoin mining rigs from hardware producer Bitmain.
Long Blockchain Corp. — formerly known as Long Island Iced Tea — is purchasing 1,000 AntMiner S9 units, along with power supplies, for $4.2 million, according to documents filed with the US Securities and Exchange Commission (SEC) and dated Jan. 4.
“We view this transaction as an important and validating initial step in the Company’s progression into blockchain technology. The commencement of our mining operations places us on a path to generating blockchain-related revenue through the accumulation of bitcoin. This platform will help support our longer-term strategy of engaging in partnerships, investments and acquisitions in the blockchain ecosystem,” said Philip Thomas, chief executive of the company.
The transaction will be partially financed by issuing 260,000 shares of Long Blockchain common stock to the vendor, which is not named in the filing. The company also plans to issue 1.6 million shares of common stock in a bid to raise another $7.7 million in funding.
Manufactured by China-based Bitmain, the AntMiner S9 can purportedly achieve a hash rate as high as 14 TH/s, according to the company website.
Long Blockchain’s bitcoin mining operation will be hosted in Iceland under a Master Services Agreement (MSA) with Verne Real Estate, which owns a data center in Reykjanesbaer.
The firm is one of a number of companies that have sought to position themselves as leaders in the blockchain space despite having little to no industry experience.
Nearly all of these companies have seen their share prices increase significantly following the rebrands, even though the US Financial Industry Regulatory Authority (FINRA) has warned investors that at least some of these pivots may be carefully-orchestrated scams intended to facilitate share price “pump and dumps.”
“Our management has relatively little experience in the blockchain technology industry,” the company acknowledged in the Friday filing, but this fact has not prevented Long Blockchain’s share price from soaring since the rebrand.
As CCN.com reported in December, the company’s share price jumped close to 300 percent after rebranding to Long Blockchain.
This, according to Bloomberg, conveniently enabled the company to avoid being delisted from Nasdaq, which had threatened to do this unless the company’s market capitalization rose above $35 million for 10 consecutive business days.
At the time of writing, Long Blockchain shares were trading at $4.96, which gave the company a market cap of $48.4 million, well above the Nasdaq-imposed threshold.
Write to Josiah Wilmoth at josiah.wilmoth(at)CCN.com.
Last modified: June 11, 2020 10:07 AM UTC