Earnings call transcript: Dmg Blockchain Q3 2025 sees revenue rise amid crypto challenges

DMG Blockchain Solutions reported its Q3 2025 earnings, revealing a notable revenue increase that surpassed forecasts despite a challenging cryptocurrency market. The company posted a revenue of $11.6 million, exceeding the anticipated $9.98 million. However, the earnings per share (EPS) matched forecasts at $0, reflecting a near breakeven on net income. Following the announcement, DMG Blockchain’s stock experienced a slight decline, closing at $0.275, down 1.82%. According to InvestingPro analysis, the company’s market capitalization stands at $38.12 million, with the stock currently trading below its Fair Value.

Key Takeaways

• Revenue for Q3 2025 was $11.6 million, surpassing forecasts by 16.33%.
• EPS met expectations at $0, indicating a near breakeven position.
• Stock price fell by 1.82% post-announcement.
• Company is focusing on expanding its hash rate and exploring AI infrastructure.
• Reduction in Signum Bank loan and increased cash flow from operations.

Company Performance

DMG Blockchain Solutions demonstrated resilience in Q3 2025, achieving higher-than-expected revenue despite a challenging environment for Bitcoin mining. The company mined 84 Bitcoins, a decrease from the previous quarter’s 91, but managed to maintain a strong cash position with $62 million in cash, short-term investments, and digital currency. The firm’s strategic focus on expanding its hash rate and exploring AI data center infrastructure positions it well for future growth.

Financial Highlights

• Revenue: $11.6 million, a 16.33% surprise over the forecast of $9.98 million.
• Earnings per share: $0, meeting the forecast and representing a near breakeven on net income.
• Cash flow from operations: $18 million, indicating strong operational efficiency.
• Total assets: $134 million, reflecting robust financial health.

Earnings vs. Forecast

DMG Blockchain’s Q3 2025 earnings report showed a significant revenue beat, with actual revenue of $11.6 million exceeding the forecast by 16.33%. However, the EPS of $0 aligned with expectations, highlighting the company’s focus on maintaining operational stability amidst market volatility.

Market Reaction

Despite the positive revenue surprise, DMG Blockchain’s stock saw a decline of 1.82%, closing at $0.275. This movement is within the context of its 52-week range of $0.185 to $0.63. The stock’s reaction may reflect investor caution due to the company’s flat EPS and the broader challenges within the cryptocurrency sector. InvestingPro data reveals the stock’s high beta of 6.81, indicating significant volatility compared to the market. Year-to-date, the stock has declined by 20.29%.

Outlook & Guidance

Looking ahead, DMG Blockchain aims to increase its hash rate to 3 exahash by year-end through non-dilutive financing. The company is also exploring AI data center contracts with the Canadian government and potential expansion into altcoin mining. Additionally, DMG is considering an uplisting to NASDAQ or a potential Texas exchange to enhance its market presence.

Executive Commentary

CEO Sheldon Bennett emphasized the company’s strategic pivot towards AI, stating, "We are positioning DMG to expand into AI in a meaningful way." COO Stephen Illescu highlighted the company’s commitment to digital assets, remarking, "We want to set an example for how all companies should think about allocating a portion of their balance sheet to digital assets."

Risks and Challenges

• Increasing network difficulty in Bitcoin mining, which rose by 10%.
• Volatility in cryptocurrency markets impacting revenue and profitability.
• Potential regulatory changes affecting cryptocurrency operations.
• Competition in the cryptocurrency custody market, which remains underserved.
• Dependence on achieving non-dilutive financing to expand hash rate.

Q&A

During the earnings call, analysts inquired about the slow progress in Canadian defense sector contracts and the company’s digital asset treasury strategy. Executives reiterated their focus on Bitcoin while exploring selective altcoin opportunities and potential partnerships with technology providers like PayPal.

Full transcript - Dmg Blockchain Solutions Inc (DMGI) Q3 2025:

Chantal, Conference Call Moderator: Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the DMG Blockchain Solutions Q3 twenty twenty five Update Conference Call. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available on the company’s website. Joining us today from DMG Blockchain Solutions is Sheldon Bennett, the company’s Chief Executive Officer and Stephen Illescu, Chief Operating Officer.

During this call, management will be making forward looking statements, including statements that address DMG Blockchain Solutions’ expectations for future performance or operational results. Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in DMG Blockchain Solutions’ most recently filed periodic reports and the company’s recent press releases, particularly the cautionary statements within. The content of this call contains time sensitive information that is accurate and only as of today, 08/25/2025. Except as required by law, DMG Blockchain Solutions disclaims any obligation to publicly update or revise any information to reflect, events or circumstances that occur after this call.

It is now my pleasure to turn the call over to Sheldon and Steven. Sheldon?

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: Thank you, Chantal. Good afternoon, and thanks to everyone who has joined the call today. My name is Sheldon Bennett, and I am the CEO and Founder of DMG Blockchain Solutions. With a similar format as recent quarters, first, I will provide an overview of the company’s achievements in the past quarter. I will then pass the call to Stephen, who will review the company’s performance.

We will end the call with our Q and A session based on questions submitted to us prior to the call as well as those using Zoom chat. So now on to our highlights of recent achievements. First, our core plus, our software and services strategy. For systemic, our progress for onboarding clients and achieving our revenue target has been slower than we earlier anticipated. While we are unlikely to realize significant revenue this calendar year, we are optimistic about the long term opportunity of the business.

Building a world class custody platform and acquiring customers in a competitive market is hard, but we also feel we offer competitive advantage with a focus on Canada where clients are seeking to mitigate geopolitical risk, competitive pricing and white glove service that our larger US firms are simply not able to provide. Accordingly, we believe we can achieve scale over the next twelve months that would begin to result in material revenue. With respect to systemic trust go to market, we are adopting a more tiered strategy of onboarding smaller customers such as family offices and smaller funds. We do not feel that we are being gated by any of the compliance hurdles that we need to achieve given our more realistic view of the sales cycle. For systemic trust platform expansion, we are working closely with our regulators so that we can offer yield generating and other value added services.

We will provide additional information as we proceed through the balance of the year regarding timing and specifics of what we will offer. We are also exploring the regulatory requirements and capital required to expand services to The U. S. To offer settlement services, we continue to focus on partnering with crypto trading platforms, including Bosonic, with which, specifically, we are also aiming to realize value from our investment. For Terra Pool, we continue to evaluate the best way to enable our carbon neutral Bitcoin ecosystem.

The market wants decentralization of the Bitcoin network. And as it has been well documented in the media, the network is dominated by a huge large pools, which even with benevolent intentions could become an increasingly overhang for growth in the value of Bitcoin. Our focus remains to work with a limited number of larger mining entities looking to leverage the portion of their energy mix that is carbon neutral and provide them the opportunity to increase their revenue. Our immediate goal is to demonstrate this opportunity for increased revenue on Terapool. In addition, we know the value proposition of Terapool becomes even greater when we can offer a suite of complementary products, including Helm, Reactor and Explorer along with our custody offering.

Now for a few words on each. First, Helm, DMG’s data center infrastructure management software, continues to be enhanced to be best in class software for maximizing the profitability of Bitcoin mining. Helm is being used in house, and we are working with beta customers to deploy Helm at their facilities, including our hosting partner. With announcements by Foundry and Block, including general facility management tools with their offerings and even Block announcing its code will be open sourced, we believe the days of proprietary and high priced legacy platforms are coming to an end. We’re embracing this trend and see Helm, which is already utilizing open source code, to do even more such in the future.

Our goal remains to be best in class and a key value add for being on Terapool. Second, Reactor, which is our proprietary software for assuring the delivery of hash rate over the term of a hash rate contract and gives Terapool clients the option to sell hash rate and be paid upfront for delivering hash rate over the term of a contract. We are currently testing Reactor along with providing additional functionality via its underlying software layer called MineApp. We will discuss some more about this in the coming months. Our near term goal is to demonstrate the operation of Reactor by selling a relatively small portion of DMG’s hash rate on multiple hash rate contracts.

We plan to integrate Reactor along with Terra Pool and Helm into a single seamless environment. Finally, we released Blocks here Explorer last month to offer the Bitcoin community a tool for miners and others engaged with Bitcoin. The next step for Explorer is to expand its analytics capabilities. In summary, we now have the critical mass of products to be able to realize our vision of monetizing a carbon neutral Bitcoin ecosystem. Our focus now is customer acquisition and feature enhancements.

Regarding our core data center infrastructure, first, for AI, regarding the two megawatts of prefabricated data center infrastructure we purchased from the same party we announced the MOU to acquire 10 megawatts of infrastructure, we have an indication of interest from a potential client for purchasing and or facilitating this asset to be located in Canada. As we have nothing definitive at this point, we cannot claim this as a deal, but we are encouraged by the progress we continue to make. With respect to the Canadian defense sector, this remains a focus area. We are aware of specific requirements for which we are having discussions. We believe that with our execution partners, which we have yet to announce, we are well positioned to address the Canada Canada’s military needs.

I personally met with secretary of state, Stefan Fuhrer, who’s responsible for defense procurement about two weeks ago at the Abbotsford International Air Show, and was very encouraged by our discussion. We plan to have additional ministerial level discussions in the coming weeks. Last October, we signed a memorandum of understanding with the Malahad nation to build up 30 megawatts of AI compute capacity split between our parties. We are now focused on executing agreements with the Malahat as well as more actively pursuing the financing of smaller projects ahead of a potentially much larger AI data center project financing. Next, for Bitcoin mining.

With our hydro miners fully energized during the quarter, we realized 1.8 exahash with a fleet efficiency of 22.6 joules. At the very May, we reached our short term hash rate goal of 2.1 exahash. As disclosed in our recent press release, we have been operating below that number based on the summer heat and suboptimal operations of our air cooled fleet even as our hydro miners achieved 0.4 exahash in the latter part of July and have maintained steady hash rate since, even with the hottest temperatures near a 100 degrees Fahrenheit or for Canadians around 40 degrees Celsius. Regarding Bitcoin mining site expansion, we remain focused on lowering our cost of energy, which includes expanding the use of non firm energy in Christina Lake and finding new sites with low cost energy. We reached an agreement with the party we announced in May 2023, which could realize for us an additional Exahash later next calendar year.

We continue to evaluate locating Bitcoin mining at other locations in Canada and The US. Regarding our three Exahash goal by the end of this calendar year, we are looking to achieve this goal with nondilutive financing. One of our options to achieve this goal is by converting a portion of our Christina Lake building facility to hydro mining. As a reminder, this building already contains all the power distribution and racking to energize up to 36 megawatts of capacity, which facilitated with modern miners could generate about 2.5 x a hash. For equipment financing options, we are considering our existing debt via facility or other debt options that would still allow us to realize our ROI targets.

For DMG’s digital asset treasury, or DAT, we are still evaluating the best options to proceed. As we announced, we have brought in consultants to evaluate how we can support the market’s need for custody services for digital asset funds and treasuries. Our objective is to set policy that will apply evenly through the next crypto winter. Technical analysis analysts would point to past Bitcoin cycles, which would suggest that Bitcoin pricing peaks this November and subsequently declines in excess of 70% in the subsequent downturn. While we have no way to forecast where Bitcoin price actually goes or if the cycle is different because of secular drivers as many pundits are saying, our objective will be to set an example for the industry of how that are managed.

Now for a summary of our strategy. First, DMG’s core plus software and services. For systemic trust, we are refining our go to market strategy while bolstering our operational capabilities to ensure we can smoothly onboard successively larger clients and ramp revenue. We have deferred our expectations for material revenues until next calendar year, but we remain committed to our platform as we believe we can provide a differentiated world class offering that fulfills real market needs. Regarding our larger carbon neutral Bitcoin ecosystem, we have the pieces in place to execute on our strategy.

Even as our focus is first to ensure the success of systemic trust, we remain committed to the rest of the platform. We are proud of having relaunched the world’s best freely available blockchain explorer, Blocks here, which is a great example of how our small developer team leverage the latest tools built and built a best of breed product in minimal time. For DMG’s core data center infrastructure, over the past quarter, we are nearing our goal to be a provider of AI data center colocation and compute services focused on the Canadian defense sector. We are encouraged by the progress we have made as we have navigated the defense related agencies within the government of Canada, having established relationships with key influencers and decision makers. Additionally, we have bolstered our relationship with market leading execution partners that can help us capitalize on what may develop into large opportunities over the coming years.

Even with a big portion of our attention on AI, Bitcoin mining remains foundational to our core strategy, and hence, we are still focused on how to grow to three exahash by the end of the calendar year and to do this in a nondilutive way. Now I’ll hand it over to Steven to review the company’s performance.

Stephen Illescu, Chief Operating Officer, DMG Blockchain Solutions: Thank you, Sheldon. I’m Steve Ellescu, DMG’s COO. First, a few words about the company’s overall position. In the June, our cash short term investments plus Bitcoin balance was $61,800,000 about flat sequentially and up 56% year over year. We’re utilizing about two thirds of our Bitcoin balance as collateral for our Signum Bank loan facility.

Note that our Signum loan balance was $12,700,000 in the June versus $20,000,000 in the prior quarter and dropped to below $10,000,000 in the current quarter as we disclosed in a recent press release. We believe this provides us a more optimal capital structure with lower debt servicing needs. Having adjusted our capital base, we’re now in the valuation phase of implementing a digital asset treasury strategy that we can have in place for the long run. For our mining operations, our average hash rate for the quarter was below expectations as we dealt with hydro infrastructure contamination caused by manufacturer quality control issues as well as seasonal heat related issues for our air cooled miners. We have largely overcome our hydro contamination, although we continue to monitor the equipment.

As we have been consistently operating at 0.4 Exahash and the few miners that have failed have largely been repaired and will be put back in service in the very near future. Finally, as Sheldon detailed in his update on AI, we are encouraged by our progress, especially given indications of interest to buyer infrastructure and or services. However, we caution that government agencies move slowly, and we’re new to the procurement process. But we continue to push avenues via partnerships and political angles to help us navigate the bureaucracy. Now to review our financial results.

In our June quarter, our revenue decreased 8% to $11,600,000 and $12,600,000 in the prior quarter, mainly as self mining revenue decreased a similar percentage on 8% lower network Bitcoin per Exahash generation. From the year ago quarter, revenue increased 40% from $88,300,000 We received 84 bitcoin from mining down from 91 bitcoin in the prior quarter as our 2% hash rate increase was more than offset by the decrease in the network’s Bitcoin per exahash generation. Our hosting revenue decreased 22% sequentially to $100,000 in our June quarter. We expect hosting revenue to decline to near zero this calendar year as our existing customers retire their fleets and we utilize our capacity for self mining. Operating and maintenance costs decreased 14% to $6,500,000 from the prior quarter, mainly on lower seasonal energy rates.

Note that our non firm power is subject to self curtailment, and we had no curtailment events in the June. Also note that the 15 megawatts of firm power, we may have may ultimately support our AI venture with the Malahat, and we’re working with our utility to secure additional firm power for future AI growth. Our margin percentage on our revenue less operating and maintenance costs was 44% in the June, up from 40% the prior quarter, mainly on lower energy rates. Consequently, our energy cost to mine a bitcoin was down to about US51 dollars even as network difficulty rose 10% from the prior quarter. As we will likely continue to utilize non firm power for much of our energy mix going forward, we will experience more volatility in our mining costs than we’ve had historically.

As a proxy for cash flow from our business, which assumes we’re selling 100% of our Bitcoin generated, our earnings before other items excluding depreciation, amortization and stock based comp was $2,700,000 or 23% on a percentage basis in the June, an increase from $2,500,000 and 20% in the prior quarter, again due in large part to lower energy rates. Our cash flow from operations was $18,000,000 in the June as we sold $15,000,000 more of Bitcoin than we earned. Our cash balance increased to $2,000,000 on our cash generation, which also funded our capital additions and pay down of debt. As we have already reported in a recent press release, our Bitcoin balance declined in July to an unaudited amount of $3.00 7 Bitcoin. Investors should expect our bitcoin balance for the remainder of the quarter to rise from this level as we believe we have achieved a more optimal capital structure and we do not expect to pay down our debt further in the near term.

Non mine expenses, excluding depreciation, amortization and stock based comp were $2,400,000 in the June, down 5% from the prior quarter of 2,500,000.0 We continue to expect non mine expenses to rise only modestly this year. We have added headcount to support program execution, especially given what we need to accomplish on AI as well as business development for our software initiatives and operations. For at least the near term, these are targeted hires helping us to ensure operational and sales execution. Depreciation expense of $4,500,000 in the June increased 5% from the prior quarter as all of our S21 plus hydro miners are now fully in service. As a percentage of revenue, our depreciation expense was 39%, up from the prior quarter of 34%, but still among the lowest in the industry.

We continue to look towards future miner CapEx to be in the $1,000,000 per megawatt range, while we underclock our legacy miners to extend their useful life. Our earnings before other items was minus $2,500,000 in the June, similar to the minus $2,600,000 the prior quarter. Our net income was minus $400,000 or $0.00 per share versus minus $3,300,000 and minus $02 per share the prior quarter. Note that also our comprehensive income, which combines our P and L with unrealized Bitcoin valuation gains on our balance sheet, $9,700,000 for the quarter and is $11,700,000 fiscal year to date. Regarding our balance sheet, our cash short term investments plus Bitcoin Holdings was $61,800,000 about flat from the prior quarter and an increase of 56% from the prior year.

With the reduction in debt, working capital increased 16 to $47,500,000 from the prior quarter and is up 91% from the prior year ago quarter. The value of our property and equipment and long term deposits increased 7% to $59,600,000 from the prior quarter as depreciation was exceeded by our capital additions, mainly the two megawatts of data center infrastructure. Accordingly, our total asset base increased 3% to $133,600,000 from the prior quarter and increased by 20% the prior year. In the June, we sold $2.00 1 Bitcoin, generating $26,400,000 of cash. Thus, we sold 239% of the Bitcoin amount mined versus the prior quarter of selling 42% of the Bitcoin mined.

It is possible that with our Bitcoin sales this quarter, DMG will sell more than 100% of its mined Bitcoin in fiscal twenty twenty five. In the past, we have stated that as a treasury policy, investors should continue to expect us to sell more most or all of the Bitcoin we mine and that our Bitcoin holdings should decline as a percentage of our total asset base over time. We are updating this policy to state that we are considering setting aside a dedicated digital asset treasury as part of a long term holding to which we accumulate digital assets initially with Bitcoin only. While we would not intend to liquidate that treasury, we may want to periodically rebalance it with cryptocurrencies other than Bitcoin. Regarding raising new capital, as for a future where AI could be a major component of our business, our capital raising would most likely be debt instruments tied to offtake and colocation contracts.

For Bitcoin mining expansion, we’re most likely to continue to utilize Bitcoin backed loans and other forms of debt financing. Note that as we look to our next phase of expansion towards 3xahash, we believe we can source near leading edge $13.16 joule per terahash equipment later this year that should cost in the $1,000,000 per megawatt range in US currency. I will now hand the call back to Sheldon to summarize her prepared comments, and we will both answer questions. Sheldon?

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: Thank you, Steven. First, to reiterate our key results and outlook. We are positioning DMG to expand into AI in a meaningful way as we have established relationships with the minister’s office related to defense procurement in Canada and have cemented execution partner relationships. We are committed to systemic trust and believe it has ample opportunity to build a strong base of business with material revenues in the next twelve months. We now have the key products to build out our carbon neutral Bitcoin ecosystem.

We are focused this year on building partnerships and acquiring clients. DIMG received 84 Bitcoin from mining in the June on a hash rate of 0.8xahash and fleet efficiency of 22.6 joules. Our hash rate goal is to grow to 3xahash this calendar year, but to do so only in a nondilutive way. Cash, short term investments and digital currency at quarter end were $62,000,000 with total assets of $134,000,000 On a net income basis, we were near breakeven in the June quarter. In addition to maximizing the cash generation of our Bitcoin mining operation, we are focused on realizing revenue from our AI and Core Plus software and services initiatives that can help return us to profitability and drive shareholder value.

In summary, we have continued to make material progress this past quarter. In AI, we are working with key decision makers who have the ability to award us with AI infrastructure contracts. We’ve now completed the platform for which we can generate revenue from systemic trust and Terra pool. We have gained significant experience in hydro mining, which will allow us to remain competitive and grow as a Bitcoin miner, all while maintaining a very lean operating structure. We continue to make real progress, and we are highly focused on our initiatives that can significantly grow our revenue and cash generation.

We appreciate your continued support. Now on to our q and a. With previous quarters, we have a selection of call questions that have come in. I normally split them up a little bit between Steven and I depending on the content, and somebody will help us read some of the questions that may be coming in now. First question, what’s your progress in talking to people in the Canadian defense sector?

How long will it take to get a contract? So as everybody knows, you know, government cycles can be long and painful. That’s no exception to the Canadian defense sector or the Canadian government. However, as we know, the Canadian government does have a sense of urgency as it’s not only trying to meet its NATO commitments, but is also directly spending in AI infrastructure, which Canada sees as woefully behind relative to The United States. We obviously wish this would move quickly.

We are encouraged by the amount of meetings we’re getting, the people we’re getting access to, the content of our meetings that we’re having, and, we believe that this is all very positive, and we’re in the right market at the right time. We also have a lot of friends, both, you know, champions within government who are helping us navigate bureaucracy. And, there’s some great individuals in the Canadian government that are really helping, Canadian company go after Canadian contracts. But as well, we have great execution partners that are willing to utilize their reputation to help us facilitate, you know, winning contracts in in the near term. And, hopefully, that answers the question.

Another question we have, why do you say you need execution partners for AI? What roles would they fill? That’s a great question. You know, for DMG, you know, we’ve been a Bitcoin miner for, you know, close to a decade. We’re coming up to ten years as a company soon.

But in data centers, around high performance computing, this is a different world of tier data centers, you know, predominantly tier three data centers. You know, our our ability is very much focused on power and power optimization and management as, you know, Bitcoin miner. And so we have made a decision to partner with companies that give us skill sets in supply chain relationships, in geographic reach that we might not otherwise have in procuring or getting or using security clearances that we don’t have. Additionally, as we’re going after, you know, what are really multibillion dollar contracts, You know, it’s hard for ourselves to present just DMGA on its own going for such large contracts. We need to present ourselves with some great partners that have experience at this size and, you know, can be seen, to the government, as successfully executing large contracts, maybe not in Canada or, you know, or in different industries within Canada, but, you know, people that have have some of this experience that we don’t have, in certain areas.

Hopefully, that answers the execution partner question. Is there a Malahat update? Is this moving forward? Yes. And it’s moving forward on two fronts.

First, our plan is to locate some portion of the prefabricated data centers on Malahat land in conjunction with a potentially, if things go, well, a military contract with the Canadian government. Additionally, our second, they’re sort of a longer term scoping and need to supply future infrastructure, on Malahat territory, for the 15 megawatt agreement that we put together. That’ll take a little bit longer, but we are, in the process with the Malahat, to to figure all of this out and to expand the power capacity on their territory. Part of that is working on the application process with the First Nations Finance Authority for, a loan to start out our first pilot project with the Malahat. And as we make, progress, we will continue to provide updates on, on our our venture with the the Malahat nation.

Another question. You have said almost nothing in the press about Terapool. Is it dead? Well, no. Terapool is far from dead.

The key issue for Terapool has been to show that buyers will pay a premium for Bitcoin sourced from carbon neutral energy sources. Our goal remains to demonstrate the economic advantages of being in a carbon neutral pool, and we are working on multiple projects to do this. Additionally, we have been building the pieces around this with Helm and Reactor along with systemic trust. So we believe very soon, we will be able to showcase in this complete ecosystem of offerings for miners. So I think that’s hopefully, kind of answers the question around TerraFool.

Why is it taking so long to generate revenue from systemic trust?

Stephen Illescu, Chief Operating Officer, DMG Blockchain Solutions: So

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: building a business is hard. As I alluded, we’ve been almost ten years as DMG. Building a trust business under the different rules and regulations that come for being a trust is even harder. So, you know, we, are busy trying to figure out the best ways to build, systemic trust in a short period of time. This is why we brought in the consultant, you know, not only just to help DMG around how we should think about building a digital asset treasury, for ourselves, but also how systemic trust would be looking at, being part of any company’s digital asset treasury and, you know, positioning ourselves to go after companies, and and organizations that want to do that.

But, you know, we have become a bit more optimistic in the future about, you know, bringing on more clients, how realistic we are about how long it takes to win clients and onboard new clients, and sort of the time from, you know, entering a market, finding clients, onboarding clients, starting to generate material revenue. We still do believe that, this is a largely underserved market, that really now currently relies on large US based custody providers. And we believe that a Canadian company servicing this area with some of the unique services that we could bring can do a better job, and we will win over customers in the future. That was sort of a a long answer. Steven?

Stephen Illescu, Chief Operating Officer, DMG Blockchain Solutions: Yeah. And I have so I’ll take we we had some other questions that I’ll take because Sheldon and I typically play tag team here and split the load. So the next question is some everybody’s favorite topic, digital asset treasuries, and asking a couple questions. Why don’t you do an offering as others have done to significantly grow their market cap? And is DMG considering becoming a a Bitcoin treasury company?

And the answer is to to the latter is no because but I think what we said is what we wanna do is set an example for how all companies should think about allocating a portion of their balance sheet to digital assets. And if you kinda look at what’s take a step back and look at what’s going on, we’ve see what we’ve seen in in the short term is investors are willing to pay, at least in some cases, this multiple premium on net asset value versus an ETF, which has no premium. And NIDIG, our friends there, have referred to this as a memetic premium. In other words, there’s a premium based on having some rock star involved. And this meme value has enabled companies to offer shares at a premium to NAV.

As DMG trades at the value of our digital assets and well below book value, we’re really not in a position to offer equity to purchase digital assets. And we’d rather use the dry powder we have and the unused portion of our Signum loan bank facility, as well as other debt instruments to potentially make asset purchases that we believe will drive much more meaningful value in the long run, our two megawatt prefab data center acquisition being an example of that. Next question here, why did you liquidate Bitcoin ahead of the peak to pay down debt rather than wait until Bitcoin was higher? Well, frankly, we wish we had a crystal ball to know when the peak is, but from a treasury management point of view, we’re proud of the fact that we utilize debt rather than sell Bitcoin at levels far below where Bitcoin is today. We know if Bitcoin goes to 200 in the few months will be criticized for selling so far below the peak.

But just given the volatility we’ve seen this year alone, we’re happy we’ve locked in gains that really most portfolio managers would be envy of self. And we’ve also had your bets by not fully paying down our debt and leaving the option also to start building a dedicated treasury that would be a base to accumulate over the long run. The next question here is about IR and marketing. We talked last quarter about IR and what’s happened since and also just this having creating a more public facing marketing strategy. And, yes, over the past quarter, we’ve had conversations with potential IR firms as well as firms that also can provide more liquidity in our stock.

And we’re excited about our story, wanna get it out more, but as we look to the fall, we are likely to make some decisions on this. But also, investors should keep in mind that we’re we continue to look at up up listing options potentially in the coming year. We just wanna make sure we have the right firm in place that can support us with that transition. And also but nearer term, especially with systemic trust, really being focused on leveraging this trend with digital asset funds and treasuries, we are gonna need to build a lot more marketing collateral in the near term. So this is an area we’re definitely putting more attention.

I think we’ll have more to discuss in the the coming months here. Question here about Block announcing its own proto mine management software. What’s the point of us doing our our own Helm product? And we applaud what they’ve done. As Sheldon mentioned in the prepared comments, we already are utilizing open source code.

And Block and us share this vision to utilize AI for making Bitcoin mining more really focused on maximizing Bitcoin profit mine profitability and uptime. And we’ve always kinda had the view that Helm wasn’t really gonna generate a lot of revenue as a standalone product, but really be support for Terra Pool and really reinforce Terra Pool. We’ve kinda seen now as other pools are introducing their mind management software. This is becoming a trend, and it’s really becoming table stakes if you wanna be in this business. Also with BitTier offering products, Auradigm having a new miner and block, what’s your stance on continuing to sole source from Bitmain?

And, yes, they’ve been a great vendor for us, but we welcome competition. I think with Bitmain is the s 21 plus, which we are now have fully in service. Of those miners at 15 joules a terahash and $14 a terahash, just kind of market pricing in the June, that’s an industry benchmark. It’s hard to beat. But we’ve said we’re continuing to look for mining equipment, million dollar per megawatt range, and we’re encouraged that there will be multiple vendors that can offer that to to be able to offer that type of range with a high efficiency.

We actually have purchased one of the Auradine hydro miners and have it in house. We went to the block proto launch event. We got to see and touch their equipment. And we’re retrofitting our Christina Lake building infrastructure for hydro to be vendor agnostic. So at this point, we haven’t made a decision regarding how to facilitate, but we’re encouraged we’re gonna have a lot of good choices.

And the related question, it’s already August. You haven’t announced your expansion plans to get the three x a hash. How can it realistically happen this year? Well, we are our primary option to get there is to retrofit our building. We have actually our building is split into three twelve megawatt tranches.

We’re working on the first. Essentially, would retrofit one tranche to reach that goal. We’re we’re gonna begin testing the first megawatt in next month as we’ve sourced the coolant distribution units. They’re they’re in shipment, so we’ve seen what they look like. The the ones that we bought, they’re gonna be in place in the next few weeks, and we’re gonna use the dry coolers that we purchased for our immersion project.

So once we confirm the operation, next month, we’ll be in a position to purchase the balance of the infrastructure, which we should have in place by the end of the year. And then the issue will really be the the miners, and we haven’t made a decision. So we wanna do it in a nondilutive way. Also, one of the things to keep with especially with respect to Bitmain, they give very limited visibility on the road map. When we started Hydro, we bought the s 21.

And the reason we switched to s 21 plus is they had just announced it shortly after we purchased the s 21. So for the balance of the six megawatts, we we switched and went to the s 21, and we’re very happy with that decision. So we think we still have time to be able to do that. Sheldon, are there any other questions that came in the chat that I may have missed that you wanna capture?

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: I got a few forwarded to me. I think we covered some of them from the looks of what’s being forwarded to me. But one is our any project with PayPal dead. I would not say PayPal’s dead. PayPal is kinda like government.

It moves at its pace of what it wants to do. We’re a technology provider for them and what they want to do. Interesting enough and timely to this question is a third party has come to us that’s very much interested in using the technology that DMG and PayPal have put together around Bitcoin. And so, you know, we’re gonna have some discussions with PayPal on that as well, but I I wouldn’t say PayPal’s dead. I would say PayPal works at PayPal’s pace.

People have to understand that we’re a technology provider on the software side for them, to help them do what PayPal wants to do on a Bitcoin blockchain. But that technology can be used for other things other than just PayPal, which is is something that’s come up recently that we’re investigating. Another question is, are we expanding or holding the defaults? I would say, potentially. Just a little bit of going back in time, DMG, for the longest time, was not interested in altcoins.

Mainly, and I’ve said this publicly in the past, was we just did not understand a lot of the value of some alts, and they’re very volatile much more than Bitcoin. And we felt that for shareholder money, you know, we kinda bet on Bitcoin as as the crypto that, you know, would outlast and outperform others. I think there’s lots of yeas, and that that is the right right bet to make. Obviously, some alts do very well, but they also do very poorly. But things are changing now.

The rules in The US have changed. Hopefully, Canada makes some changes as well. And there could be some alts out there that, you know, can do just as well as Bitcoin, potentially better than Bitcoin. And so, you know, we’re spending some time with with, the consultants we have, looking at some ROI, trying to figure out what would make sense. Everything we’re looking at has to be liquid.

We don’t want to get into some altcoin that, you know, we we may end up mining and owning or purchasing and owning, and then we can never get rid of it if we wanted to get rid of it. So we’re very much focused on things that will continue to grow our Bitcoin balance as well. Anything else? Did you see?

Stephen Illescu, Chief Operating Officer, DMG Blockchain Solutions: Yeah. There’s a question about with respect to AI in terms of focused focusing on the enterprise market, and we’ve certainly seen a number of announcements from our peers regarding that the last couple of days. We are very much looking at at the enterprise market. We just think it’s gonna be a lot more competitive and the not necessarily have the kinds of margins that defense sector or or government has. The trade off being is there’s a readily available market in enterprise in with seemingly unlimited demand.

And with government, it’s slow. And we agree, and our view would probably be somewhat different and typical environment. We believe given what we’ve already capitalized on in terms of building relationships within the defense sector and the defense sector’s sense of urgency to spend money, a lot of money in a relatively short period of time, as well as for Canada to improve its trade relations with The US, that we have a unique opportunity at this point to capitalize on the defense sector. We haven’t lost sight of enterprise, but this is the enterprise is really about investing outside of the hyperscalers, but the the smaller enterprise accounts and the neo cloud business is build it and they will come. That is certainly true right now.

We think the way we’re doing it limits our exposure in the near term, but gives us a very, strong and long term revenue base and position that we hope will be the envy of the industry.

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: Thanks, Steve. I think just this comes up, and we we spoke about it earlier, was this sort of selling off a large portion of our Bitcoins. Obviously, you know, it needs to be understood that when we take debt on, we have to pay interest. Our interest is around eight and a half percent. You know, running that on how much debt we took, this, you know, can really add up, and the gains of, you know, waiting out the increase of Bitcoin price can be lost if we just continually hold it as debt and and don’t pay it down.

When you look at, you know, the economics of when we took on the debt, what that Bitcoin price was, when we started selling it back, the return for us has been phenomenal. And, you know, eventually, that debt needs to be paid down somehow. And the amount of interest we’ve incurred, you know, is is not insignificant. So there has to be a balance where investors understand that there’s a time to hold the coin and take on debt and take on interest, and there’s a time to take advantage of that as as Steven has said in his his his comments, where we can take that off the table and and do really well on holding back and not selling coins at, you know, a a lower value, that we would have had to sell if we didn’t take on debt. So that balance sometimes is a little bit misunderstood with people, you know, just wanting to have a as large of a Bitcoin balance as possible.

So you have to be a little bit careful there. So I just wanna say that. The other the other thing point on that is that, you know, when opportunities do come up, having that balance of Bitcoin allows us to move quickly because we can turn it into cash and do things. And that, you know, allowed us to to break into the AI game by getting our hands on the first two data center units that that we procured. So, you know, there’s there’s some advantages to having that bit point sitting there in which we can do things very quickly that we think are gonna be very beneficial for the company.

And so far, all indications in us buying the two prefabricated, units look very positive for us getting into some very interesting, business relationships in Canada. Those are sort of the end of our q and a unless Steven sees another question coming out of

Stephen Illescu, Chief Operating Officer, DMG Blockchain Solutions: There there’s one last question here I’ll address, and for I’ll it’s a two part question. One of it is just would we with if we did consider alt coin mining, would we hold the alts? And the answer there is we would most likely convert those alt coins to Bitcoins. We probably would not be wanting to hold altcoin, or let’s just say speculative altcoins for our treasury. We would look to blue chips.

So you can kind of start with ETH, maybe look at a couple others, but it’s gonna be a very short list. Those are essentially proof of stake coins that we would stake. And the proof of work coins tend to be a lot more speculative. And hence, if we did decide to go mine those, they would be converted to most likely be converted to Bitcoin. And then also just in terms of the the company priorities, we really look at it from, two points of view.

One is Bitcoin mining generates cash, and we wanna keep it competitive so that it continues to do that for us in a capital accretive way. And our new businesses really are split with AI and our software and services where we’ve said the priority there is systemic trust. So you can kind of think of us as having two branches for driving future growth and future valuation of the company. We have different people who are dedicated to those efforts, and they all filter up to to Sheldon and I, but at the end of the day. But we do look at them as, two growth initiatives that are running in parallel that ultimately, we feel both can drive a lot of value in the long run for DMG.

And I I think that’s the last question.

Sheldon Bennett, CEO and Founder, DMG Blockchain Solutions: Yeah. There’s there’s one that just looked like it came across. What exchanges are you looking to uplist to? Well, obviously, you know, NASDAQ, New York are the two most prominent, and we spent some time looking at NASDAQ. But, an up and coming exchange is Texas.

We’ve had some discussions around that. We’re gonna have some more discussions in the the coming months as we get more information on what a Texas exchange may look like and how it operates. It may be a great place. You know, it’s a kind of the Bitcoin capital of America. It seems to be Texas, and it could be a great place for us to uplist onto.

I think that ends our q and a. Thanks, everybody, for the questions and joining the call. Regarding upcoming conferences, we will be at the HC Wainwright Conference in New York, September ’10, and the Arkstone Kingswood Growth Summit in Toronto on September 18. We thank you, everyone, for attending, and our call is now over.

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