TORONTO–(BUSINESS WIRE)–Sphere 3D Corp. (“Sphere 3D” or the “Company”) (Nasdaq: ANY), dedicated to becoming the leading carbon-neutral Bitcoin mining company operating at an industrial scale, delivers its Bitcoin mining results per 31 July 2022.
The CEO’s comments
“I am very pleased with our mining output during July. Our miners operated very efficiently and maintained an average uptime of approximately 94%. Also during the month we secured hosting at Compute North, a leader in sustainable, large- scale data infrastructure, to host our new S19j Pros at their new Wolf Hollow site in Granbury, TX This facility is one of the newest, next-generation data centers in the US and should provide Sphere 3D with solid long-term hosting options.
“The shipment of 4,000 S19j Pros featured in last month’s update is set for delivery and installation at Compute North’s location beginning in August. Logistics challenges with US Customs are ultimately delaying delivery past the expected delivery dates of July 2022. The Sphere 3D team worked diligently with the vendor to to ensure prompt delivery, the miners were shipped by air to the US in several shipments that arrived between July 6 and July 10. Unfortunately, US Customs held the shipments and restricted final delivery pending receipt of documentation from the equipment supplier. August 2, 2022 , our teams received the release of one shipment containing about 540 miners, which is on its way to Compute North. We expect to have the other shipments released soon, but we will not speculate when final delivery will be allowed by US Customs Based on conversations with industry leaders, other mining companies are challenged with similarly frustrating US customs clearance issues.
“As of July 31, Sphere 3D had made contractual payments to FuFu Technologies Ltd. (BitFuFu) totaling $106.5 million on the purchase agreement entered into and announced in September 2021. Considering current market conditions and the market price of the S19j Pros miners addressed of the agreement, we look at the terms of the agreement with Bitfufu. The timing and volume of any future deliveries with respect to the 60,000 unit purchase order are expected to be affected by these discussions, and future payments on the contract are not currently expected We cannot make any assurances as to the outcome of these discussions, but we remain optimistic that a timely and fair solution can be reached. As part of our discussions, BitFufu is working with Bitmain on behalf of the company.
“We have explored several financing options in recent months and have decided to maintain our current balance sheet given market conditions and available financing terms. The company currently operates without long-term debt and intends to continue its conservative approach to capital expenditures in the near future. To maintain our conservative approach, we intend to take delivery of our fully funded miners in 2022 and push the delivery of our unfunded mining exahash into 2023.”
Update of Bitcoin production and inventory
During the month ending July 31, 2022, Sphere 3D’s mining operation produced 12.78 Bitcoin or an average daily output of 0.41 Bitcoin. Daily production volume remained flat compared to June 2022. The corresponding approximate value of the company’s production, based on a Bitcoin price of $23,378 on July 31, 2022, was approximately $298,771 for the month.
Since the company started its mining operation during the first quarter of 2022, it has produced 68.05 Bitcoin, and as of July 31, 2022, it had 62.03 Bitcoin. This represented a fair market value of approximately $1.45 million based on the Bitcoin price of $23,378 on July 31, 2022. As of July 31, 2022, the company operates approx. 1,000 S19j Pros miners delivering a production capacity of approx. 100 PH/s. Sphere 3D’s mining fleet operated at 138.5 BTC/EH efficiency in July and averaged approximately 94 percent uptime.
The company continues to use a HODL strategy for most of our holdings. The difference between the number of Bitcoin mined versus the holding is the Bitcoin Sphere 3D used to fund working capital.
Gryphon contract clarification
Based on investor feedback, the company clarifies the canceled merger and master services agreement (MSA) with Gryphon Digital Mining (Gryphon). Sphere 3D had three individual agreements in place with Gryphon. 1) the Merger Agreement, 2) the Hosting Sublicense Agreement with Core Scientific (Core), and 3) the MSA covering Gryphon’s role in managing Sphere 3D’s mining fleet.
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The merger agreement was canceled on April 4, 2022. Sphere 3D does not require any further payments to Gryphon.
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The sublicense agreement with Core called for payments of more than $50 million to Core by Sphere 3D to pre-purchase energy for the company’s miners. The agreement between Gryphon and Sphere 3D included Gryphon acting as an intermediary for these payments. Payments from this contract have been stopped due to the changes in the delivery schedule for miners and other significant reasons.
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MSA manages the continued collaboration between Sphere 3D and Gryphon after the termination of the merger. Gryphon receives compensation from monthly Bitcoin production for services it provides.
Company update
Mrs Trompeter took part in the panel discussion, Women who do mining, at Mining Disrupt, the world’s largest Bitcoin mining expo. The panel discussion was held on July 28, 2022. She joined a group of female leaders from the mining industry on a panel that discussed several topics, including the Bitcoin industry, renewable energy, and how women are driving and leading innovation in the Bitcoin mining space. For more information, visit www.miningdisrupt.com.
The CEO’s final comment
“Sustainable change and positioning a company for growth requires not only a level head, nerves of steel and conviction, but also a long-term focus. We are working hard to expand our mining operations in 2022, while exploring new and existing opportunities to empower shareholders When completed, Sphere 3D will have a strong balance sheet and our company will be well positioned for growth.
“I am proud of the work the Sphere 3D team is doing. We are working hard to grow the company and create increased shareholder value. I am proud to lead Sphere 3D on this journey.” – Patricia Trompeter, CEO of Sphere 3D
About Sphere 3D
Sphere 3D Corp. (Nasdaq: ANY) is a net carbon neutral cryptocurrency miner with decades of proven expertise in enterprise data services. The company is rapidly growing its industrial-scale mining operations through capital-efficient acquisitions of next-generation mining equipment and collaboration with best-in-class data center operators. Sphere 3D is dedicated to increasing shareholder value while honoring its commitment to strict environmental, social and governance standards. For more information about the company, please visit Sphere3D.com.
Forward-looking statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “assume,” “could,” “intend,” “goal,” ” projects”, “considers”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these words or other similar terms or expressions. Expectations and beliefs regarding matters discussed herein may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The forward-looking statements in this communication are also subject to other risks and uncertainties, including those more fully described in filings with the SEC, including Sphere 3D’s reports filed on Form 20-F and Form 6-K and in other filings made by Sphere 3D with SEC from time to time and available at www.sec.gov. These forward-looking statements are based on current expectations, which are subject to change.
