NEW YORK, NY / ACCESSWIRE / December 14, 2022 / Consensus Mining & Seigniorage Corporation ("CMSC") reported its financial results for the third quarter ending September 30, 2022.
Financial Results Summary
Consensus Mining and Seigniorage Corporation ("CMSC" or the "Company") is pleased to announce that, during its third quarter ending September 30, 2022 (the "Period"), the Company earned $1,117,392 in revenue, and $3,610,597 in revenue for the three quarters ending September 30, 2022.
During the Period, the Company mined 37 BTC and 747 LTC, of which 21.65 BTC and 110 LTC were sold to pay for operating expenses, with the remainder being retained on the balance sheet.
As of the end of the quarter, CMSC held 159.81 BTC, 3,130 LTC and de-minimis amounts of ZEC, BCH, ETH and ETC.
Operating expenses of $671,402, primarily consisting of hosting costs, were incurred during the Period, resulting in a net operating income (excluding depreciation and any cryptocurrency valuation impairment) of $445,990. For the three quarters ending September 30th, 2022, the net operating income (excluding depreciation and cryptocurrency valuation impairment) was $1,875,234.
Non-operating expenses for the quarter were $1,780,771, primarily consisting of depreciation expenses for the mining equipment.
Net of the depreciation of the mining equipment and impairment of its cryptocurrency holdings, as well as other non-operating expenses, the Company's GAAP net loss for Q3 2022 and YTD 2022 were ($1,754,416) and ($7,320,314) respectively.
Operations Update
During the Period the Company purchased 5 Antminer L7's at a cost of $60,000 which were deployed in August 2022, increasing the Company's Litecoin hashrate by 32% to 190GH.
In our last update, we reported that we had procured additional equipment for deployment in June, which was delayed due to ERCOT1 energization delays at the hosting provider. The site has now been energized and the equipment has been fully deployed, having come online in the third quarter, adding 33PH to our Bitcoin mining hashrate.
The hosting provider that was building 2.1MW of expansion space for CMSC's use, on a right of first refusal basis, came online during Q3. The cleaned and consolidated mining equipment from a different, terminated hosting provider (as reported in Q1), is now online. This resulted in an additional increase of 14.2 PH of additional processing power. The company still has additional hosting capacity at this hosting site, which it plans to deploy strategically over the coming months.
During the Period, the Company's total Bitcoin hashrate increased by approximately 56% to 120PH.
One of the Company's hosting service providers experienced significantly higher power costs for a number of its facilities during the quarter. The hosting provider made the decision, as permitted by its hosting contracts, to pass through to its customers these increased power costs, which have resulted in a significant increase in our hosting expense, which, along with increases in network difficulty and the fall in cryptocurrency prices, has made profitability at this hosting site very challenging. More recently, the hosting provider has stated that it believes that power costs will go back down, which would then be reflected in future power cost pass-through expenses. We are monitoring the situation very closely and will take any steps necessary to protect Consensus Mining.
We continue to engage with existing and new hosting providers to secure space as we procure new mining equipment.
Further, the Company is actively looking at opportunities to purchase or partner with other mining hosting facilities that will allow the Company to have more control of the fundamental costs of hosting.
Update on Upcoming Listing
We continue to pursue a path to become a publicly traded company, via direct listing on OTC Markets. In September, we started the listing process ahead of the end of the 12-month hold/restriction period. That process is ongoing, and we expect the listing to commence sometime in late 1Q2023.
The Company has held firm to its prudent approach to capital deployment and continues to do so. During 5+ years of our operating history, both before and after the formation of Consensus Mining and Seigniorage Corporation, we have consistently employed a capital allocation methodology designed to mitigate the unexpected swings in operating margins, such that we deliberately acquire our equipment over time to diversify our cost basis. By having not borrowed to purchase additional equipment, we do not have interest payments that eat into the slim mining margins of today, nor need we be concerned with debt repayment or roll-over obligations. By maintaining a lean and low-cost organizational operating model we are not adding unnecessary expenses to the Company's net operating cash flow. In addition, by not purchasing equipment at the inflated prices of a year ago, we have maintained a strong balance sheet that continues to have capital to deploy. And, of course, the cost of equipment powerfully determines the future returns on investment. Rapid growth can be entirely illusory if the embedded cost of the operating assets is excessive. The crypto-mining industry is very dynamic, in ways that can provide continued periodic advantages. Given CMSC's patient positioning, and the current pressures on the industry, opportunities are arising for putting the capital to work at attractive reduced prices.
1The Texas electrical grid operator.
Further details are available on the Company's website at https://www.consensusmining.com.
Consensus Mining and Seigniorage Corporation ("CMSC") is an operating business and is not a registered investment adviser or broker-dealer. CMSC does not provide investment, legal or tax advice. Certain information set forth in this letter may contain "forward-looking information". Forward-looking statements are provided to allow potential investors the opportunity to understand management's beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment.
These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance of result expressed or implied by such forward-looking statements. CMSC undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change.
Cryptocurrencies in general, including the mining of cryptocurrencies, represents a relatively new industry and therefore carries special and substantial risks. Investors should appreciate the risks associated with holding and mining cryptocurrencies before investing in such companies.
All material presented is compiled from sources believed to be reliable, but accuracy cannot be guaranteed. Opinions stated herein may change at any time without notice, and past results are not a guarantee of future results. Under no circumstances does the information contained herein represent a recommendation to buy, hold or sell any security.
Consensus Mining and Seigniorage Corporation
Statement of Financial Condition
As of September 30, 2022
Assets | ||||
Cash | 65,501,433 | |||
Cryptocurrency miners(1) | 7,916,667 | |||
Mined & held cryptocurrency(2) | 3,221,048 | |||
Prepaid miner hosting | 524,027 | |||
Loans | 350,000 | |||
Prepaid insurance | 16,830 | |||
Interest receivable | 15,406 | |||
Total assets | 77,545,411 | |||
Liabilities | ||||
Accrued expenses | 39,099 | |||
Total liabilities | 39,099 | |||
Equity | ||||
Common Stock (3) | 22,500 | |||
Additional paid-in capital | 86,286,813 | |||
Retained earnings | (8,803,001 | ) | ||
Total equity | 77,506,312 | |||
Total liabilities and equity | 77,545,411 | |||
Notes
(1) Net of $5,010,983 accumulated depreciation
(2)Net of $5,267,107 impairment assessed on cost of $8,488,155
(3) $0.01 par value, 5,000,000 shares authorized, 2,250,009 shares issued and outstanding
Consensus Mining and Seigniorage Corporation
Statement of Income
For the Three Months Ended September 30, 2022
Revenues | ||||
Cryptocurrency mining | 824,220 | |||
Interest revenue | 293,172 | |||
Total revenues | 1,117,392 | |||
Operating expenses | ||||
Depreciation expense | 1,780,771 | |||
Hosting fees | 550,395 | |||
Repair expenses | 84,416 | |||
Audit & Tax expenses | 15,000 | |||
Insurance expense | 6,311 | |||
Advertising fees | 6,060 | |||
Transfer agent fees | 3,913 | |||
Management fees | 3,000 | |||
Custody fees | 2,076 | |||
Other operating expenses | 231 | |||
Total operating expenses | 2,452,173 | |||
Other expenses | ||||
Tax expense | 256,618 | |||
Loss on Disposal of Fixed Assets | 163,017 | |||
Total other expenses | 419,635 | |||
Total expenses | 2,871,808 | |||
Net income | (1,754,416 | ) | ||
Consensus Mining and Seigniorage Corporation
Statement of Income
For the Nine Months Ended September 30, 2022
Revenues | ||||
Cryptocurrency mining (1) | 3,246,244 | |||
Interest revenue | 364,353 | |||
Total revenues | 3,610,597 | |||
Operating expenses | ||||
Depreciation expense | 4,772,874 | |||
Impairment of cryptocurrencies | 3,813,581 | |||
Hosting fees | 1,400,098 | |||
Coinmint fees | 160,149 | |||
Repair expenses | 87,746 | |||
Audit & Tax expenses | 30,000 | |||
Transfer agent fees | 12,583 | |||
Advertising fees | 11,685 | |||
Management fees | 9,000 | |||
Insurance expense | 8,415 | |||
Custody fees | 7,925 | |||
Registered agent fees | 6,117 | |||
Other operating expenses | 1,646 | |||
Total operating expenses | 10,321,819 | |||
Other expenses | ||||
Tax expense | 422,919 | |||
Loss on Disposal of Fixed Assets | 186,173 | |||
Total other expenses | 609,092 | |||
Total expenses | 10,930,911 | |||
Net income | (7,320,314 | ) | ||
Notes
(1)Gross of Coinmint fees
Contact Information:
CMSC Investor Relations
Agustin Krisnawahjuesa, CFA
646-495-7340
[email protected]
www.consensusmining.com
SOURCE: Consensus Mining & Seigniorage Corporation