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DMG CEO Report Q1

DMG Blockchain Solutions Announces Q1 Progress: 
Cryptocoin Mining Service Capacity Sells Out, Up to a 85 Megawatt Mine Construction Underway, Closes First M&A Deal, Strategic Partnerships Inked

Key Achievements & Operational Highlights

  1. 2,650 Mining Rigs Sold: MaaS allocated 4 megawatts of power sold out
  2. Power Update: DMG expects an additional 40 megawatts ready for mid-2018
  3. Bitcoin Mining: Launching what could be the largest industrial bitcoin mining complex in North America with power capacity of up to 85 megawatts
  4. Blockseer and AI: Carefully managed M&A plan underway with the acquisition of leading Silicon Valley-based artificial intelligence (AI) and Blockchain company, Blockseer
  5. Key partnerships that can be catalysts for growth and margin expansion (Bitmasters, Foreside Financial, Mogo, Emerald Health Therapeutics, Element Fleet Management, D-Link, Primary Engineering and CannaChain)
  6. More than $35 million raised in 2017 with institutional ownership of more than 20%

VANCOUVER, British Columbia, March 27, 2018 (GLOBE NEWSWIRE) -- DMG Blockchain Solutions Inc. (TSX-V:DMGI) (“DMG” or the “Company”), a diversified blockchain and cryptocurrency company, announced today that it has sold out its current capacity of 2,650 mining rigs for its cryptocoin Mining-as-a-Service (MaaS) business.  Under DMG’s unique MaaS business model, customers purchase the mining rigs and receive their mined the bitcoin directly, while DMG provides hosting and management services - a stable and predictable revenue stream.  Additionally, the Company’s operational achievements in 2018 to date include the commencement of construction of a new mining facility with up to 85 megawatts of power, the acquisition of A.I. leader Blockseer, and initiatives with key partners including D-Link, Primary Engineering, Emerald Health Therapeutics, Mogo, Foreside Financial, and Bitmasters.

DMG’s CEO, Dan Reitzik commented, “This is our first report for our shareholders and the first of many to come.  We continue to provide our shareholders with opportunities other crypto players do not see or are unable to execute upon due to our experience and relationships built over several years in the industry.  DMG is not only establishing itself as the leader in crypto mining but also in blockchain and AI platform development with our recent acquisition of Blockseer.  Our pipeline is strong and exciting, and few have it.  In fact, market weakness has created more opportunities for DMG as power providers are becoming more educated as to whom they want to deal with.  We thank our investors and customers for all of their support to date.”

MaaS Currently Sold Out

To date, DMG has received strong demand for its MaaS offering, as DMG is currently completely sold out of available capacity (4 megawatts) allocated to this service. Major orders have come from leading Japanese clients including Foreside Financial and Bitmasters. An additional 40 megawatts of capacity is expected to be in place mid-2018, and we are now in discussions for additional orders, primarily from Asian clients.

DMG Focus

DMG recognized from inception that an experienced management team with deep knowledge of cryptocurrency and blockchain technology is requisite to be successful. Our team includes three former Bitfury personnel (considered to be the world’s second largest bitcoin mining company). Our technology team includes Danny Yang, a Stanford Ph.D. in Computer Science and Artificial Intelligence, and Tim Eller, Ph.D. (Mathematics), a graduate of UCLA, Cambridge and Harvard. The team includes developers having worked at Uber, Lyft, Google, and Facebook. With Blockseer’s deep understanding of Blockchain transactions, DMG is poised to be a leader in cryptocurrency forensics. DMG’s Forensics business is led by Certified Fraud Examiner (CFE) Simon Padgett, an English chartered accountant (ACCA) with a Canadian CPA and MBA from University of Oxford.

DMG Business Strategy

DMG’s primary objective is to monetize the Blockchain ecosystem. DMG does this in three ways: 1) mining cryptocurrency on an industrial scale (processing global bitcoin transactions), 2) extracting rich data analytics from public blockchains, and 3) providing enterprises with permissioned blockchain solutions that create efficiencies and new sources of revenue by combining DMG’s proprietary blockchain technology with the customer’s deep domain knowledge. To achieve this, DMG brings unique expertise for: 1) mining at scale - tens of megawatts of mining, which may expand to hundreds, and 2) merging artificial intelligence (AI) with blockchain technology, which together can enable new business models for monetization of data.

DMG Operations

DMG is building an organization focused on operational excellence. DMG aims to achieve this in several ways: 1) further expand the team with the experience to meet and exceed set goals, 2) implement a tightly integrated supply chain whereby suppliers and subcontractors are partners integral to the operations planning process, and 3) diligently manage complexity by continuously simplifying both the business model and operational procedures.

Bitcoin Mining

DMG is on track to becoming one of North America’s leading bitcoin mining companies and is in the process of adding significant new capacity for bitcoin mining.  Under the leadership of Sheldon Bennett, who previously led Bitfury’s Canadian industrial mining deployment, DMG has begun to energize this new flagship facility, which at capacity should have up to 85 megawatts of power. Once fully operational, this would be North America’s largest single location crypto mining facility.  To add context, 85 megawatts can power a small city with a population of about 50,000 residents. The facility is currently equipped with over 4 megawatts, and we expect an additional 40 megawatts to be readied by mid-2018. The remaining infrastructure is expected to be ready by Fall 2018, which is able to provide 85 megawatts in total.

Blockseer and AI

DMG has brought together the worlds of blockchain and artificial intelligence with the acquisition of Silicon Valley-based Blockseer (Datient Inc.). Blockseer has an expanding team of blockchain, AI, and data scientists based in Silicon Valley and an existing established customer base that includes Bitstamp, Intuit, and, one of the world’s largest cryptocurrency wallet providers. This acquisition also vaults DMG into a leadership position in Blockchain Forensics, with proprietary analytics to service a variety of clients, including government agencies such as the FBI, Homeland Security, and the IRS as well as legal and accounting firms. The merging of AI and blockchain technologies have a wide variety of possible applications, including anti-money laundering (AML), cryptocurrency trading analytics, anonymized data mining of permissioned blockchains and blockchain solutions where data itself is the asset. AI is a significant growth market with “a compound annual growth rate (CAGR) of 57% between 2017 and 2025 to become a $36 billion market,” according to Grand View Research.

Key partnerships

Blockchain technology enables the ‘Automation of Trust.’  This may disrupt many industries, as it has the potential for cost savings through greatly improved efficiencies as well as reducing the fraud and friction native to legacy trust-based industries. Bitcoin and other cryptocurrencies are simply the FIRST successful and widely adopted applications of blockchain technology.  Our goal as a company is to use our blockchain expertise in partnership with our clients to develop enterprise platforms tailored to their particular use cases.

As announced on December 4, 2017, DMG and Element Fleet Management (TSX:EFN) are working towards the development of a leading-edge Artificial Intelligence and Blockchain solution for fleet-management that is expected to result in greater efficiencies and cost-savings for Element’s fleet customers and business partners. This platform will enable predictive analytics based on the extensive data that Element has gathered on their vehicles and drivers.  In addition to having Element as a collaborative partner, Element also purchased approximately 9.9% of DMG.

On January. 23, 2018 DMG signed a new agreement with Mogo Finance Technology Inc. (TSX: MOGO), one of Canada's leading financial technology companies through the formation of its new subsidiary – Mogo Blockchain Technology Inc. Mogo Blockchain plans to begin bitcoin mining through an agreement with DMG bitcoin mining hosting (mining as a service or MaaS) and diversified blockchain platform development.  The expansion into bitcoin mining follows Mogo's announcement of the launch of its MogoCrypto – a new product that will allow Canadians to easily buy and sell bitcoin through their MogoAccount and will bring a new level of convenience and transparency to bitcoin ownership.

As announced on January 26, 2018, CannaChain, which is a partnership between DMG and Emerald Health Therapeutics (TSX-V:EMH), one of Canada’s largest Licensed Producers for cannabis. Blockchain technology is ideally suited for the cannabis industry, as ensuring consumer safety, tracking provenance of product and regulatory/tax reporting are all key requirements. The supply chain management platform will enable irrefutable tracking of product from licensed producers to end patients and consumers nationwide. This platform can be customized for other governments and regions based on their requirements.

Select Media Coverage

CBC News | What's fuelling the potential bitcoin mining boom in Canada
Motley Fool | Marijuana and Blockchain: A Match Made in Heaven?
Inc. | Cryptocurrencies Are Creating Billion-Dollar Industries. The Next? Mining As A Service

Investor Relations Materials

DMG Press Releases

About DMG

DMG Blockchain Solutions Inc. is a diversified blockchain and cryptocurrency company that manages, operates and develops end-to-end solutions to monetize the blockchain ecosystem. DMG intends to be the global leader in bitcoin mining hosting - Mining as a Service (MaaS), bitcoin mining, blockchain forensics/analytics, and blockchain platform development.

On behalf of the Board of Directors,

Daniel Reitzik, CEO & Director

For further information, please contact:

Investor Relations: John Martin
Toll Free: 1-888-702-0258
Direct: 778-868-6470

Cautionary Note Regarding Forward-Looking Information

This news release contains forward-looking information based on current expectations. Statements about the Company’s plans and intentions, other potential transactions, the expansion and build-out of the flagship facility, adding more megawatts of power, product development, events, courses of action, and the potential of the Company’s technology and operations, among others, are all forward-looking information. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, business, economic and capital market conditions; the ability to manage operating expenses, which may adversely affect the Company’s financial condition; the ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; access to equipment; market conditions and the demand and pricing for products; the demand and pricing of bitcoins; security threats, including a loss/theft of DMG’s bitcoins; DMG’s relationships with its customers, distributors and business partners; the inability to add more power to DMG’s facilities; DMG’s ability to successfully define, design and release new products in a timely manner that meet customers’ needs; the ability to attract, retain and motivate qualified personnel; competition in the industry; the impact of technology changes on the products and industry; failure to develop new and innovative products; the ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect the business; the ability to manage working capital; and the dependence on key personnel. DMG may not actually achieve its plans, projections, or expectations. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, the ability to successfully develop software, that there will be no regulation or law that will prevent the Company from operating its business, anticipated costs, the ability to achieve goals and the price of bitcoin.  Given these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. 

There can be no assurance that DMG will add additional megawatts of power to its flagship facility or that it will add additional cryptocurrency miners to its flagship facility.

The securities of DMG are considered highly speculative due to the nature of DMG’s business.

Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, lack of supply of equipment, power and infrastructure, failure to obtain any permits required to operate the business, the impact of technology changes on the industry, competition, security threats including stolen bitcoins from DMG or its customers, consumer sentiment towards DMG’s products, services and blockchain technology generally, failure to develop new and innovative products, litigation, increase in operating costs, lack of demand for DMG’s products and services, increase in equipment and labor costs, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.

The forward-looking statements contained in this news release are made as of the date of this news release.  Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Additionally, the Company undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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