The low price of bitcoin is starting to knock a dent in digitalBTC's finances, according to the company's latest regulatory filing.
However, because of investments in mining equipment and the fact that the firm is holding a significant portion of its mined bitcoin, the company posted an operating loss of $261,000.
Despite the figures, the company is downplaying the effect of short-term price fluctuations on its business and still maintains its performance is "robust".
Unlike most bitcoin companies, Digital CC Limited is a public company, trading on the Australian Securities Exchange (ASX) as 'digitalBTC'. This makes it is the only major mining operation with an obligation to provide such information, giving outsiders a rare glimpse into the inner working of a bitcoin mining company.
In addition to its mining operations, digitalBTC is in the process of expanding into the consumer space with new products under its digitalX brand.
DigitalBTC downplays short-term fluctuations
DigitalBTC executive chairman Zhenya Tsvetnenko was upbeat about the company's performance, saying:
"Whilst the company notes the movements of the USD/bitcoin price over the course of the quarters, price fluctuations do not in any way impact the underlying inbuilt payments system of bitcoin."
He made it clear that the company is not adversely affected by such fluctuations in the short term:
"Short-term fluctuations do not affect our continued progress, and we are well funded to operate our business and work towards achieving our near-term goals around managing our mining capacity and launching our cutting-edge software products."
Tsvetnenko went on to describe the bitcoin payments system as a "truly disruptive technology".
Growing bitcoin cache
The company reported mining a total of 6,140 BTC during the third quarter of 2014, bringing its cumulative bitcoin holdings to 8,500 BTC as of 30th September.
DigitalBTC indicated that substantial bitcoin mining operations had started just a few months earlier, generating approximately 7,200 BTC in the 3.5 months leading up to its previous June 30th report.
DigitalBTC has now mined upwards of 13,340 BTC, having commenced operations less than seven months ago.
The company liquidated 6,290 of those coins through its trade desk, yielding revenue of $3.2m. The average selling price over the period was $510 per bitcoin – substantially higher than the price at press time.
Bitcoin has been trading at sub-$500 prices since late August, and stands at around $382 per coin today.
The volume of bitcoins traded through the company's trade desk in the third quarter was an increase of around 36% compared with June's figures.
In its report, DigitalBTC also mentioned a recently announced deal to procure cheaper electricity, which resulted in 40% cheaper power across half of the company's power requirements. The company announced the deal in late August, saying its new Icelandic mining centre would be powered by 100% renewable energy at substantially lower prices than before.
The company also reported the purchase of additional BitFury mining hardware valued at $1.14m, which increased its mining capacity by about 90%.
Entering the consumer space
While digitalBTC's primary focus over the past two quarters was on mining, the company has also made it clear that one of its goals was to develop and launch consumer-oriented products.
Two of these products have already launched through digitalBTC's new consumer brand, digitalX.
The first new offering is digitalX Pocket, a bitcoin payments platform with mobile and web wallets. Users can pre-enrol now, pending the platform's imminent launch.
DigitalX Minsty, a mining and trading platform, is the firm's second consumer product. Minsty has been designed to allow users to lease the company's mining rigs, or use their own equipment, to mine a variety of cryptocurrencies, all backed by an integrated trading platform.
Additionally, digitalX Direct is a liquidity provision platform designed for various bitcoin businesses, ranging from ATM operators to hedge funds.
A digitalX API is in the works, which should allow third-party developers to integrate the firm's services on their platforms. DigitalBTC's launch customer for digitalX Direct was the Global Advisors Bitcoin Investment fund (GABI) – a cryptocurrency hedge fund – which made its first bitcoin investment via digitalBTC last month.
Financial report image via Shutterstock
The Australia-based firm reported US$4.36m cash reserves in its Q3 report , along with approximately 8,800 BTC awaiting liquidation, which is currently valued at almost $3.37m.
However, because of investments in mining equipment and the fact that the firm is holding a significant portion of its mined bitcoin, the company posted an operating loss of $261,000.Despite the figures, the company is downplaying […]