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Successful Q2 Test of Next-Generation Bitmain Servers Results in
Increased Computational Power and Improved Operating Costs at US Datacenter
TORONTO, June 3, 2019 /CNW/ - Following the successful testing of next-generation 7 nanometer Bitmain servers at its US cryptocurrency datacenter, HyperBlock Inc. ("HyperBlock" or the "Company") (CSE: HYPR) announces that it has secured US $2 million in financing to purchase and deploy the new Bitmain servers at its 20MW facility in the Pacific Northwest. The Company expects this transaction will better position the Company for future growth and improved profitability.
CEO Loan Reflects Confidence in Bitcoin and HyperBlock's Future Outlook
The Company's disinterested directors have determined that the US $2 million secured loan (the "Loan") — which was obtained from the Company's CEO Sean Walsh, a related party — is on reasonable commercial terms that are superior to those that would be available to the Company from an arm's length lender. The Loan is secured by the assets of the Company and its subsidiary HyperBlock LLC, carries an annual interest rate of 15 per cent, carries no operational covenants and matures on July 31, 2021, with an option granted to Mr. Walsh, as lender, to extend the term of the Loan by an additional two years. The secured promissory note evidencing the Loan together with the related security documents, can be found under the Company's profile at www.sedar.com.
HyperBlock began testing the 7 nanometer Bitmain servers in April 2019 and its engineering team confirmed that the new servers offer substantially better power efficiency than the Bitmain S9 servers. The Company has placed its first large order of the next-generation servers, with delivery expected later in June.
Due to the new servers' greatly improved power efficiency, the Company expects the new servers to approximately double the self-mining revenue per kilowatt, compared to that derived from the older Bitmain S9 servers, at little to no incremental operating cost.
Cancellation of Private Placement
To avoid significant shareholder dilution and in light of the current cease trade of the Company's shares, the Company has determined it will no longer pursue its proposed C $7 million non-brokered private placement of HyperBlock units, which was announced in December 2018. As such, any commitments by subscribers in connection with such financing have been cancelled, including Mr. Walsh's previously announced US $2 million commitment.
About Project Northwest — HyperBlock's 20MW US Datacenter
The Bitcoin market and outlook rebounded this spring and normal operations continue at the Company's 20MW US datacenter, where it currently runs approximately 12,000 servers. The Company has operated the datacenter since 2016 at an average electricity price below US $0.04 per kWh and current power contracts are expected to be active into Q3 2022. Operations in the Company's existing 20MW datacenter are unaffected by recently imposed Missoula County interim zoning regulations, which are applicable only to new operations. HyperBlock expects to continue to grow the profitability of the operation as it replaces legacy Bitmain S9 servers with new, more efficient servers.
Related Party Transaction and Disclosure of Conflict of Interest
The Loan from Mr. Walsh to the Company constitutes a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In connection therewith and pursuant to section 132(1) of the Business Corporations Act (Ontario), Mr. Walsh has disclosed the extent and nature of his interest to Company. While the Company, under MI 61-101, was exempt from formal valuation and minority approval requirements, the disinterested directors carefully and fully considered the terms of the Loan, reviewed competitive market terms, and determined that the terms of the Loan are commercially reasonable and are not less advantageous to the Company than if the Loan was obtained from a person dealing at arm's length from the Company.
About HyperBlock Inc.
HyperBlock is a leading publicly traded crypto-asset enterprise. The Company operates one of North America's most efficient cryptocurrency datacenters and provides complementary product offerings, which include cryptocurrency mining, Mining-as-a-Service (MAAS), server hosting and server hardware sales, depending on market conditions. HyperBlock is committed to operating as sustainably as possible, purchasing electricity from a hydro-electric dam for its current 20MW US datacenter — and employing advanced recycling technology to minimize environmental impact. Learn more at www.hyperblock.co
Cautionary Note Regarding Forward Looking Information and Future-Orientated Financial Information
Certain information in this news release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "plan", "believe", "may", "should", "anticipate", "expect", "intend", "forecast" and similar expressions. The forward-looking information contained in this press release includes, but is not limited to, statements related to: the positioning and growth of the Company, the expected delivery date of the 7 nanometer Bitmain servers, the increase of the Company's self-mining revenue per kilowatt as a result of the future use of 7 nanometer Bitmain servers and the increased profitability of the Company's operations as it replaces its legacy Bitmain S9 servers. These forward-looking statements contained herein are made as of the date of this press release and are based on assumptions and estimates of management, which management considers reasonable, based on information available on the date hereof. Such assumptions may be incorrect. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors, among other things, include: general economic, market and business conditions will be consistent with expectations, fluctuations in general macroeconomic conditions; fluctuations in securities markets; risks relating to the Company's ability to execute its business strategy and the benefits realizable therefrom, the ability to retain personnel to execute the Company's business plans and strategies; the ability to retain auditors to perform an audit of the Company's financial statements; the presence of laws and regulations that may impose restrictions on the ability of the Company to operate its business, including securities laws applicable to the Company; the speculative nature of cryptocurrency mining and blockchain operations including but not limited to cryptocurrency prices and mining difficulties; and those factors described under the heading "Risks Factors" in the Company's listing statement dated July 10, 2018 and the risks described in the Company's Management's Discussion & Analysis for the nine months ended September 30, 2018 dated November 29, 2018, each of which is available on the Company's issuer profile on SEDAR. There may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
For further information: For investor inquiries: Deb Quinn, firstname.lastname@example.org, 1-800-613-4721; Sean Walsh, email@example.com