The Company produced 12.19 Bitcoin during the month
Total Bitcoin holdings grew to 49.23 coins
Operations achieved 128 BTC/EH efficiency
Sphere 3D Corp. dedicated to becoming the leading carbon-neutral Bitcoin mining company operating at an industrial scale, provides results of its Bitcoin mining operation as of June 30, 2022.
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CEO Comments
“The current political and economic environment is impacting every financial market, including cryptocurrency. In June, the price of Bitcoin fell to a low of about $17,500 according to the Coinbase Exchange, the lowest level since late 2020. Some analysts and pundits speculate that the recent price declines indicate that we are entering a crypto bear market, and some are predicting cryptocurrency prices could remain depressed for an extended period.
“Even at the current Bitcoin trading price, it is still profitable for Sphere 3D to continue mining. Sphere 3D’s mining fleet comprises the most efficient miners currently available, and our favorable energy agreements will enable us to continue producing even if Bitcoin prices slide further. If market conditions persist, companies with less-efficient miners or less-favorable energy agreements could be compelled to produce Bitcoin at a loss or shut down their machines and wait for prices to rebound.
“Lower crypto prices are already exerting considerable negative pressure on the price of cryptocurrency mining machines. There are reports that manufacturers have large stockpiles of miners that have not been financed, which could put even more downward pressure on the market. Consequently, we are working with our partner BitFuFu Technology (‘BitFuFu’) to optimize the agreement we entered into and announced in September 2021 to make it more equitable for both organizations.
“The Sphere 3D team is evaluating every option to ensure our mining operations’ long-term success and drive value for our shareholders. Recent actions by the Federal Reserve to address inflationary pressures have delayed our efforts to secure funding for the balance of our mining fleet at favorable terms. While we will continue to work with banking partners to arrange favorable financing, we do not expect to reach an agreement before the end of the fourth quarter which could result in pushing deliveries of additional miners into the future, which we understand is consistent with the steps taken by other crypto mining companies.”
Bitcoin Production and Holdings Update
From June 1, 2022, through June 30, 2022, Sphere 3D’s mining operation produced 12.19 Bitcoin, or an average of 0.41 Bitcoin daily. The daily production level remained flat compared to May 2022. The equivalent approximate valuation of the Company’s production, based on a Bitcoin price of $19,889 on June 30, 2022, totaled approximately $242,500 for the month.
Since the Company began its mining operations during the first quarter of 2022, it has produced 55.26 coins and held 49.23 Bitcoin on June 30, 2022. This represented a valuation of about $1.0 million based on the Bitcoin price of $19,889 on June 30, 2022.
The Company continues to employ a HODL strategy and has not liquidated Bitcoin since commencing mining operations. The difference between the number of Bitcoin mined versus its holdings is the Bitcoin Sphere 3D used to pay operational expenses to partners.
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Miner Deliveries and Petahash Capacity
As of June 30, 2022, the Company was operating approximately 1,000 S19j Pros miners delivering a production capacity of about 100 PH/s. Sphere 3D’s mining fleet operated at 128 BTC/EH efficiency in June and averaged 97 percent uptime.
Sphere 3D expects to take delivery of about 4,000 (400 PH/s) new S19j Pros from BitFuFu, the global strategic arm of Bitmain, during July 2022. The miners are scheduled to arrive in multiple shipments and ports in early July. Once received, teams will deploy the miners as quickly as possible. The Company initially anticipated the shipments would arrive in early June 2022 however, supply chain and shipping issues delayed delivery. We are working closely with our partners to ensure that future orders are shipped and received on schedule.
While we expect to see an incremental production increase in July 2022, all miners are not expected to be fully operational during the month. August 2022 production should increase significantly due to the addition of approximately 400 PH/s of production to our mining operation between now and the end of August, 2022. With the addition of the new miners, we anticipate our production capacity to grow to about 500 PH/S.
NuMiner Global, Inc. (“NuMiner”) did not meet the June 30, 2022, deadline for delivering and testing the 12 pre-production miners required in its contract with the Company. NuMiner representatives stated that supply chain issues prevented them from manufacturing the machines. As a result, we have canceled our order and have requested the prompt return of the Company’s $10 million deposit.
Corporate Update
On June 20, 2022, the Company finalized an employment agreement with Kurt Kalbfleisch to continue his employment as Chief Financial Officer of Sphere 3D. The one-year agreement was effective as of June 20, 2022. The contract will be automatically extended for an additional one-year period unless terminated by either party not less then 90 days prior to the renewal date.
On May 23, 2022, Patricia Trompeter, Sphere 3D’s CEO, participated in Maxim Group LLC’s conference on Digital Assets: Exploring The Metaverse And Crypto Assets. Ms. Trompeter was featured on the Cryptocurrency Mining panel, where she shared her insights on the current cryptocurrency markets, mining in a turbulent, inflationary market, and the availability and pricing of cryptocurrency miners. She also shared her insights on Bitcoin mining in a bear market on The Crypto Conversation podcast on the website Brave New Coin.
Ms. Trompeter will be featured on the Women Powering Mining panel at Mining Disrupt, the world’s largest Bitcoin mining expo being held July 26-29, 2022. She will be joining several other women leaders in the mining industry as part of “an all-woman unscripted discussion panel on woman powering and leading innovation in the Bitcoin mining space.”
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