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Cryptocurrencies officially went mainstream in 2017 and have been on a rollercoaster ride ever since. Bitcoins meteoric rise to north of $18,000 USD had investors from wall street to main street looking to get in on the action. While the crypto markets have investors polarized, we are favorable on companies levered to cryptos underlying technology: blockchain.
Blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
Investors that are looking for a less volatile way to gain exposure to the burgeoning crypto sector should be looking for firms that are developing and implementing blockchain solutions. Companies that are focused on providing scalable blockchain solutions for enterprise level clients with a large addressable market are a relatively safe way to play this sector.
Enter DMG Blockchain Solutions
One firm that has been quietly building its portfolio of assets across the crypto ecosystem is DMG Blockchain Solutions (TSX.V: DMGI). DMG right now stands poised for strong growth thanks to its four diversified business units.
With a focus on software development – and outstanding partnerships – DMG is a unique blockchain investment positioned for success free from the extreme volatility that investors are seeing in the crypto markets. In a crowded “pure play” crypto mining space DMG is differentiating itself by focusing on blockchain solutions and forensics while operating a profitable mining division with the upside to be the global leader in “MaaS” or mining as a service.
Diversification Is A Major Key
We are going to explore DMG’s four major business units and how they are setting the foundation for one of the soundest blockchain/crypto plays we have seen to date.
Forensics and data analysis will work with law enforcement and professional firms to provide forensic services related to Ethereum, Bitcoin and the altcoin universe. DMG will employ certified to work in partnership with analytics companies and assist in cybercrime investigations. This vertical is a true differentiator as we have not come across any firms with the foresight to be venturing into the forensic aspect of industry and we see this as being a need for firms in the future as the industry matures.
Bitcoin mining is hot right now on the street and we are seeing companies rapidly emerging to get a piece of the action. What investors need to realize is that this is not as simple as buying a facility with cheap power, setting up a server farm and bam out pops bitcoins.
DMG have the Luke Skywalker of bitcoin mining in Sheldon Bennett. Mr. Bennett has over 20 years of management experience leading international companies including PwC, Ernst & Young, Baker & McKenzie, Cisco Systems and Fonterra CIS. For the past three years Sheldon led Bitfury’s Canadian mining operations, where he was responsible for the setup and development of industrial bitcoin mining operations, including government relations, power optimization with Canadian utilities, and the engineering and development of mining operations.
With Mr. Bennett at the helm you can bet that DMG’s mining operations will be firing on all cylinders. After all he did set up the largest industrial bitcoin mining facility in Canada pumping out 58 megawatts of power running 30,000 servers.
We see Mining As A Service (MaaS) as an interesting take on the crypto mining sector and one that will surely pay dividends for the firm. MaaS involves providing end-to-end hosting and management services to clients seeking to invest in new Bitcoin ASIC computers and related Bitcoin mining operations. In our view the major benefit of this service is that DMG are not incurring the cost of updating the servers as that is passed on to the clients. This is a pure profit maker for the firm.
DMG currently owns hundreds of servers for Bitcoin mining and has access to a facility that can accommodate up to 40 self-contained mobile server units, totaling 20,000 servers.
In exchange for its service – operation and maintenance of the servers – DMG Blockchain receives a monthly fee from each of its clients…providing access to a consistent stream regardless of any potential swings in Bitcoin pricing.
And now ladies and gentlemen the Pièce De Résistance: Blockchain Software Platform Development. We see this revenue stream having the most upside potential in DMG’s portfolio.
The platform development division involves DMG Blockchain Solutions partnering with carefully-selected companies to develop blockchain-based software solutions for their unique business needs.
One example of this is the recent partnership – announced in January 2018 – with Emerald Health Therapeutics (TSX.V: EMH).
On January 26, 2018 Emerald Health Therapeutics and DMG signed a letter of intent to develop a foundational blockchain-based supply chain management system and e-commerce marketplace for the legal cannabis industry.
In this joint venture, Emerald would provide its expertise and relationships as one of the earliest Canadian Licensed Producers under Access to Cannabis for Medical Purposes Regulations. DMG Blockchain Solutions will build and deploy a blockchain supply chain management solution designed to meet the challenges and opportunities of the cannabis industry.
A Management Team With “The Right Stuff”
DMG have assembled the who’s who from the bitcoin mining, forensics and blockchain industries to put together a top tier management team.
Dan Reitzik – CEO & Director
Dan Reitzik is a successful entrepreneur having built companies at the forefront of societal change. These include Digital Youth Network, a teen focused wireless community, which was a joint venture between Rogers Wireless, Canada’s largest mobile phone network and Universal Music, the world’s largest record label.
Ryan Cheung – CFO & Director
Ryan Cheung is the founder and managing partner of MCPA Services Inc., Chartered Professional Accountants, in Vancouver, B.C. Leveraging his experience as a former auditor for junior venture and resource companies, Mr. Cheung serves as a director and/or officer or consultant for public and private companies providing financial reporting, taxation and strategic guidance.
Chris Filiatrault – Chairman of the Board
Chris Filiatrault is a co-founder and director of DMG. For over 30 years, Mr. Filiatrault has been developing internet technology and software for the Japanese business market. In 1999, he founded Universal Objects Japan. In May of 2012, Mr. Filiatrault brought Bitcoin to the Japanese market and since that time, he has become a respected international authority on Bitcoin, opening the first Bitcoin ATM in Tokyo in 2014 and authored his first book about Bitcoin in Japanese.
Sheldon Bennett – CTO
Sheldon Bennett has over 20 years of management experience leading international companies including PwC, Ernst & Young, Baker & McKenzie, Cisco Systems and Fonterra CIS. For the past three years Sheldon led Bitfury’s Canadian mining operations, where he was responsible for the setup and development of industrial bitcoin mining operations, including government relations, power optimization with Canadian utilities, and the engineering and development of mining operations.
A Stock To Watch
The blockchain sector is still in its infancy and the cream is quickly rising to the top. With that being said, within the past several months, companies like Long Island Iced Tea, Rich Cigars Inc. and Eastman Kodak have all announced plans to change their name and enter the blockchain space.
While those announcements – in some cases as transparent as simply adding the word “blockchain” to their name – are indicative of the frenzy associated with blockchain…they’re not likely to help individual investors profit from this trend.
When we look at DMG Blockchain Solution (TSX.V: DMGI)we see a well-diversified company built on a solid foundation with all of the pieces in place to succeed. We will be watching closely as this story develops and are bullish on what the future holds for this blockchain leader.