DMG Blockchain Solutions, a blockchain and cryptocurrency technology company, established a relationship with Sygnum Bank, a Swiss bank specialized in servicing crypto-native companies, as a strategic banking partner providing a $9 million credit facility to increase its operational capacity ahead of the upcoming Bitcoin halving expected in April.
DMG Blockchain Solutions will primarily use proceeds of the facility for the purchase of 4,550 T21 190 TH/s bitcoin miners from Bitmain Technologies for $12,103,000 ($14/TH/s). The purchase was previously announced in December.
With a first financing tranche of $5.6 million already disbursed, DMG has been able to fulfill part of its payment obligation to Bitmain without the need to liquidate its bitcoin holding. DMG believes that modest amounts of debt enable it to better optimize its balance sheet, especially as it can help maintain its healthy bitcoin holding as well as lower its weighted average cost of capital, both of which should be positive for shareholders. In addition to this $9 million credit facility, DMG intends to use some of its existing cash toward the purchase from Bitmain.
The loan is interest bearing at an annual rate of 7.8% for an indefinite term. Sygnum has the right to terminate the agreement at any time, at which time the loan would be due immediately. The loan is secured against the DMG’s digital currency assets of 237.8 BTC, which are pledged and deposited with Sygnum. Because the collateral is subject to fluctuations in value, DMG may be required to provide additional collateral in order to restore the security margin on the loan. DMG may repay the amount of debt outstanding at any time.
“We are very happy to announce this partnership with Sygnum as a strategic banking partner,” Sheldon Bennett, CEO of DMG, said. “We look forward to working closely with Sygnum Bank, as its mission includes decarbonization of the Bitcoin ecosystem, a value which we very much share.”
“As we see our footprint in the Bitcoin mining ecosystem growing and including several leading publicly listed players, Sygnum is pleased to work with DMG Blockchain Solutions in providing tailored service for its banking and lending needs and support growth in carbon-neutral crypto asset mining,” Néstor Palao, head of DLT and corporate clients at Sygnum, said.
