DMG Blockchain Solutions, a vertically integrated 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 US$9 million (equivalent) in a credit facility to increase its operational capacity ahead of the upcoming Bitcoin halvening expected in April 2024. The primary use of proceeds is for the purchase of 4,550 T21 190 TH/s bitcoin miners from Bitmain Technologies for US$12,103,000 (US$14/TH/s), which was previously announced in December 2023.

With a first financing tranche of US$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 US$9 million credit facility, DMG intends to use some of its existing cash towards the purchase of these miners 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 Company’s digital currency assets of 237.8 BTC, which are pledged and deposited with Sygnum. Because the collateral is subject to fluctuations in value, the Company 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.

DMG’s CEO Sheldon Bennett commented, “We are very happy to announce this partnership with Sygnum as a strategic banking partner. 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.”