UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): September 24, 2018
MGT
Capital Investments, Inc.
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Delaware
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001-32698
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13-4148725
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(State
or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification No.)
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512
S. Mangum Street, Suite 408
Durham, NC Durham, NC 27701
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27701
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(914)
630-7430
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(Address
of principal executive offices)
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(Zip
Code)
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(Registrant’s
telephone number, including area code)
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(Former
name or former address, if changed since last report.)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company [ ]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]
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Item
7.01
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Regulation
FD Disclosure.
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On
September 27, 2018, MGT Capital Investments, Inc. (the “Company”) issued a letter to its shareholders providing an
update with respect to the Company’s operations. A copy of the press release is attached to this report as Exhibit 99.1.
The
information contained in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of
the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act,
except as shall be expressly set forth by specific reference in such a filing. The furnishing of the information in this Current
Report on Form 8-K is not intended to, and does not, constitute a representation that such furnishing is required by Regulation
FD or that the information contained in this Current Report on Form 8-K constitutes material investor information that is not
otherwise publicly available.
This
Current Report on Form 8-K and exhibits may contain these types of statements, which are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, and which involve risks, uncertainties and reflect
the Registrant’s judgment as of the date of this Current Report on Form 8-K. Forward-looking statements may relate to, among
other things, operating results and are indicated by words or phrases such as “expects,” “should,” “will,”
and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results
to differ materially from those anticipated at the date of this Current Report on Form 8-K. The Company disclaims any obligation
to, and will not, update any forward-looking statements to reflect events or circumstances after the date hereof. Investors are
cautioned not to rely unduly on forward-looking statements when evaluating the information presented within.
As
previously reported in the Company’s Form 10-Q for the quarterly period ended June 30, 2018 as filed with the Securities
and Exchange Commission on August 14, 2018, the Company learned on May 16, 2018 that Beacon Leasing LLC (“Beacon”)
was in default under that certain Hosting Agreement between the Company and Beacon with respect to the Company’s facility
in Northern Sweden due to Beacon’s failure to pay certain service providers to the facility including the electric utility.
As a result of these defaults, effective September 24, 2018, the Company has shut down its operations in Sweden while it seeks
a new location to deploy its Bitcoin mining machines that had been located at such facility.
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Item
9.01
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Financial
Statements and Exhibits.
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Signature
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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MGT
Capital Investments, Inc.
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Date:
September 28, 2018
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By:
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/s/
Robert S. Lowrey
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Name:
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Robert
S. Lowrey
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Title:
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Chief
Financial Officer
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MGT
Capital Issues Letter to Shareholders
DURHAM,
NC, September 27, 2018 /PRNewswire/ —
MGT Capital Investments, Inc
. (OTCQB: MGTI) issued the following letter to
shareholders from
H. Robert Holmes
, Chairman of the Board and Interim Chief Executive Officer,
Stephen Schaeffer
,
Chief Operating Officer, and
Robert Lowrey,
Chief Financial Officer:
“The
past several months have posed tremendous challenges to the Bitcoin mining industry, and to MGT itself. Given this, we would like
to address some of those challenges, and share with investors the steps we are taking to assure future successes.
Less
than a year ago, as MGT was ramping up its expansion plans, Bitcoin was trading at about the same level as today, only to move
to what many deemed a bubble at $20,000 in December 2017. But while nearly all external attention focuses on the price of Bitcoin,
mining economics have been much more pressured by the Difficulty Rate – a computation used by miners to determine the amount
of computing power required to mine bitcoin. The Difficulty Rate is directly influenced by the total size of the entire Bitcoin
network. The Bitcoin network has grown six-fold in the past year, resulting in a six-fold increase in difficulty. Today, the network
requires the computing power of 80 Bitmain S9 miners to mine one Bitcoin per month, where a year ago it required roughly 12. Meanwhile,
demand from miners also drove up hardware and power prices, the largest costs of production.
Despite
the increased Difficulty Rate greatly increasing costs, Bitcoin mining can still be highly profitable on a marginal cost basis.
What’s more, it is our opinion that the market will adjust in the near future to swing the economics to a more favorable
level. On an indexed basis, the ratio of Difficulty to Price is at multiyear highs, and we expect some reversion to the mean moving
forward.
As
we were confronted with difficult industry realities, MGT was also faced with a number of our own specific issues. To accommodate
an ambitious growth agenda, the company was forced to rely on outside vendors. Our facility in Central Washington was and is strong,
but the region’s power infrastructure is limited, so we scoured the globe for an ideal location to expand. Ultimately, we
secured a commitment for a facility in northern Sweden, with the promise of decreased cooling costs and cheap, abundant electricity.
Unfortunately,
this expansion into Sweden was mired with challenges, as MGT was forced to address the inexperience and thinly-stretched capital
of our hosting vendor. The company was forced to concentrate a significant amount of management efforts to the facility, as engineering
errors and issues with the electric utility continued to arise. While the facility was able to produce Bitcoin, running a total
of 50 Ph/s for all miners, the costs of rectifying vendor errors has required large outlays of capital with uncertain returns.
Due
to these concerns, we began intensely researching alternative locations for our principal mining operation. The current state
of mining economics has created an ample supply of geographically closer locations with adequate capacity and relatively inexpensive
power supplies. Today, we are confident that an appropriate location in the United States or Canada can be secured within the
next several weeks, and that rates for hosting and power in that location will be materially lower and more stable than in Sweden.
Given
the above circumstances, this past Monday we concluded that any further monetary investment in Sweden would be a misuse of capital,
and began the process of palletizing and shipping our S9 miners to North America. Aside from a breached contract by our hosting
vendor, MGT has signed no commitments with either the facility owner in Sweden or the electric utility.
We
have confidence that this transition will materially reduce MGT’s costs while establishing the conditions for stable, secure
growth. Management will keep investors updated throughout this transition, particularly as we finalize the details of our new
principal facility. We are committed to engaging with shareholders consistently and openly as we work to better position the company
for long-term success.”
About
MGT Capital Investments, Inc.
Operating
in facilities in Washington State, MGT Capital Investments, Inc. (OTCQB: MGTI) ranks as one of the largest U.S. based Bitcoin
miners. MGT oversees the operation of approximately 6,800 Bitmain S9 miners, and 50 GPU-based Ethereum mining rigs. Further, the
Company continues to execute on an expansion model to secure low cost power and grow its crypto assets materially.
For
more information on the Company, please visit:
https://mgtci.com
Forward–looking
Statements
This
press release contains forward–looking statements. The words or phrases “would be,” “will allow,”
“intends to,” “will likely result,” “are expected to,” “will continue,” “is
anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward–looking
statements.” All information set forth in this news release, except historical and factual information, represents forward–looking
statements. This includes all statements about the Company’s plans, beliefs, estimates and expectations. These statements
are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly
changing technology and evolving standards in the crypto mining industry; the ability to obtain sufficient funding to continue
operations, maintain adequate cash flow and execute its business strategy; volatility in the Bitcoin market; and other factors
set forth in the Company’s most recently filed annual report and registration statement. Readers are cautioned not to place
undue reliance on these forward–looking statements, which reflect management’s analysis only as of the date hereof.
The Company undertakes no obligation to publicly revise these forward–looking statements to reflect events or circumstances
that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that
the Company files from time to time with the U.S. Securities and Exchange Commission.
Investor
and Media Contact:
Dominique
Villanueva
dominique.villanueva@mmhgroup.io
919-378-1788