Bitcoin market surge bolsters Digital X

Fintech firm Digital X has reported a total operating and investing cash flow of $410,000 for the first half of the 2016 financial year on the back of a second quarter increase of 33 percent year-on-year to $746,000.

Previously, Digital X was listed on the Australian Securities Exchange (ASX) as DigitalBTC, undergoing not only a name change in October, but a shift in business model as well.

DigitalBTC, trading as Digital CC, was formerly involved in bitcoin mining, a procedure whereby a company is rewarded with the cryptocurrency for performing calculations that secure the blockchain and confirm the validity of a transaction.

However, the company did not ditch the cryptocurrency altogether, spending over $9.54 million on bitcoins and $623,000 on the cost of running and hosting its bitcoin mining equipment in the three months ending December 31, 2015.

As of December 31, 2015, Digital X said it held the equivalent of $400,000 in bitcoin, along with $3 million in cash. The company attributed its cash flow increase to a rise in transactions and improved bitcoin prices.

"A surge in Bitcoin market sentiment and trading has underpinned Digital X's strong cash position in the December quarter with the company's trading desk increasing the amount of bitcoins held during the quarter," Digital X told shareholders.

"This resulted in a favourable mark-to-market return that was driven by higher Bitcoin pricing."

Digital X said that the pick-up in cashflow was particularly pronounced in the last two months of the year, with total trading revenue hitting $7.3 million compared with $5.4 million in September and October 2015.

In May, Digital X raised AU$3.5 million to fund the development and rollout of AirPocket, an app-based peer-to-peer, cross-currency cash remittance platform. After rebranding, Digital X announced its focus would be on the AirPocket platform, saying that the rebranding represented a strategic change from a focus on bitcoin as a mechanism to store value to a focus on software development.

Digital X told shareholders on Friday that it had completed beta testing of AirPocket that saw 50 users send funds to the US and to the Dominican Republic via its platform. The company also confirmed that it had begun expanding the AirPocket testing to 1,000 users in Latin America.

AirPocket is not available in Australia.

Digital X executive chairman Zhenya Tsvetnenko said he was pleased with his company's first half results. "This has been an exceptionally pleasing quarter for Digital X as we ended 2015 on a high note," he said.

"Not only have we proven the commercial viability of AirPocket through our first public beta trial, but we have made great inroads in our negotiations with a number of global partners to bring AirPocket to market."

The company has only been on the ASX since June 2014 after it performed a reverse takeover of investment firm Macro Energy.

As a result, the 2014 financial year was the last time the company sat in positive territory, with net profit after tax of $600,000 on revenue of $4 million, and earnings before interest, tax, depreciation, and amortisation (EBITDA) of $2.5 million.

A year on, the company reported a net loss after tax of $6.77 million, and negative EBITDA of $3.16 million for the full year, ending June 2015.

Although posting a loss, Digital X told shareholders at the time that its FY15 results reflected a "strong performance from the company's bitcoin operations", with bitcoin mining generating $6.4 million in revenue.