Bitcoin mining gives DigitalBTC $0.6m in underlying profit

The publicly traded bitcoin-mining company brings in $4 million of revenue in 3.5 months.
Written by Chris Duckett, Contributor

Just over a quarter of a year after completing its reverse takeover of Macro Energy, DigitalBTC has posted its first yearly results, with the underlying numbers showing that there is money to be made in the non-existent hills.

For the three and half months that it has been operating as a "significant" bitcoin-mining operation, DigitalBTC posted an underlying net profit after tax of $0.6 million on revenue of $4 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of $2.5 million.

Overall, the company posted a loss of $11.1 million as a result of accounting and legal fees, due to completing the reverse-takeover transaction.

"I am very pleased that these are the first financial results to be released by a Bitcoin-focused company on a major stock exchange, anywhere in the world," said executive chairman Zhenya Tsvetnenko.

"Aside from some non-cash accounting-related adjustments, I couldn't have hoped for a better first result."

During the time it has been mining bitcoins, DigitalBTC has mined approximately 7,200 bitcoins, of which it sold 4,000 at an average price of $525 each to earn around $2 million in cash. The company held 3,600 bitcoins at June 30, which were worth $2.3 million at the time.

DigitalBTC has so far spent $5.3 million on BitFury bitcoin-mining hardware, with the company saying that its first purchase of $4 million worth of hardware has paid for itself thanks to bitcoins mined, and selling off "older-generation" hardware to help fund its recent $1.3 million hardware purchase.

Beyond mining operations, the company said its liquidity desk operations are growing, and it is looking at developing a digital wallet app for consumers that is expected to be in beta testing before the end of 2014.

"Only when both security and ease of use can be offered to consumers in one product will Bitcoin reach its maximum mainstream adoption rate," the company said.

Earlier this month, the Australian Taxation Office (ATO) issued its guidance on how Bitcoin and other crypto-currencies will be taxed. The guidance paper and rulings call for individuals' bitcoin transactions to be treated like barter transactions with similar taxation consequences, unless they are doing it for business purposes.

The ATO said that any capital gain or loss from disposal of bitcoins paid by an individual to purchase goods or services for personal use or consumption will be disregarded as a personal use asset — as long as the cost of the bitcoin is AU$10,000 or less — but individuals using Bitcoin as an investment may be subject to capital gains tax rules when they dispose of it, as they would for share assets.

DigitalBTC said while that the approach taken by the ATO would not adversely impact the company, it would prefer if the ATO treated bitcoin as a foreign currency for taxation purposes.

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