BTCS
Announces Letter to Shareholders from CEO
Balance Sheet Strengthened with $1.24m Raised in 2019
Silver
Spring, MD, July 29, 2019 -- InvestorsHub NewsWire
-- BTCS Inc. (OTCQB: BTCS) ("BTCS" or the "Company"),
a digital asset and blockchain technology focused company, released
a Letter to Shareholders updating current activities and outlining
its corporate strategy. An updated corporate presentation is also available on the
Company's website (link).
Dear
Shareholders,
Our
decision to focus our business around blockchain technologies in
2014 has proven to be a valid thesis with prescient timing. Over
the past five years our management team has made strong industry
connections, tried our hand at many blockchain verticals in this
rapidly growing industry, and gained invaluable insight and
industry knowledge. This depth and breadth of experience, while
falling short of outright success, has enabled us to refine our
business model, setting the stage for shareholder value improvement
as we move forward.
Recognizing that the
opportunity in the blockchain space is still in its infancy, we
spent much of the past year focused on improving our financial
position as we seek out acquisition opportunities and execute on
our plan to build a portfolio of digital assets.
We have
taken these steps because we believe the rise of digital tokens as
a new asset class has created a tremendous opportunity for us to
leverage our experience in the sector. One of our most significant
assets in this regard is our seasoned team of industry leaders who
are recognized for their deep relationships with key players in the
space. Our team's value is further enhanced by our ability to
bridge the gap between public company experience and blockchain
expertise, which we believe fills a major talent void in this
burgeoning arena.
FINANCIAL
UPDATE
In the
first half of 2019, we signed an equity line of credit (ELOC)
agreement to raise up to $10 million, an agreement that is in line
with our goals of avoiding toxic funding and seeking out the lowest
possible cost of capital while minimizing shareholder dilution.
Since January 2019, we have raised $1.24 million under the ELOC and
through the cash exercise of warrants at an average price of $0.31,
representing a 72% premium to Friday's closing price. By
strengthening our balance sheet, we believe we are now in a great
position to execute on our business plan.
INDUSTRY
UPDATE
The price
of Bitcoin and Ethereum have had meteoric rises in recent years.
Looking at the yearly lows of both Bitcoin and Ethereum, the
digital assets have seen year-over-year increases nearly every
year, as indicated by the following table:
Today,
Bitcoin alone has a market capitalization of approximately $170
billion, and Ethereum, the second largest cryptocurrency, has a
market capitalization of approximately $22 billion. Together, the
valuations of Bitcoin and Ethereum represent 73% of the overall
cryptocurrency market.
Confirmed
daily transactions in the digital asset ecosystem have surged back
to near all-time highs this year, topping 400,000 transactions per
day multiple times in 2019, a number previously reached for only a
short period of time in late December 2017 and early January 2018,
while blockchain wallet users has continued a steady climb to new
all-time highs of nearly 40 million users in 2019, up nearly 100%
from the end of 2017.
We
believe blockchains are still in their "first inning." The Internet
took 20 years to transition from proof-of-concept to mass adoption.
Bitcoin has just recently crossed the 10-year threshold, and with
major corporations from Walmart to Microsoft and IBM working on
blockchain ledgers, the early stage of commercialization is now
underway.
A
discussion of major corporation participation in the blockchain
space would be incomplete without addressing Facebook's planned
Libra "cryptocurrency." While we commend Facebook for their efforts
to launch a new cryptocurrency, Libra lacks the fundamental
strengths and characteristics of traditional cryptocurrencies,
which are based on five key pillars: open, public, neutral,
borderless, and censorship resistant.
Whereas
Bitcoin and other traditional cryptocurrency transactions are
recorded pseudo-anonymously on public distributed and decentralized
blockchains maintained by a global network of computers, Libra, on
the other hand, plans to launch using a permissioned blockchain,
meaning that transaction can only be added by a group of "trusted"
parties. Given Facebook's track record of failing to protect its
users' data underscores the risks related to Libra, where a user
not only puts their personal information at risk, but their money
as well.
We
believe it's highly unlikely Facebook will launch Libra in 2020 as
planned. David Marcus, the head of Facebook's digital currency
project, recently stated in Congressional testimony that "Libra
will comply with all U.S. regulations and not launch until the U.S.
lawmakers' concerns have been answered." Given our experience,
getting multiple regulators on board with a plan as audacious as
Libra is no easy task and no amount of money will expedite the
process. Furthermore, trying to launch Libra on a global scale
which spans many gray
areas of
regulation seems like a futile effort in the short and medium
term.
Based on
its current use case, we believe that Bitcoin is more of a digital
asset than a digital currency, which was not how it was initially
intended, however as we discuss in our updated presentation
(link),
it is a great stepping stone and proof-of-concept for the
progression of distributed ledger technology.
BUSINESS
PLAN UPDATE
BTCS is
an early mover in the blockchain and digital currency ecosystems
and the first "pure play" U.S. public company in the space. Moving
forward, we plan to leverage our expertise and strengthened balance
sheet to execute on our refined business plan, which is primarily
focused on building a portfolio of digital assets and seeking
acquisition opportunities in the blockchain space.
We plan
to focus our digital asset acquisition strategy on the protocol
layer. Unlike the Internet, where the protocol layer (TCP/IP, HTTP,
etc.) was not a
profit center,
rather wealth was created at the application layer (Google, Amazon,
etc.), with blockchains, we believe the protocol layer will grow
faster than the value of the applications built on top of it.
Additionally, while applications are more akin to
startups,
with high failure rates, in each case, the applications built upon
a particular protocol drive value increase in the underlying
protocol, whether any single application ultimately succeeds or
fails.
Our
company acquisition strategy plans to leverage our position as one
of only a limited number of established public companies focused on
blockchain technology. Our close relationship with blockchain
industry leaders and entrepreneurs, proven record of navigating
regulatory environments, and ability to identify emerging themes in
the industry, combined with an experienced team with a track record
of negotiating and closing deals, places us in an ideal position to
capitalize on future opportunities. Furthermore, our strengthened
balance sheet should increase our attractiveness to potential
targets.
With
respect to mining, which is still of interest, we do not believe
the current economics of mining offer a positive ROI, and as such,
we do not intend to resume our mining efforts in the near future.
This shift further augments our attractiveness relative to our
public company peers, many of which we believe are burdened by
unprofitable mining operations.
With your
continued support, we hope to capitalize on these opportunities
while the industry is still in the "first inning", maximizing the
potential for long-term shareholder value improvement.
On behalf
of our management team, I want to personally thank you for your
continued support.
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Sincerely,
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Charles
Allen
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CEO and
Chairman
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About
BTCS:
BTCS is
one of the first U.S. publicly traded companies focused on digital
assets and blockchain technologies. BTCS plans to acquire
additional Digital Assets to provide investors with indirect
ownership of Digital Assets that are not securities, such as
bitcoin and ether. We intend to acquire Digital Assets through open
market purchases. Additionally, we may acquire Digital Assets by
resuming our mining operations through outsourced data
centers
and
earning rewards in Digital Assets by securing their respective
blockchains, if an acceptable return on investment exists. We are
not limiting our assets to a single type of Digital Asset and may
purchase a variety of Digital Assets that appear to benefit our
shareholders, subject to the limitations of the Investment Company
Act of 1940. The Company is also seeking to acquire controlling
interests in businesses in the blockchain industry. For more
information visit:
www.btcs.com
Forward-Looking
Statements:
Certain
statements in this press release, constitute "forward-looking
statements" within the meaning of the federal securities laws
including statements regarding our belief regarding our ability to
execute our business plan, our intention to acquire Digital Assets
and acquiring controlling interests in businesses in the blockchain
industry. Words such as "may," "might," "will," "should,"
"believe," "expect," "anticipate," "estimate," "continue,"
"predict," "forecast," "project," "plan," "intend" or similar
expressions, or statements regarding intent, belief, or current
expectations, are forward-looking statements. While the Company
believes these forward-looking statements are reasonable, undue
reliance should not be placed on any such forward-looking
statements, which are based on information available to us on the
date of this release. These forward-looking statements are based
upon current estimates and assumptions and are subject to various
risks and uncertainties, including without limitation those set
forth in the Company's filings with the Securities and Exchange
Commission, not limited to Risk Factors relating to its digital
currency business and our ability to raise sufficient capital
contained therein. Thus, actual results could be materially
different. The Company expressly disclaims any obligation to update
or alter statements whether as a result of new information, future
events or otherwise, except as required by law.
Investor
Relations:
Michal
Handerhan
BTCS
Inc.
(202)
430-6576
IR@btcs.com