Benzinga | Aug 5, 2021 06:20PM EDT

Sphere 3D Announces Agreement To Acquire Exclusive Rights For Assignment Of Cryptocurrency Mining Assets; Terms Not Disclosed

Sphere 3D Corp. (NASDAQ:ANY) ("Sphere 3D" or the "Company"), a company delivering containerization, virtualization, and data management solutions, announces it has entered into an agreement (the "Agreement") with Hertford Advisors Ltd. ("Hertford"), a privately-held company that provides turnkey mining solutions, to provide a six month exclusive right to assume all of Hertford's rights to a number of bitcoin mining agreements (the "Bitcoin Agreements").

The Company has successfully assumed and executed the first Bitcoin Agreement directly with the manufacturer, for the purchase of up to 60,000 new bitcoin mining machines ("miners"), with deliveries to commence in November 2021 and continue over the course of the next ten months. Upon completion of delivery, this will give Sphere 3D 5.7 Exahash of computing power.

"This is a significant milestone for Sphere 3D as we look to the future," says Peter Tassiopoulos, Sphere 3D's CEO. "We are pleased to have the opportunity to place Sphere 3D as a leader in the space with state of the art miners, in a very competitive market where time to delivery is paramount. We continue to look for ways to increase shareholder value while remaining true to our commitment to ESG principles. We believe that this series of transactions could have significant revenue and cost synergies across our value chain."

Details of the Transactions

In exchange for the assignment of the contracts from Hertford, for which Sphere 3D has the right, but not the obligation, to complete, and subject to receipt of all necessary regulatory approvals and execution of definitive agreements, Sphere 3D will issue to Hertford Common Shares, as well as shares of a new series of preferred stock in the Company, based upon the achievement of certain milestones. Those milestones include the assumption of two additional contracts, outside of the 60,000 miner agreement previously mentioned in this release, for the purchase of up to an additional 160,000 miners (for a total of 220,000), and the right to complete negotiations to secure a long-term contract for a 200,000 square foot crypto mining facility to be supplied with up to 1GW of carbon-neutral power and 1GW of power from the grid as backup, for which the lessor will contractually agree to offset all carbon emissions when grid power is utilized. If all contracts are executed, Sphere 3D will have 21.5 Exahash computing power. Upon assignment of the contracts, the Company will issue an aggregate of 4,500,000 Common Shares to Hertford Advisors, Ltd. Additional consideration will be granted as other key milestones are achieved. The shares issued by the Company shall be subject to lock up and leak out agreements, with the initial release starting six months after issuance of the securities, and continuing until two years following the issuance of the securities.

As previously disclosed, the Company entered into a definitive merger agreement with Gryphon on June 3, 2021, which is expected to close in the 4th Quarter 2021. Gryphon is committed to 100% renewable Bitcoin mining and currently holds 720 PH/s computing power. This agreement secures access to additional mining capacity and creates new revenue opportunities within Sphere 3D's existing business.