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Company Update
Good afternoon and welcome. Thank you for taking the time to join me.
I’m Michael Toporek, CEO of Mechanical Technology, Inc. Today I wanted to share with you an illustration of the earnings power of the company across a range of potential business environments, consistent with our principles of accountability and transparency, we think it’s important that the shareholders are well informed.
First, some legal matters. The material in this presentation has been prepared by EcoChain and is general background information about EcoChain’s activities, current at the date of this presentation, and is provided for information purposes only. It should be read in conjunction with EcoChain’s periodic and continuous disclosure announcements followed by the Securities and Exchange Commission.
This presentation provides information in summary form only and is not intended to be complete. EcoChain makes no representation or warranty, express or implied, as to the accuracy, completeness, fairness, or reliability of any of the information, illustrations, examples, opinions, forecasts, reports, estimates, and conclusions contained in this presentation. It is not intended to be relied upon as advice or recommendation to investors or potential investors and does not take into account the investment objectives, financial situation, taxation situation, or needs of any particular investor. Due care and consideration should be undertaken when considering and analyzing EcoChain’s future performance and business prospects.
This presentation is not intended to serve as a forecast of any such future performance or prospects. An investor must not act on any matter contained in this document but must make its own assessment of EcoChain and conduct its own investigations and analysis. Investors should assess their own individual financial circumstances and consider talking to a financial advisor, professional advisor, or consultant before making any investment decision. This document does not constitute an offer, invitation, solicitation, or recommendation with respect to the purchase or sale of any security in EcoChain, nor does it constitute financial product advice. This document is not a prospectus, product disclosure statement, or another offer document under the United States federal or state securities law or under any law. This document has not been filed, registered, or approved by regulatory authorities in any jurisdiction.
Any projection, forecast, estimate, or another forward-looking statement in this presentation only illustrates hypothetical performance under specified assumptions of events or conditions that have been clearly delineated herein. Such projections, forecasts, estimates, or other forward-looking statements are not reliable indicators of future performance. The hypothetical or illustrative performance information contained in these materials may not be relied upon as a promise, prediction, or projection of future performance and are subject to significant assumptions and limitations.
In addition, not all relevant events or conditions may have been considered in developing such assumptions. Readers of this document should understand the assumptions and evaluate whether they are appropriate for their purposes. Some events or conditions may not have been considered in such assumptions. Actual events or conditions will vary and may differ materially from such assumptions. Readers should understand such assumptions and evaluate whether they are appropriate for their purposes. This presentation may include figures related to past performance or simulated past performance as well as forecasted or simulated future performance. EcoChain disclaims any obligation to update its views of such risks and uncertainties or to publicly announce the results of any revision to the forward-looking statements made herein.
One of our commitments to our shareholders is that we’ll communicate frequently, clearly, and transparently about the company and its prospects. In this presentation, we’ll demonstrate the potential earnings for the company across a range of economic scenarios. The footnotes and details in this illustration are important components, but the idea was to simulate if we were to make all the buying decisions today, what could the outcome be for our shareholders.
As part of being transparent, we’re committed to giving shareholders ongoing information flow that should help them make informed investment decisions. Our first commitment, we will refresh this illustration every four to six weeks. This means that certain variables will change such as coin prices, difficulty assumptions, and the equipment mix we’re assuming we deploy. We will also plan to release monthly, by location, financial, and operating information within 10 days of the close of each month. The first of these reports will be by June 10th.
Now, as our mining capacity comes online, the need for this illustration to be updated will decrease and investors will be well served to look at the monthly information reports that we’re putting out. To be very specific about our monthly information flow on or about June 10th, we’ll release key financial and operating information for the TNT and Python locations. Then by the 10th of every month, shareholders will know how we’re doing.
Following are some illustrative financial outcomes. Now on the first illustration, you can see our $45,000 Bitcoin assumption and our hash rate assumptions below on the slide. Our contribution margin is after we take into account electricity and overhead costs. Contribution dollars ramp from about $900,000 in Q2 to about $2 million in Q3 and $8 million in Q4. For convenience, we assume we’re ramping the 10-megawatt building at Python in Q4 2020, but we’re not showing any financial results for it in that quarter. Then on January 1st, 2022, that 10 megawatts come online. That accounts for the jump in revenue and profit in Q1 2022 to about $10.4 million dollars in this scenario.
If you look at our run rate at $45,000 Bitcoin for Q4 of this year, it’s at $32 million dollars. Then for Q1 of 2022, our run rate is $41 million. We pride ourselves on being ultra low cost in the sector. So we also looked at the margin generated at $25,000 Bitcoin in Q4 of this year. If you were to annualize it and make up a run rate, it would be 15 million dollars. In Q1 of next year, our run rate would be $22 million dollars, not a bad showing at $25,000 Bitcoin. Obviously, of course, if Bitcoin was $60,000, we’d be doing very well as the scenario below demonstrates.
So, let’s delve into some details here. For the $45,000 Bitcoin scenario, TNT would continue to produce solid cash flow given the low investment dollars we have in place there. When we ramp Anaconda in late Q3 and expected to be running near capacity at Q4 this year, we expect very strong results. For Python, we assume in July 1st close. Python’s second building gets built and scales up over Q4. For our illustration, just to simplify, no revenues were assumed in Q4 2021 and the full 10 megawatts is brought online on January 1st, 2022. Over the course of 2021, we ramp up as the landlord terminates his hosting contracts. This ramp-up takes into account the schedule he’s given us, but we’ve added a fair bit of slack to our numbers in case things don’t play out as quickly as he hopes. Please note that Q2 revenue at Python. The landlord is currently hosting the equipment we purchased in April and we announced that in a press release, I think it was April 12th or so.
I’d like to give you some historical information on each of our sites, namely a bit about our Q1 performance. So TNT for Q1 of this year performed exactly as we had expected and you can check back our expectations were met. Again, we’re very pleased with the way this site is running and generating cash for us. At Python in the first quarter, the landlord hosted some of our surplus equipment. In April, we purchased additional equipment, which the landlord at Python is hosting for us. In June, when we released our April and May monthly performance, you should see that equipment comes into the numbers.
There were just a couple of slides that I want to review with you in our appendix. This slide just presents the quarterly illustration with BTC at $25,000. Again, still very respectable and reflects our ultra-low-cost position in the industry. Then obviously at $60,000 BTC, we’re knocking it out of the park, into the house across the street, to use a baseball analogy. There is additional material in this presentation and is free to review, which I encourage you to look at without my narration.
We view it as our obligation to you to be accountable and transparent. We’ll put out the information flow to demonstrate to you that we are very focused on delivering a high return on invested capital. You’ll see our numbers every month, as I’ve said, I’m really looking forward to the rest of this year as we scale up our business. Thank you.