On Tuesday, H.C. Wainwright maintained a Neutral rating for Mawson Infrastructure Group Inc. (NASDAQ: MIGI), following the company's recent production report. Mawson Infrastructure, transitioning from a pure bitcoin mining firm to a digital compute host, disclosed an 18% increase in co-location revenue for October, amounting to $4.0 million compared to September. This shift is part of Mawson's strategy to diversify its business model in the highly competitive bitcoin mining industry.
The company's sales for the third quarter, reported on November 14, were $12.6 million, a slight decrease from the second quarter's $13.1 million. However, co-location revenue for the same quarter stood at $9.5 million, marking a 17% rise from the previous quarter. This increase underscores the company's growing focus on sustainable hosting services for crypto mining and high-performance computing (HPC) support.
Mawson has recently acquired land in Perry County, Ohio, with access to 24 megawatts (MW) of power. The site is being prepared for a 20MW NVIDIA (NASDAQ:NVDA) GPU support deal with BE Global Development, a London-based private equity firm. This deal, announced on August 12, is part of Mawson's efforts to expand its hosting capacity for various HPC consumers.
Upon completion of the Ohio site, Mawson's total power under management is expected to reach 153MW, up from the current 129MW, which includes facilities in Midland and Bellefonte, Pennsylvania. Despite the expansion, H.C. Wainwright expresses caution regarding Mawson's growth prospects and operating leverage, choosing to maintain a Neutral stance without altering the investment rating.
In other recent news, Mawson Infrastructure Group Inc. has reported a substantial surge in revenue, with a 65% year-over-year increase for September 2024. The digital colocation business, which saw no revenue in September 2023, has now reached multi-million dollar monthly earnings. The energy management segment also reported a significant 271% growth in revenues to $0.62 million. The company also completed the first phase of construction at its Perry County, Ohio facility, which is expected to boost Mawson's total capacity to 153 megawatts.
Among other developments, Mawson announced a 6-year AI customer colocation agreement with NVIDIA, which could generate a cumulative revenue potential of $285 million. The company also extended its lease agreement with Jewel Acquisition, LLC for an 8-acre land in Midland, Pennsylvania, until 2027, and signed a marketing deal with Outside The Box Capital Inc.
On the executive front, CEO Rahul Mewawalla was granted 2,500,000 restricted stock units under the company's 2024 Omnibus Equity Incentive Plan. The company also announced the departure of Chief Development Officer Craig Hibbard and the appointments of Kaliste Saloom as General Counsel and Corporate Secretary, and former U.S. Congressman Ryan Costello as the new Chair of the Board of Directors.
InvestingPro Insights
Mawson Infrastructure Group's recent strategic shift towards digital compute hosting is reflected in the latest InvestingPro data and tips. The company's revenue growth of 25.45% over the last twelve months aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year. This growth trajectory supports Mawson's transition from pure bitcoin mining to a more diversified business model.
However, the company's financial health presents a mixed picture. An InvestingPro Tip indicates that Mawson's short-term obligations exceed its liquid assets, which could pose challenges as it expands its operations and power capacity. Additionally, the company is not profitable over the last twelve months, with a negative operating income margin of -67.29%.
Despite these challenges, Mawson's stock has shown significant momentum, with an InvestingPro Tip highlighting a large price uptick over the last six months. This is corroborated by the 29.32% price total return over the same period. The stock's volatility, as mentioned in another InvestingPro Tip, is evident in its substantial 212.73% one-year price total return, contrasting with a -46.25% year-to-date return.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Mawson Infrastructure Group, providing deeper insights into the company's financial position and market performance.
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