TAMPA, Fla. - LM Funding America, Inc. (NASDAQ:LMFA), a technology-based specialty finance and cryptocurrency mining company, has announced its asset purchase agreement to acquire a 15 MW mining site in Oklahoma for $7.3 million. The site, previously owned by Tech Infrastructure JV I LLC, a joint venture majority-owned by Arthur Inc., is part of LM Funding's strategy to become a vertically integrated Bitcoin mining operation.
The acquisition, expected to close in December 2024, includes air-cooled GIGA containers, transformers, and related infrastructure. LM Funding will pay $1.1 million upfront and credit approximately $3.7 million in accrued loans and interest previously extended to the JV towards the purchase price. An additional $2.5 million will be held in escrow to ensure the completion of the acquisition and the exit of a third-party miner currently hosted at the site.
Bruce Rodgers, CEO of LM Funding, highlighted the strategic importance of the acquisition, stating it allows the transition of their miners to a more cost-effective facility. The company aims to continue identifying additional hosting sites to drive further growth.
LM Funding has also lent an additional $0.7 million to the JV, with aggregate loans totaling $3.7 million. The facility and assets are intended for LM Funding's internal hosting needs, not for third-party mining machines.
Arthur Inc. plans to reinvest the proceeds from the sale into its subsidiary growth strategy, focusing on the development of new mining sites and expanding operational capacity. Rudá Pellini, President of Arthur Inc., described the transaction as a pivotal step in their long-term vision.
By January 2025, LM Funding intends to deploy approximately 800 of its S21 and XP (NASDAQ:XP) Bitmain machines and 640 S19J Pros after vacating the third-party miner from 5 MW of the current hosting space.
LM Funding America started its Bitcoin mining operations in September 2022 and also operates a specialty finance company providing funding to nonprofit community associations. This move underscores LM Funding's commitment to optimizing operations and strengthening its position in the cryptocurrency mining sector. The information in this article is based on a press release statement.
In other recent news, LM Funding America reported a net loss of $6.1 million in Q2 2024, with a decrease in total revenue to $3 million and an increase in operating expenses to $7.8 million. Despite this, the company successfully mined 44.1 Bitcoins and currently holds 160.4 Bitcoins, valued at approximately $10 million. Furthermore, the company announced a registered direct offering and concurrent private placement with an institutional investor, anticipated to raise approximately $2.6 million, managed by Maxim Group LLC.
In a move to expand its Bitcoin mining operations, LM Funding America has disclosed plans to acquire a mining site in Texas and establish a hosting facility near Oklahoma City. The company has secured a $5 million non-convertible loan to acquire additional miners and for infrastructure expansion.
In addition to these developments, LM Funding America announced the approval of an expanded incentive plan and the ratification of Malone Bailey, LLP as its independent registered accounting firm for the fiscal year 2024. The Amended and Restated LM Funding America, Inc. 2021 Omnibus Incentive Plan, which aims to increase the number of shares available for issuance to 1 million and modify the annual share reserve increase, was approved. These recent developments highlight the company's focus on growth and optimization of their Bitcoin mining operations, despite a challenging financial quarter.
InvestingPro Insights
LM Funding America's recent acquisition of a 15 MW mining site in Oklahoma aligns with its strategic pivot towards becoming a vertically integrated Bitcoin mining operation. This move comes at a time when the company's financials present a mixed picture, according to data from InvestingPro.
Despite the company's ambitious plans, InvestingPro data reveals that LM Funding America has a market capitalization of just $10.1 million, reflecting its current small-cap status. The company's revenue for the last twelve months as of Q2 2024 stood at $15.13 million, with a significant revenue growth of 122.01% over the same period. However, this growth hasn't translated into profitability yet, as evidenced by the negative operating income of -$8.04 million.
InvestingPro Tips highlight some key aspects of LM Funding's financial situation. The company is "quickly burning through cash," which could be a concern given the capital-intensive nature of cryptocurrency mining operations. Additionally, the stock "has taken a big hit over the last week," with a 1-week price total return of -8.41% as of the latest data.
On a more positive note, LM Funding is "trading at a low Price / Book multiple" of 0.25, which could indicate potential undervaluation. This aligns with the company's strategy to acquire assets that could potentially increase its book value and operational capacity.
Investors considering LM Funding should note that InvestingPro offers 7 additional tips for this stock, providing a more comprehensive analysis of its financial health and market position. These insights could be valuable in assessing the potential risks and rewards of the company's strategic shift towards cryptocurrency mining.
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