Btcs jan2015
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- Bitcoin Shop, Inc. is building a digital currency ecosystem through strategic investments and partnerships in companies focused on wallets, payment processing, ATMs, ecommerce, and mining. - They own two bitcoin ATMs and are the lead investor in Coin Outlet, a leading bitcoin ATM manufacturer and operator planning to deploy ATMs globally. - BTCS also has partnerships with payment processor GoCoin, cloud wallet Gem, and digital currency exchange Expresscoin to provide an integrated ecosystem of digital currency services.
Btcs jan2015
- 2. 2 Safe Harbor The following presentation is an outline of matters for informational purposes only. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities of Bitcoin Shop, Inc. (“Bitcoin Shop”, “BTCS”, “we” or “us”). While we believe the information provided herein is reliable, as of the date hereof, neither Bitcoin Shop nor any of its affiliates, subsidiaries, directors, officers, employees, agents or consultants (i) makes any representation or warranty as to the accuracy or completeness of the information contained in this document, (ii) undertakes any obligation to update any information contained herein, except to the extent required by applicable law, or (iii) takes any responsibility under any circumstances for any loss or damage suffered as a result of any omission, inadequacy, or inaccuracy in this document, except to the extent required by applicable law. The following presentation is intended as a summary only, contains selected information and does not purport to be all-inclusive or to contain all of the information that may be relevant to a decision to invest in our securities. You should not rely upon this document in evaluating the merits of investing in our securities. Any decision with respect to an investment in our securities should be made based solely upon appropriate examination of our business, including an examination of our filings with the Securities and Exchange Commission (“SEC”) and the “Risk Factors” contained therein. The following presentation contains statements, estimates, forecasts and projections with respect to future performance and events, which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those statements include statements regarding the intent and belief or current expectations of Bitcoin Shop and its affiliates and subsidiaries and their respective management teams. These statements may be identified by the use of words like “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “will”, “should”, “seek” and similar expressions and include any financial projections or estimates or pro forma financial information set forth herein. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, without limitation, those detailed in our filings with the SEC. Neither Bitcoin Shop nor any of its affiliates undertakes any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. This document does not constitute and should not be interpreted as either a recommendation or advice, including investment, financial, legal, tax, regulatory or accounting advice. You should conduct your own independent investigation as to the economic, financial, regulatory, tax and accounting implications of an investment in Bitcoin Shop’s securities, and you should consult your own attorney, business advisor, accounting and tax advisor for legal, business, accounting, regulatory or tax advice regarding an investment in Bitcoin Shop. Bitcoin Shop files annual, quarterly and current reports, and other information with the SEC. Our filings with the SEC contain important information regarding Bitcoin Shop, its business, financial condition, results of operations and prospects. You should assume that information contained in any of our filings with the SEC is only accurate as of the date specified in such filings. Our business, financial condition, results of operations and prospects may have changed materially since any such date. You are advised to carefully review the description of our business and the “Risk Factors” set forth in our Annual Report filed on Form 10-K filed with the SEC on March 28, 2014. Summaries of documents contained herein and in our filings with the SEC may not be complete and are qualified in their entirety by reference to the complete text of such document. In making an investment decision, you must rely on your own examination of these documents and such additional due diligence as you deem appropriate. We have not authorized any other person to provide you with information that is different from the information contained in our filings with the SEC. If anyone provides you with different or inconsistent information, you should not rely on it. Our filings with the SEC are available to the public on, and may be reviewed at, the SEC’s website http://www.sec.gov and on Bitcoin Shop’s web site (www.bitcoinshop.us). You may also read and copy any document that Bitcoin Shop files with the SEC at the SEC’s Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549.
- 3. 3 Table of Contents Section Page Investment Highlights 4 Digital Currency Industry Overview 5 Corporate Overview 14 Digital Currency Mining 24 ATM Solutions 29 Ecommerce Business 32 Bitcoin Secure Storage Solution 38 Summary 43
- 4. 4 • Bitcoin Shop, Inc. (“BTCS”) is an early mover in the digital currency ecosystem and one of the first U.S. publicly traded companies in the space • We plan to build a digital currency ecosystem and have made strategic investments and partnerships to utilize and leverage the technologies and services of 4 key digital currency companies: GoCoin, Gem, Expresscoin and Coin Outlet • We are rapidly scaling our low cost bitcoin mining efforts and believe this will provide revenue growth as we build our ecosystem • We currently own two bitcoin ATMs and are the lead investor in Coin Outlet, a leading bitcoin ATM manufacturer, and operator and plan to grow this business • Our beta ecommerce business offers over 250,000 curated products and utilizes its “Intelligent Shopping Engine” to find consumers competitive prices on products from over 250 retailers • We have nearly completed the development of our secure bitcoin storage solution • Digital currency acceptance and regulatory guidance indicates the potential for an increase in opportunities within the industry • Our management team offers the right combination of capital markets experience, industry expertise, and business leadership Investment Highlights
- 5. 5 Digital Currency Industry Overview
- 6. 6 The Traditional Traits of Money* Traits Barter (Before 600BC) Gold/Silver (600BC - present) Fiat (C. 806 - present) Bitcoin (C. 2009 - present) Highly Divisible Globally Transferable Durable Secure (counterfeiting) Acceptable Scarce (Predictable Supply) Not Sovereign (Government Issued) Decentralized** Smart (Programmable)** * The above data was prepared by BTCS and reflects solely the opinion of BTCS and its management. ** New traits made possible by the invention of the blockchain. Poor Excellent
- 7. 7 Digital Currency Ranking/Acceptance Notable Companies Accepting Bitcoin Revenue (billions) Microsoft $92 Dell $57 DISH $14 Time Inc. $3.5 Systemax Inc. (Tiger Direct) $3.4 Overstock $1.4 1-800-FLOWERS $0.8 Zynga $0.7 Digital River $0.4 Total $173.2 Source: Capital IQ, as of 12/16/2014 Rank Country Money Supply (billions) 1 European Union $6,205 2 Japan $6,176 3 China $4,907 4 United States $2,311 5 Germany $2,025 6 Italy $1,161 ≈ ≈ ≈ ≈ 105 Bosnia and Herzegovina $4.11 106 Belarus $4.02 107 Bitcoin $3.99 108 Costa Rica $3.87 109 Senegal $3.58 110 Iceland $3.56 Source: http://www.coinometrics.com, as of 1/9/2015
- 8. 8 Bitcoin Adoption is Rapidly Accelerating User Wallets (1) Cumulative Trading Volume (2) Est. Merchants Accepting Bitcoins (3) # of Transactions on Blockchain (4) 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 Source: 1. blockchain.info, bitcoinpulse.com; 2. bitcoinity.com; 3. blockchain.info, CoinDesk.com, Bitpay; 4. bitcoinity.com , as of 12/30/2014 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 5,000,000 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14
- 9. 9 Potential Market Cap. Disruption by Bitcoin Processors Market Cap Visa Inc $128.3 American Express Co $87.1 MasterCard Inc $80.8 Capital One Financial Corp $45.1 Discover Financial Services $28.6 Alliance Data Systems Corp $13.0 Total System Services Inc $5.4 Global Payments Inc $4.9 Euronet Worldwide Inc $2.4 Heartland Payment Systems Inc $1.8 Green Dot Corp $0.8 Total $398.2 Market Cap (billions) Payment Hardware Market Cap MICROS Systems Inc $5.3 Ingenico $5.0 NCR Corp $4.8 Verifone Systems Inc $3.4 Diebold Inc $2.1 Wincor Nixdorf AG $1.4 Outerwall Inc $1.0 Agilysis Inc $0.2 On Track Innovations Ltd $0.1 Total $23.3 Bank Software Market Cap Fiserv Inc $15.5 Fidelity National Information Services Inc $15.2 Jack Henry & Associates Inc $4.4 ACI Worldwide $2.0 Total $37.1 Securities Exchange Market Cap CME Group Inc $26.6 Intercontinental Exchange Services Inc $22.9 NASDAQ OMX Group Inc $6.8 Total $56.3 Money Transmitters / ATM Market Cap Western Union Co $8.2 Cardtronics Inc $1.5 MoneyGram International Inc $0.7 Xoom Corp $0.7 Total $11.1 Trust/Escrow Market Cap M&T Bank Corp $15.7 Associated Banc-Corp $2.6 Private Bancorp Inc $2.2 Total $20.5 Source: Wedbush Securities, Capital IQ, as of 10/13/2014 $- $100 $200 $300 $400 $500 Market Cap Processors Money Transmitters / ATM Payment Hardware Trust / Escrow Securities Exchange $547 Billion
- 10. 10 Universal What is Bitcoin? What is a cryptocurrency? The Ecosystem Driving the Disruption Bitcoin is the most mature digital currency A cryptocurrency is a type of digital currency that relies on cryptography, peer-to-peer networking, and decentralization Peer-to-Peer Decentralized Worldwide Network Mining Wallets Payment Processors Exchanges ATMs and Financial Services
- 11. 11 Time Growth Single Solution Providers May Hit Growth Ceiling Aggregate Solution Providers Growth Ceiling We Believe the Industry Should Favor Ecosystem Providers Ecosystem Providers Wallets, Exchanges, Processors, Mining, Financial Services
- 12. 12 Payment Processors 10% Wallets 17% Universal 30% Mining Hardware 16% Other 8% Financial Services 12% Exchanges 10% Total $517 Venture Capital Landscape Investment Distribution Source: CoinDesk.com, as of 1/23/2015 Sector Total Invested (millions) Payment Processors $54 Exchanges $49 Financial Services $60 Mining Hardware $82 Universal $141 Wallets $90 Other $41 Early Stage VC Industry Comparison • Number of Universal Bitcoin companies doubled in 2014 • 2014 VC investment surpassed early internet investments • Number of countries with Bitcoin VC investment grew from 8 to 18 in 2014 VC Trend Summary $96 $337 $250 $0 $50 $100 $150 $200 $250 $300 $350 $400 2013 Bitcoin 2014 Bitcoin Run Rate 1995 Internet Bitcoin vs. Early Internet VC Investment (millions) Source: CoinDesk.com, as of 1/23/2015 Source: CoinDesk.com, as of 1/7/2015
- 13. 13 Notable Industry Comparables Company Type Investment Size Valuation / Market Cap Vogogo Inc.1 (TSXV: VGO) Financial Services $8.5 million $118 million Digital CC Ltd.2 (ASX: DCC) Mining $8 million $28.5 million Bitpay3 Payment Processor $30 million $160 million Xapo4 Wallet $40 million Not Disclosed Blockchain5 Wallet $30.5 million Not Disclosed BitGo6 Wallet $12 million Not Disclosed Coinbase7 Universal $25 million $125 million Circle8 Universal $17 million Not Disclosed Source: 1. TSXV – Market Cap as of October 10, 2014 (http://web.tmxmoney.com/quote.php?qm_symbol=VGO) 2. ASX – Market Cap as of October 13, 2014 (http://www.digitalbtc.com/share-capital/) 3. Wall Street Journal – May 13, 2104 (http://online.wsj.com/news/articles/SB10001424052702303851804579558383014468104) 4. CoinDesk.com – July 8, 2014 (http://www.coindesk.com/xapo-sets-40-million-fundraising-record-bitcoin-industry/) 5. CoinDesk.com – October 7, 2014 (http://www.coindesk.com/blockchain-grow-further-closing-30-5-million-funding-round/) 6. TechCrunch – June 6, 2014 (http://techcrunch.com/2014/06/16/bitgo-raises-12m-led-by-redpoint-for-multi-signature-bitcoin-wallets-services/) 7. TechCrunch – December 12, 2013 (http://blogs.wsj.com/digits/2013/12/12/andreessen-boosts-bitcoins-legitimacy/) 8. Wall Street Journal Blog – March 26, 2014 (http://blogs.marketwatch.com/thetell/2014/03/26/bitcoin-company-circle-raises-17-million-launches-consumer- product/)
- 15. 15 Consumer Education & Adoption: “The Challenge” • Misperception of what Bitcoin is and can do • Limited ways to enter ecosystem • Uncertain and unknown risks Cold Storage QR Code Block Chain Wallet CommercePrivate Key Exchange Use CaseATM Average “Joe” Current User Experience Optimal User Experience • Mass adoption will be driven by: − Increased education and awareness − Simple user interfaces − Value-added use cases One Access Point Block Chain Wallet Use CaseATM Commerce Cold Storage QR CodePrivate Key Exchange
- 16. 16 Building a Universal Ecosystem: “The Solution” WALLET FINANCIAL SERVICESATM PAYMENT PROCESSOR ECOMMERCE MINING Strategic Partnerships BTCS was Lead Investor – Series A Board Seat • GoCoin is a leading international digital currency payment platform • Processes Bitcoin, Litecoin and Dogecoin • GoCoin recently signed deal with Paypal BTCS was Lead Investor – Bridge Round Advisor / Board Seat * • Expresscoin is a digital currency exchange with multiple payment options BTCS was a Syndicate Investor – Series A • Gem is a secure, cloud wallet storage technology • State-of-the-art, white label • API access BTCS was Lead Investor – Seed round • Coin Outlet is a digital Currency ATM manufacturer • Coin Outlet plans to operate a worldwide ATM Kiosk network (100K locations secured) • BTCS has option to increase ownership * BTCS has right to advisor role or board seat but has not yet formally completed appointments.
- 17. 17 Corporate Structure Bitcoin Shop, Inc. (Nevada) Bitcoinshop.us LLC (Maryland) BTCS Digital Manufacturing (Nevada) GoCoin LLC (Delaware) 100% 100% Minority Investments Express Technologies, Inc. (Delaware) ~2% 1. BTCS received: (i) a warrant to purchase an additional 16,668 shares at $6.0 per share which expires on December 31, 2015, and (ii) an option to execute a share exchange in one or more transactions for 75,488 shares of Coin Outlet Inc. in exchange for up to an aggregate of 3.5 million newly issued shares of BTCS. The option will automatically exercise on August 16, 2015 subject to certain conditions. If the warrant and option are exercised in full and the convertible note purchased by BTCS on January 19, 2015 is converted at its valuation cap of $6 million then BTCS would own approximately 11.4% of Coin Outlet Inc. Bitvault, Inc. Gem Platform (Delaware) Coin Outlet Inc. (Delaware) ~2.4%-11.4% (1)
- 18. 18 Key Accomplishments February 5 & 6 Begins Trading as a Public Company & Raised $1.875M March 26 Strategic and Lead Investor in GoCoin LLC February 13 BTCS.com Purchased June 28 Company Founded September 1 Website Launched January 13 Management Team Joins January 23 Purchased 550 TH/s of mining hardware and Spondoolies agrees to take equity in BTCS April 1 Marcum appointed as Independent Public Accounting Firm 2013 2014 July 10 Strategic and Lead Investor in Express Technologies, Inc. May 9 Strategic Investor in BitVault Inc. (Gem) September 16 Partnership established with Hashmaster Tech, LLC. 2015 October 1 Lead Investor in Coin Outlet Inc. January 19 Follow on Investment in Coin Outlet Inc. January 19 Closed $498k financings led by management January 28 Signed lease on new mining facility
- 19. 19 Growth Strategy & Timeline Development Phase: focus on R&D and build robust and scalable enterprise grade universal platform • Integrate new service offerings • Develop single account ecosystem access Customer Acquisition Phase: focus on growing user base • Drive site traffic and new users • Deliver additional products and services designed to broaden engagement across our customer base • Leverage strategic partners to reduce customer acquisition costs Monetization Phase: focus on monetizing user base • Generate revenue from other service offerings • Grow top and bottom line while maintaining lower fixed costs through scalable business model Development Customer Acquisition Monetization Time
- 20. 20 Capitalization Table & Performance Options 1. As of 1/20/2015 2. % diluted does not include warrants purchased by management in connection with the January 19, 2015 private placement 3. 875,000 warrants strike @ $1.00, Expire 2/6/2017, and 10,450,000 warrants strike @ $0.10, Expire 1/21/2020 4. Strike @ $0.10 Equity Cap Table1 Shares % Basic % Diluted Common Shares Public Float 62,093,312 42.9% 36.4% Founders & Management2 82,673,923 57.1% 48.4% Total Common 144,767,235 100.0% 84.8% Preferred Stock (as converted) Series C Preferred (1:1) 2,200,000 1.3% Total Preferred 2,200,000 1.3% Warrants Warrants3 11,325,000 6.6% Total Warrants 11,325,000 6.6% Options Performance Options4 12,450,000 7.3% Total Issued Options 12,450,000 7.3% Total Diluted 155,887,235 100.0% • On October 21, 2014 all officers and directors voluntarily agreed to the Company's redemption of an aggregate of 12,750,000 shares of common stock for an aggregate payment of $2,491 • Our officers, directors and large shareholders agreed to refrain from selling or transferring an aggregate of 58,504,575 shares of their common stock until February 5, 2017 Management Performance Option Triggers* Financial Performance Goals FYE 2015 FYE 2016 EBITDA Target, and $500,000 $3,000,000 EBITDA per Share Target $0.003 $0.014 Options to Vest 3.75m 5.35m Revenue Target Bitcoinshop.us LLC $1,000,000 Options to Vest 1.5m Non-Financial Goals Nasdaq/NYSE listing On or before 12/31/2016 Options to Vest 1m Various operational milestones On or before 12/31/2015 Options to Vest 0.85m Total 4.6m 7.85m* As of 1/20/2015
- 21. 21 Management Team Charles Allen, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors • Responsible for overall corporate strategy and direction as well as managing corporate finances • Extensive experience in business strategy, investment banking, investing and capital markets transactions • Strong engineering background with experience in the compound semiconductor field • B.S. in Mechanical Engineering, Lehigh University, M.B.A. Mason School of Business at the College of William & Mary Michal Handerhan, Chief Operating Officer, Co-Founder and Director • Supports business and R&D strategy across the management team • Team leader for the National Aeronautics and Space Administration (“NASA”) in their Peer Review Services group and web 2.0 developer at NASA’s Goddard Space Flight Center • President and CEO of Meesha Media Group, LLC, delivering high-definition video services, web development, database management, and social media solutions • B.S. in Computer Science, Czech Technical University Tim Sidie, Lead Programmer, and Co-Founder • Leading our technology development and platform architecture • Software Engineer II at the Space Telescope Science Institute supporting Hubble Space Telescope and James Webb Space Telescope projects • Software Engineer at NASA's Goddard Space Flight Center for the Direct Readout Laboratory, building software for earth observing satellite systems • B.S. in Computer Science, Ursinus College Charlie Kiser Jr., Executive Vice President • Responsible for our corporate marketing and business development strategy • 15 years in management and C-level roles in marketing, sales, business development and operations • Highlights include Chief Operating Officer for 60 Degrees Pharmaceuticals, Director of Sales and Business Development for Apiphany Inc., Vice President of Sales and Business Development for FortiusOne Inc./GeoIQ, Venture Mentor for AccelerateDC, the Washington, DC Economic Partnership Mentorship Program • B.S./B.A in Finance, West Virginia University
- 22. 22 Advisory Board David Bailey, Chief Executive Officer of BTC Media • BTC Media is one of the largest Bitcoin Media group with assets like yBitcoin. • Founded Forza Financial, building it from concept to one of America’s preeminent MFI's, and serves as Chairman • Served on the Advisory Board for Lend for America • Advisory Board Director for College Cryptocurrency Network • Served on the Culverhouse Investment Management Group Board of Directors • Founded two long-only equity funds Patrick Cines, Chief Executive Officer of BitMercury Ventures • Founding president of the Penn State University Bitcoin Club • Director of Mid-Atlantic Relations for the College Cryptocurrency Network Carol Van Cleef, Partner at Manatt, Phelps and Phillips, LLP • Co-chair of the Global Payments Group, and a member of the Financial Services and Banking practice • Experienced in federal and state regulatory, compliance, and enforcement matters, including anti-money laundering and sanctions compliance, electronic payments and digital/virtual currencies, privacy and data security, and consumer protection issues • Clients include banking organizations, credit unions, securities firms, insurance companies, finance companies, money service businesses, technology companies and hedge funds, among others Bruce Fenton, Founder and Managing Director of Atlantic Financial Inc. • President of the Bitcoin Association • Advisor to various large charitable organizations, private equity and family offices • Outspoken believer in the digital currency ecosystem Jeremy Gardner, Co-founder and Executive Director of the College Cryptocurrency Network • College Cryptocurrency Network is an international, non-profit organization composed of student groups and academics dedicated to blockchain education, innovation, and advocacy • Founder of Ausum Ventures, a horizontal blockchain incubator
- 23. 23 Advisory Board Jason King, Founder of Sean’s Outpost • Sean’s Outpost has fed thousand of meals to the needy and is funded through bitcoin donations • Founder of Satoshi Forest, a 9 acre homeless shelter near Pensacola FL • Organizer Bitcoin conferences across the country including Bitcoins in the Beltway and Coins in the Kingdom Will O’Brien, Chief Executive Officer and Co-founder of BitGo, Inc. • Seasoned technology entrepreneur and executive, advisor and angel investor • Featured in the Wall Street Journal, New York Times, Forbes, AllThingsD, and BusinessWeek • M.B.A. from MIT Sloan School of Management and a B.A. in Computer Science from Harvard University Jonathan Silverman, Partner and Co-founder of Sator Square Partners, LLC • Investment Manager focused on actively managed strategies in Digital Currency • Former Head of Trading at Tradehill, Inc., a start-up bitcoin exchange based in San Francisco • Former trader at Morgan Stanley where he traded Delta-One Equity Products • Has held Series 3, 7, 55, and 63 designations from FINRA Changpeng Zhao, Chief Technical Officer and Co-founder of OkCoin.com • OKCoin.com is one of the largest digital currency exchanges in the world • In charge of all technical development as well as international markets at OKCoin.com • Former Head of Development at Blockchain.info, where he managed development of all products including Blockchain.info, Wallet, API, Merchant App and ZeroBlock
- 25. 25 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Bitcoin Price (USD) Difficulty (millions) The Waiting is Over - A Timed Mining Entrance • Network hash rate doubled every 1.87 months in 2014*. According to Moore’s law CPU power should double every 2 years. ASIC (Application Specific Integrated Circuit) processing power approaching CPU processing growth pattern • Predictable revenue expected • Mining costs can no longer be ignored and smaller miners are being pushed out 2 • Rapid difficulty increases rendered mining hardware obsolete in a matter of months • Poor investment due to risk / reward profile1 3 • Price decline and price-to-difficulty spread has resulted in high end mining hardware readily available at competitive prices • Limited capital available to invest and fund data centers and mining hardware 1 3 Bitcoin Price vs. Mining Difficulty Level 2 Optimal Entry Point Source: CoinDesk.com, as of 12/30/2014, * calculated by BTCS based on publicly available hash rate data
- 26. 26 Hardware: • 93% of current hardware are Spondoolies S35s • Spondoolies is a shareholder of BTCS Mining Overview BTCS Hashing Power (Th/s) BTCS Mined Bitcoins 176 891 0 100 200 300 400 500 600 700 800 900 1,000 2014Q4 2015Q1* ‼52 0 10 20 30 40 50 60 2014Q4 Overview: • Over $1.5 billion worth of un-mined bitcoins • High IRR’s expected on equipment with tolerable risk profile • Synergies with other BTCS businesses New Facility: • 83,000 square feet – repurposed manufacturing building • 10+ Mw of power available to building • ~30% lower operating cost then current facility • 1st year rent of $58,271 with option to buy between 1st and 2nd year for $775,000 (less cumulative rent payments and security deposit) • Potential for hosted mining service and additional revenue streams Current Facility: • Near capacity without making upgrades • Low operating cost Over 100 Th/s came online in mid-December 406% Pro Forma Growth * includes hardware that has been purchased but not yet mining, as of 1/23/2015
- 27. 27 New Facility
- 28. 28 Operational Hedge* Our facility has low operational costs Time USDExchangeRate Bitcoin Price Time Bitcoins Number of Bitcoins Mined WHY? Small Miner’s IRR Time IRR Network Hashrate Time HashrateSmall Miners Go Offline • Declining bitcoin price forces smaller mining operations offline Mining Difficulty Difficulty Time Number of Bitcoins Mined Time Bitcoins • Miners are competing for a fixed number of bitcoins • BTCS mining capacity may account for a larger % of total network hash rate • Useful life of mining hardware increases with difficulty decrease Estimated BTCS’s Mining Revenue Time Revenue • BTCS may earn more bitcoins * The operational hedge assumes the total current network hash rate includes miners with higher operating costs than BTCS which may come offline during bitcoin price declines. There is no guarantee the operational hedge will occur.
- 29. 29 ATM Solutions
- 30. 30 ATM Market Overview U.S. Bitcoin ATM Locations 0 50 100 150 200 250 300 350 400 # of Bitcoin ATMs Worldwide Source: http://coinatmradar.com, as of 12/29/2014 BitXatm • Bitcoin ATMs are rapidly gaining popularity as a method to bring bitcoin adoption to the masses • Converting traditional ATMs to utilize bitcoin is typically not practical • BTCS owns two BitXatms, which it plans to deploy and have operated by its partner Coin Outlet Coin Outlet Source: http://coinatmradar.com, as of 12/29/2014 Headquarters
- 31. 31 Coin Outlet – Key Facts* • BTCS has the ability to own up to 11.4% of Coin Outlet at a $6 million dollar valuation assuming BTCS exercises its Option and Warrant • Coin Outlet has 4 digital currency ATMs in service and plans to expand to over 150 in 2015 • Coin Outlet partnered with Locant Services who holds the exclusive rights to locate equipment such as Coin Outlet ATMs at over 100,000 high traffic locations across the United States • Current Coin Outlet locations: − Overstock (Nasdaq: OSTK) headquarters − University of North Dakota Center for Innovation Foundation − 454 Grill (Restaurant / Bar) − Bad Decisions (Restaurant / Bar) • High profile target locations: − Universities − Dense populations for remittance • ATM platform anticipated to provide springboard to remittance market • Coin Outlet is AML/KYC compliant which we anticipate should create a short term barrier to entry * Based on information made publicly available by Coin Outlet, Inc., as of 1/23/2015
- 33. 33 • Ecommerce represented only 6% of total U.S. retail sales in 2012 leaving significant growth opportunities • Electronics and apparel/accessories estimated to account for approximately 46% of U.S. ecommerce sales by 2016 • Books, movies and videos forecasted to grow at 16.3% CAGR through 2017 • Large retail categories like auto and food/beverage have lower sales online indicating room for growth U.S. Ecommerce Market Overview 25% 19% 12% 5% 4% 3% 2% 30% Consumer electronics and appliances Apparel Media, toys, and games Food and drink Furniture and homeware Beauty and personal care Home improvement and home care Other U.S. Online Sales by Category Source: Forrester Research, Inc. U.S. Online Retail Forecast (billions) Source: ATKearney The 2013 Global Retail Ecommerce Index™ $157 $176 $197 $218 $240 $259 $279 2009 2010 2011 2012 2013 2014 2015 Source: “US Retail Ecommerce: 2013 Forecast and Comparative Estimates”, eMarketer
- 34. 34 The Solution – “Intelligent Shopping Engine” We search over 250 retailers − You spend less time searching site to site − You count on top name retailers you know and trust Our “Intelligent Shopping Engine” finds the most competitive deals. We oversee fulfillment and strive for a smooth shopping experience − We provide customer service − We oversee product delivery and satisfaction 1 2 3
- 35. 35 The User Experience RUNS IN REAL TIME Site wide currency selector Add to Wish List Add Best Price to Cart
- 36. 36 Intelligent Shopping Offers Universal Benefits • Major credit cards is anticipated to greatly expand customer base • Consumer pays fee for using credit card − Value add to consumer still anticipated due to product spread • Goals: − Convert users to adopt digital currencies over time − Increase conversions at checkout • Certain areas of customer service handled by vendors • Enable fast and secure payments • Offer lower transaction fees • Eliminate charge backs • New currencies may fuel customer growth • International growth potential • Improved customer service options offered Digital Currencies Traditional Payments (Coming Soon)
- 37. 37 Ecommerce Vendor Growth Initiatives Manufacturers and Exclusives Drop Shippers Affiliate ProgramsExpanding On-Going Discussions Applying Estimated Sales & Products Offered LowerHigherTypicalMargin Product Source “Intelligent Shopping Engine”
- 38. 38 Bitcoin Secure Storage Solution Powered by
- 39. 39 Secure Storage Overview • Bitcoin storage security is necessary for mass adoption • According to Gem over 7% of all bitcoins have been stolen or lost • Multi-signature technology allows users to protect their bitcoins without entrusting a third-party with their funds, thus eliminating a single point of failure • Our multi-signature storage solution combines three keys and every transaction requires valid signatures from at least two of the keys: 1. BTCS cosigning key 2. Primary key 3. Offline backup key • Our storage solution offers 2-factor authentication for added security • Our solution is built on Gem’s technology tool kit and we are the only strategic investor in Gem
- 40. 40 The User Interface Most recent transactions Unlimited Wallets Real time USD balance Security Logs and Settings
- 41. 41 KEY #1: BTCS Cosigning Key KEY #2: Primary Key KEY #3: Offline Backup Key Every transaction requires 2 of 3 keys A Secure Storage Solution User is always in control of funds Wallet can be recovered if one key is lost BTCS hold one key, so user is always in control of funds
- 42. 42 Planned User Experience 2-Factor Authentication User Login User accesses wallet: User sends Bitcoin: Primary Key Cosigning Key 2-Factor Authentication Transaction Confirmed Recipient 4 Levels of Security 1 2 User Name / Password Multi-Signature 1 2-Factor Authentication*2 2-Factor Authentication*33 * User can disable (BTCS uses its key when user enters password)
- 43. 43 Summary • BTCS is an early mover in the digital currency ecosystem and one of the first U.S. publicly traded companies in the space • We plan to build a digital currency ecosystem and have made strategic investments and partnerships to utilize and leverage the technologies and services of 4 key digital currency companies: GoCoin, Gem, Expresscoin and Coin Outlet • We are rapidly scaling our low cost bitcoin mining efforts and believe this will provide revenue growth as we build our ecosystem • We currently own two bitcoin ATMs and are the lead investor in Coin Outlet, a leading bitcoin ATM manufacturer, and operator and plan to grow this business • Our beta ecommerce business offers over 250,000 curated products and utilizes its “Intelligent Shopping Engine” to find consumers competitive prices on products from over 250 retailers • We have nearly completed the development of our secure bitcoin storage solution • Digital currency acceptance and regulatory guidance indicates the potential for an increase in opportunities within the industry • Our management team offers the right combination of capital markets experience, industry expertise, and business leadership
- 44. 44 Contact Info Charles Allen Chief Executive Officer Investor Contact Info ir@btcs.com (202) 430-6576