Slide 1: A Blockchain Technology Company Corporate Presentation
A Blockchain Technology Company Corporate Presentation BTCS Inc. (OTCQB: BTCS) October 2015 1
Slide 2: Safe Harbor
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 BTCS Inc. (“BTCS”, “we” or “us”). While we believe the information provided herein is reliable, a
Slide 3: Table of Contents
Table of Contents Section Page Investment Highlights 4 Pro-Forma Merger Highlights 5 Industry Overview 9 Corporate Overview 17 Summary 36 3
Slide 4: Investment Highlights
Investment Highlights • BTCS Inc. (“BTCS”) is an early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on blockchain technologies • The blockchain is a decentralized public ledger that has the ability to fundamentally impact all industrie
Slide 5: Pro-Forma Merger Highlights
Pro-Forma Merger Highlights 5
Slide 6: Pro-Forma Combined Financial Projections
Pro-Forma Combined Financial Projections • Spondoolies has successfully built two Revenue Forecast ($m) generations of ASIC servers $80 $71 • Power capacity available to deploy SP50 $70 $59 $59 servers $60 $50 $48 • BTCS has experienced team running NC $50 $44 facility to drive expansion in other lo
Slide 7: Pro-Forma Capitalization
Pro-Forma Capitalization Pro-Forma Combined Equity Cap Table (1) Pro-Forma 2016E Price/EBITDA vs. Stock Price Stock Price Shares % Basic % Diluted 1.37x $0.08 $0.10 $0.12 $0.17 $0.22 $0.25 $0.30 $0.35 Common Shares $8 2.86x 3.58x 4.29x 6.08x 7.87x 8.94x 10.73x 12.51x BTCS 157,310,545 55.0% 51.0% $10
Slide 8: Summary Comparables
Summary Comparables • 9.9x average 2016 EV/EBITDA multiple for public company comps compared to 1.2x for BTCS on a pro-forma combined basis • Estimated 50%+ EBITDA margin inline with public comparables • Substantially de-risked business model i.e. many components to succeed teed up There are substan
Slide 9: Industry Overview
és BTCS: Blockchain Technology Consumer Solutions Industry Overview
Slide 10: The Blockchain Explained
The Blockchain Explained What is it? “The blockchain is a decentralized public ledger” Why it matters? “More than just the foundational basis for digital currency, the blockchain has the ability to impact all industries on a global basis that require trust and rely on or utilize record keeping” DECE
Slide 11: Blockchain Potential Applications & Disruption
Blockchain Potential Applications & Disruption The blockchain is radically changing the future of transaction based industries BTCS powers the ecosystem and touches every blockchain transaction 11
Slide 12: Bitcoin - Most Prominent Blockchain Use Case
Bitcoin - Most Prominent Blockchain Use Case The Traditional Traits of Money* Poor Excellent Traits Barter Gold/Silver Fiat Bitcoin (Before 600BC) (600BC - present) (C. 806 - present) (C. 2009 - present) Highly Divisible Globally Transferable Durable Secure (counterfeiting) Acceptable Scarce (Predic
Slide 13: Why it Truly Matters
Why it Truly Matters Greece Exposes Risks and the Fragile Nature of Government Backed Currencies The Default Zone Greece, has defaulted or restructured its debt five Total number of sovereign defaults and/or reschedulings in Europe since 1800 14 different times since the 12 country declared its 10 8
Slide 14: Bitcoin Ranking/Acceptance
Bitcoin Ranking/Acceptance M1 Country Money Supply Notable Companies Revenue Rank (billions) Accepting Bitcoin (billions) 1 European Union $6,736 Microsoft $94 2 China $5,846 Dell $57 3 Japan $5,403 DISH $14 4 United States $2,943 Expedia $5.9 5 Germany $2,236 Time Inc. $3.1 6 Italy $1,185 Systemax
Slide 15: Bitcoin Adoption is Rapidly Accelerating
Bitcoin Adoption is Rapidly Accelerating User Wallets (1) Cumulative Trading Volume (2) 9000000 200,000,000 8000000 180,000,000 7000000 160,000,000 6000000 140,000,000 120,000,000 5000000 100,000,000 4000000 80,000,000 3000000 60,000,000 2000000 40,000,000 1000000 20,000,000 0 0 Jun-13 Feb-14 Jun-14
Slide 16: Venture Capital Landscape
Venture Capital Landscape • Over $210 million of venture capital funds invested Sector Distribution of Top 15 Funded to secure the blockchain, bitcoin’s key innovation Companies (millions) • BTCS is the only U.S. public company focused on Transaction Verification Services securing the blockchain wit
Slide 17: Corporate Overview
és BTCS: Blockchain Technology Consumer Solutions Corporate Overview 17
Slide 18: Securing the Blockchain
Securing the Blockchain • BTCS secures the blockchain through transaction verification and touches every transaction • Initial and early focus areas centered on digital currencies • Refined focus over time to reduce risk and capitalize on disruptive potential of blockchain across all industries INIT
Slide 19: Principals of Transaction Verification Fees
Principals of Transaction Verification Fees Transaction Fee Over Time Transaction in Detail Newly User Portion of the Issued Bitcoins Transaction Fee Bob sends Kate Kate receives 3 bitcoins 3 bitcoins Bob Anna Transaction Verification Processor (i.e. Bitcoin Miner) Miner verifies the transaction and
Slide 20: Current Transaction Verification Fee Breakdown
Current Transaction Verification Fee Breakdown Current Transaction Current Block Reward Fee Portion 20
Slide 21: Bitcoin Distribution – Newly Issued
Bitcoin Distribution – Newly Issued Newly issued bitcoins are based on a mathematically controlled supply Total Bitcoins Over Time (m) Projected Bitcoins in Near Future Reward Year BTC End BTC Date Reached Per Block (Estimate) Start BTC BTC Added End BTC Increase Limit 1/3/09 50 2009 0 2625000 26250
Slide 22: Key Revenue and Gross Profit Drivers
Key Revenue and Gross Profit Drivers Gross Profit = Revenue - Power and Mining Expense - Price of bitcoin - Equipment efficiency – energy per hash rate - Network difficulty - Data center operating efficiency – electricity price adjustments BTCS Competitive Advantage / Barriers to Entry • Low Cost Op
Slide 23: Revenue Example – Supporting Calculations
Revenue Example – Supporting Calculations Bitcoin Distribution Formula per Month H = Server Hashrate (TH/s) D = Network Difficulty (adjusts bi-weekly based on network performance) B = Reward per Block N = Average number of days per month 84,600 = Number of seconds per day # of Bitcoins H * B * N * 8
Slide 24: Power & Mining Expense Example – Supporting Calculations
Power & Mining Expense Example – Supporting Calculations Power Usage Cost Formula per Month P = Server Power Usage (kW) Power Usage E = Facility Electric Cost ($/kWh) H = Average Hours in a Month (hr) Cost = P*E*H SP50 Monthly Power Usage Cost Example P = 16.5 kW (SP50 Usage) E = $0.055 kWh H = 730
Slide 25: Monthly Example Summary
Monthly Example Summary Revenue = $3,792,600 Power and mining expense = $331,235 Gross profit = $3,461,365 Profit margin = 91.3% Cost to earn 1 bitcoin = $24.45 Excludes Pro-Forma Combined SG&A and public company costs estimated at $1.7-2m per year. Example is for illustrative purposes only. There a
Slide 26: A Timed Entrance to Securing the Blockchain
A Timed Entrance to Securing the Blockchain Bitcoin Price vs. Difficulty Level 25% Average Monthly Difficulty Increase 4% Average Monthly Difficulty Increase $1,400 70,000 Bitcoin Price (USD) $1,200 Difficulty (millions) BTCS Entry Point 2 60,000 $1,000 50,000 $800 1 40,000 3 $600 Viable Long Term O
Slide 27: Operational Hedge
Operational Hedge* Our Facility Has Low Operational Costs Number of Estimated BTCS’s Revenue USD Exchange Rate Bitcoin Price Bitcoins Earned Revenue Bitcoins Time Time Time • Declining bitcoin price forces smaller operations offline, decreasing competition and increasing market share potential for B
Slide 28: Breakout Growth Across Key Metrics
Breakout Growth Across Key Metrics BTCS Bitcoins Earned* BTCS Hashing Power & Electric Capacity 1,400 ฿1,329 mw Th/s 1,200 9 1000 2,481% 8 8 800 1,000 YTD Growth 7 6 800 600 ฿683 5 ฿552 4 891 891 891 600 3 400 3 2 1.5 200 400 1 0.1 176 200 ฿94 0 0 ฿52 2014Q4 2015Q1* 2015Q2 2015Q3 0 Electric Capacity
Slide 29: Transaction Verification Services Facility
Transaction Verification Services Facility 29
Slide 30: Pending Merger with Spondoolies
Pending Merger with About Spondoolies Spondoolies Key Highlights • Spondoolies founded in August 2013 • $28.1 million in revenue for 2014 develops, builds and sells world class ASIC • Received $10m in funding servers from prominent Israeli VC’s • 3rd generation ASIC servers expected to be 4x more ef
Slide 31: Merger Premised on Vertical Integration
Merger Premised on Vertical Integration Deployment Revenue Server Sales Revenue Revenue Vertical Integration + Server Server Server Server Server Sales Development Sales Development Sales Time • Vertical integration should provide continued revenue during server development cycle 31
Slide 32: Competition to Secure the Blockchain
Competition to Secure the Blockchain Cumulative Company Strategy Country Capital Technology and Deployment Raised 16% Bitmain Tech Ltd China Develop Others • Tech: 28nm (TSMC) Build unknown • Efficiency: 0.22 J/GH (current gen) Deploy 58% 15% Bitfury Holding B.V. Netherlands Develop • Tech: 28nm Bui
Slide 33: Spondoolies SP50
Spondoolies SP50 SP50 Key Specs • Simplicity of 110 TH/s (Tera hash per second) in just one unit • Extremely low power consumption 0.15 J/GH (presently below many competitors) and an estimated 4x improvement over current Spondoolies units at 0.61 J/GH • Cost effective 28 nanometer (nm) process • Rep
Slide 34: Management Team
Management Team Charles Allen, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board • Responsible for overall corporate strategy and direction as well as managing corporate finances • Extensive experience in business strategy, investment banking, investing and capital markets
Slide 35: Growth Strategy and Path Forward
Growth Strategy and Path Forward • Vertically integrate though merger with Spondoolies • Drive revenue growth through deployment of Spondoolies SP50 in North Carolina facility • Evaluate other low-cost data centers to expand and diversify our transaction verification services business • Evaluate and
Slide 36: Summary
Summary • Early mover in the blockchain and digital currency ecosystems and the first “Pure Play” U.S. public company focused on blockchain technologies • The blockchain is a decentralized public ledger that has the ability to fundamentally impact all industries globally that require trust and rely
Slide 37: Contact Info
Contact Info Charles Allen Chief Executive Officer Investor Contact Info ir@btcs.com (202) 430-6576 37