Sphere 3D Corp (NASDAQ:ANY) has seen its shares rise over 300% so far in 2021. Not bad for a modestly sized Canadian software company that specializes in virtualization and data management. However, most of the gains have come over the past several months. And that’s where things get interesting. ANY stock isn’t rallying because companies are suddenly adopting Sphere 3D’s cloud virtualization products. The excitement is over Bitcoin (CCC:BTC-USD) and Sphere 3D’s aggressive plans to become a Bitcoin mining powerhouse.
The result is an interesting potential opportunity for investors. Crypto adds a great deal of volatility to the mix. You can see that in the recent performance of ANY stock. However, there’s no denying the fact that it also adds considerable growth potential to the mix. Sphere 3D ups the ante by making a play to be not just a big league Bitcoin miner, but also a carbon neutral one that uses 100% renewable energy. So now there’s a green angle to this as well. Time for a deeper dive on Sphere 3D.
A Canadian Cloud Data Company
Let’s start by looking back to 2019. At the time, Sphere 3D had no signs of being involved in the crypto market. The Toronto-based company described its business as:
… containerization, virtualization, and data management solutions via hybrid cloud, cloud and on-premise implementations through its global reseller network and professional services organization.
In fiscal 2019 — a year I also picked because there was no pandemic-related slowdown to account for in assessing the company’s business — Sphere 3D reported full-year revenue of $5.6 million. That was a considerable drop from $9 million the year before. As the year wound down, shares were worth about 75 cents. It was a wholly unremarkable company.
A Merger and a Pivot to Crypto Mining
The Sphere 3D story started to pique the market’s interest this summer. In June, it was announced that Sphere 3D would be merging with Gryphon Digital Mining. Gryphon’s claim to fame was being the first 100% renewable energy Bitcoin mining company.
Crypto mining is incredibly energy-intensive. That was always a concern, but it’s become a much bigger issue in the push to net zero-emissions. Other crypto miners have been turning to carbon offsets to “green” their operation, but these are half-measures at best. Gryphon’s approach was to use renewable energy so zero carbon is generated in the first place. This strategy could make Sphere 3D’s Bitcoin mining operation check the list for investors looking for stocks that have Environmental, Social and Governance (ESG) compliance. News of the merger started ANY stock surging in June.
Mind you, there’s no real hint of the pivot to crypto mining if you check Sphere 3D’s website. Any potential investors looking for news of the new venture won’t find it there. With the merger and Bitcoin mining venture underway, Sphere 3D is also continuing to operate its existing cloud data businesses.
A Huge Bitcoin Mining Rig Order
Excitement about Sphere 3D’s new crypto mining business gained momentum at the start of August. The company announced a massive agreement with privately held Hertford Advisors Ltd. that gives Sphere 3D the rights to secure up to 220,000 mining rigs at pre-negotiated terms. The company also announced it is securing the rights to a 200,000 square foot, carbon-neutral facility to house its Bitcoin mining operation.
As part of the agreement, Sphere 3D has already purchased 60,000 new Bitcoin mining machines, which will be delivered beginning in November. That first phase will give Sphere 3D 5.7 exahash of computing power. The company will have the option of buying up to 160,000 additional Bitcoin miners. If it fully exercises that option, Sphere 3D will eventually end up with 21.5 exahash computing power.
This would make Sphere3D a big player in the global Bitcoin mining game.
In a September update (where it confirmed the first payment toward the purchase), Sphere 3D noted its combined Bitcoin mining capacity after completion of the first phase and the Gryphon merger would be 6.7 exahash. That’s enough to produce 1,300 Bitcoin per month at current difficulty levels.
Bottom Line on ANY Stock
Which brings us to today. Some of the Bitcoin wind is out of ANY stock’s sails. Opening at $6.34 today it’s still up around 345% so far in 2021, but discounted from its Sept. 22 high close of $9.40 by about 40%.
ANY stock earns a “B” rating in Portfolio Grader, so it’s considered to be a reasonable low-risk bet on long-term growth. However, if you do decide to add this cloud data company turned Bitcoin miner to your portfolio, do so knowing that cryptocurrency adds an element of volatility to the mix.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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