Btcs 201507

Btcs 201507

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  1 Corporate Presentation Bitcoin ShopInc. (OTCQB: BTCS) July 2015
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  2 Safe Harbor The followingpresentation 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 April 15, 2015. 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.btcs.com). 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.
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  3 Table of Contents SectionPage Investment Highlights 4 Industry Overview 5 Corporate Overview 13 Broader Initiatives 24 Summary 28
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  4 • Bitcoin Shop,Inc. (“BTCS”) is an early mover in the blockchain and digital currency ecosystems and the only “Pure Play” U.S. public company focused on blockchain technologies • The blockchain is a decentralized public ledger and has the ability to fundamentally impact all industries globally that rely on or utilize record keeping and require trust • We secure the blockchain through our transaction verification services business and plan to build a broader ecosystem to capitalize on opportunities in this fast-growing multi-billion dollar industry • We are rapidly scaling our low cost transaction verification services business and believe this will provide revenue growth as we evaluate and build additional consumer solutions that leverage blockchain technology • Our management team offers the right combination of capital markets experience, industry expertise, business leadership, and dedication • ~$2.8 million in YTD financings led by prominent investors, institutions, and management Investment Highlights
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  5 Industry Overview
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  6 The Blockchain Explained “Theblockchain is a decentralized public ledger” DECENTRALIZED TRUSTED Transactions are verified and confirmed by nodes around the world before being added to the blockchain PUBLIC What is it? Why it matters? All transactions are publically available on the blockchain The blockchain is secured and maintained by a network of specialized servers (nodes) around the world “More than just the foundational basis for digital currency, the blockchain has the ability to impact all industries on a global basis that rely on or utilize record keeping and require trust” How it fits?
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  7 Blockchain Potential Applications& Disruption The blockchain is radically changing the future of transaction based industries
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  8 Bitcoin - MostProminent Blockchain Use Case 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 ExcellentThe Traditional Traits of Money*
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  9 Why it TrulyMatters Greece Exposes Risks and the Fragile Nature of Government Backed Currencies Greece, has defaulted or restructured its debt five different times since the country declared its independence in 1821 Source: International Monetary Fund, World Economic Outlook Source: Reinhart and Rogoff – This Time is Different 13 8 8 7 7 6 6 5 5 3 3 1 1 0 2 4 6 8 10 12 14 The Default Zone Total number of sovereign defaults and/or reschedulings in Europe since 1800
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  10 Bitcoin Ranking/Acceptance Notable Companies AcceptingBitcoin Revenue (billions) Microsoft $94 Dell $57 DISH $14 Expedia $5.9 Time Inc. $3.1 Systemax Inc. (Tiger Direct) $3.3 Overstock $1.5 1-800-FLOWERS $1.1 Zynga $0.7 Total $181 Source: Yahoo Finance, as of 6/25/2015 M1 Rank Country Money Supply (billions) 1 European Union $6,736 2 China $5,846 3 Japan $5,403 4 United States $2,943 5 Germany $2,236 6 Italy $1,185 ≈ ≈ ≈ ≈ 114 Belarus $3.75 115 Brunei $3.53 116 Bitcoin $3.45 117 Equatorial Guinea $3.36 118 El Salvador $3.05 Source: U.S. Central Intelligence Agency, Blockchain.info, as of 6/25/2015
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  11 Bitcoin Adoption isRapidly Accelerating Source: 1. blockchain.info, bitcoinpulse.com, CoinDesk.com; 2. bitcoinity.com; 3. blockchain.info, CoinDesk.com, Bitpay, IB Times; 4. bitcoinity.com, as of 6/27/2015 Cumulative Trading Volume (2) # of Transactions on Blockchain (4) - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 - 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 User Wallets (1) Est. Merchants Accepting Bitcoins (3) - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 - 20,000 40,000 60,000 80,000 100,000 120,000 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 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15
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  12 Venture Capital Landscape EarlyInternet VC Investment vs. Blockchain (millions) Source: CoinDesk.com, as of 4/10/2015 $250 $96 $349 Q1 $229 $687 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 1995 Internet 2013 Bitcoin 2014 Bitcoin 2015 Projected Sector Distribution of Top 15 Funded Companies (millions) Active Investors $190 $182 $99 $48 $37 $35 $28 $0 $50 $100 $150 $200 Transaction Verification Services Universal Platforms Digital Wallets Payment Processor Financial Services Infrustructure Exchange • Over $190 million of venture capital funds invested to secure the blockchain, bitcoin’s key innovation • BTCS is the only public company focused on securing the blockchain with a fully integrated solution
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  13 Corporate Overview
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  14 Securing the Blockchain •BTCS secures the blockchain through transaction verification • 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 INITIAL FOCUS BROADENED FOCUS CURRENT FOCUS
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  15 - 10,000 20,000 30,000 40,000 50,000 60,000 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Bitcoin Price (USD) Difficulty(millions) A Timed Entrance to Securing the Blockchain • Network hash rate doubled every 1.87 months in 2014*. According to Moore’s law CPU power should double every 2 years. ASIC processing power approaching CPU processing growth pattern • Predictable revenue expected • Costs can no longer be ignored and smaller operations are being pushed out 2 • Rapid difficulty increases rendered ASIC servers 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 ASIC hardware readily available at competitive prices • Limited capital available to invest and fund data centers and ASIC hardware 3 Bitcoin Price vs. Difficulty Level 2 Source: CoinDesk.com, as of 6/26/2015, * calculated by BTCS based on publicly available hash rate data 1 BTCS Entry Point Unsustainable IRRs High-Risk Volatility Viable Long Term Opportunity
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  16 Operational Hedge* Time USDExchangeRate Bitcoin Price •Declining bitcoin price forces smaller operations offline, decreasing competition and increasing market share potential for BTCS • Low operational costs and increasing capacity at BTCS facility offsets declining bitcoin price risk • Slower rate of difficulty increases extends the useful life of ASIC servers Number of Bitcoins Earned Time Bitcoins Estimated BTCS’s Revenue Time Revenue Our Facility Has Low Operational Costs * The operational hedge assumes the total current network hash rate includes operators with higher operating costs than BTCS which may come offline during bitcoin price declines. There is no guarantee the operational hedge will occur.
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  17 ฿52 ฿94 ฿552 0 100 200 300 400 500 600 2014Q4 2015Q1 2015Q2 971% YTDGrowth Breakout Growth Across Key Metrics Key Facts: • BTCS current cost to earn a bitcoin ~ $100-$120 • BTCS currently operating at 0.65mw (of 1.5mw capacity) • Building capacity to 3mw capacity by 2015Q3 • 3mw can power 13,000 – 29,000 Th/s of 3rd generation ASIC servers (Application Specific Integrated Circuit), assumes 3-5x efficiency improvement • 83,000 square foot – repurposed manufacturing building with option to buy for $775,000 (less cumulative rent payments and security deposit) • Potential for additional revenue streams BTCS Hashing Power (Th/s)BTCS Bitcoins Earned* 176 891 891 0 100 200 300 400 500 600 700 800 900 1,000 2014Q4 2015Q1* 2015Q2 * 715 Th/s came online in last month of Q1* Bitcoins earned are a non-GAAP financial measure.
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  18 Transaction Verification ServicesFacility
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  19 Pending Merger withSpondoolies Spondoolies Key Highlights • $28 million in revenue for 2014 • Received $10m in funding from prominent Israeli VC’s • 3rd generation ASIC servers expected to be 3-5x more efficient and cost 5x less to build About Spondoolies • Spondoolies–Tech Ltd. (“ST”) founded in August 2013 develops, builds and sells world class ASIC servers Merger Highlights • Vertical integration, i.e. develop, build, and deploy ASIC servers • Shared vision of building leading blockchain company; complementary teams with no overlap in roles • BTCS invested $1.5m in ST on May 12, 2015 for a 6.6% equity interest • $1m break fee and preferred pricing structure for BTCS if merger isn’t consummated Management Team Guy Corem, CEO & Founder • 17 years of experience in embedded software development • Previously software architect at Intel and Voltaire Kobi Levin, COO & Founder • 20 years of experience in leading hardware and system design • Previously VP R&D at Voltaire and COO at Solaredge Yuval Rosen, CFO • 20 years of experience in leading finance for international technology companies • Previously CFO at Cheetah Medical and Discretix Gadi Glikberg, VP Sales & Marketing • 10 years of experience in the technology industry • Previously Director of pre-sales at Evolven software
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  20 25% 18% 5%3% 49% Competition to Securethe Blockchain Company Strategy Country Cumulativ e Capital Raised Technology and Deployment Bitmain Tech Ltd Develop Build Deploy China unknown • Tech: 28nm (TSMC) • Efficiency: 0.5 J/GH (current gen) Bitfury Holding B.V. Develop Build Deploy Netherlands $40m • Tech: 28nm • Efficiency: 0.35 J/GH (3rd gen) 21 Inc Develop Build Deploy US $121m • Tech: 22nm (Intel) • Efficiency: 0.22 J/GH target KnCMiner AB Develop Build Deploy Sweden $29m • Tech: 16nm • Efficiency: Unknown Spondoolies-Tech LTD Develop Build Israel $14.7m • Tech: 28nm • Efficiency: 0.15-0.25 J/GH (3rd gen target), current 0.5-0.6 J/GHBitcoin Shop, Inc. Deploy US Source: Bitfury.com, Bitmain.com, Spondoolies-tech.com, Kncminer.com, CoinDesk.com Others Pro-FormaMerged Source: Blocktrail.com/BTC, as of 6/30/2015
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  21 Company Shares Outstanding (m) (asof 7/1/2015) Post-Merger Pro-Forma Combined Percent Ownership (1) 157 52% NA 48% Total 100% Capitalization and Public Peer Comparison Digital Currency and Blockchain Public Company Analysis (USD) (2) 2014 Company Ticker Price per Share Outstanding Shares (m) Market Cap (m) Revenue (m) P/Rev ASX: DCC $0.13 168 $21 $3.97 5.3X TSXV: VGO $1.43 41 $59 $0.23 257.4X Average 131.4x 1. Pro-forma ownership is based on terms of letter of intent (“LOI”) signed between BTCS and Spondoolies and does not include outstanding warrants or options and is subject to change pending successful completion of the pending merger 2. Source: Thomson Reuters, as of 7/1/2015 BTCS Market Cap = $28m (as of 7/1/2015) Spondoolies 2014 revenue = $28m (announced May 20, 2015, unaudited)
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  22 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 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
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  23 Advisory Board David Bailey,Chief Executive Officer of BTC Media • BTC Media is one of the largest Bitcoin Media groups with assets like yBitcoin • 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 Bruce Fenton, 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 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 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 of Bitcoin conferences across the country including Bitcoins in the Beltway and Coins in the Kingdom Will O’Brien, 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, 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, Co-founder of OkCoin.com • 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
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  24 Broader Initiatives
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  25 Consumer Education &Adoption: “The Challenge” • Misperception of what Bitcoin is and can do • Limited ways to enter ecosystem • Uncertain and unknown risks 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 Code Private Key Exchange Cold Storage QR Code Block Chain Wallet Commerce Private Key Exchange Use CaseATM Average “Joe”
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  26 Building a UniversalEcosystem: “The Solution” WALLET FINANCIAL SERVICESATM PAYMENT PROCESSOR ECOMMERCE Transaction Verification Strategic Partnerships BTCS was Lead Investor – Series A Advisor • GoCoin is a leading international digital currency payment platform • Processes Bitcoin, Litecoin and Dogecoin • GoCoin signed deal with Paypal in 2014 BTCS was Lead Investor – Bridge Round Advisor • 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 operates an ATM Kiosk network
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  27 Growth Strategy andPath Forward • Vertically integrate though pending merger with Spondoolies • Drive revenue growth through deployment of 3rd generation ASIC servers in North Carolina facility • Evaluate other low-cost data centers to expand and diversify our transaction verification services business • Evaluate and build additional consumer solutions that leverage blockchain technology • Continue software development of universal platform • Identify additional acquisition opportunities in the blockchain space • Pursue uplisting to NASDAQ or NYSE MKT
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  28 Summary • Early moverin the blockchain and digital currency ecosystems and the only “Pure Play” U.S. public company in the world focused on blockchain technologies • The blockchain is a decentralized public ledger and has the ability to fundamentally impact all industries globally that rely on or utilize record keeping and require trust • We secure the blockchain through our transaction verification services business and plan to build a broader ecosystem to capitalize on opportunities in this fast-growing multi-billion dollar industry • We are rapidly scaling our low cost transaction verification services business and believe this will provide revenue growth as we evaluate and build additional consumer solutions that leverage blockchain technology • Our management team offers the right combination of capital markets experience, industry expertise, business leadership, and dedication • ~$2.8 million in YTD financings led by prominent investors, institutions, and management
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  29 Contact Info Charles Allen ChiefExecutive Officer Investor Contact Info ir@btcs.com (202) 430-6576