MGT Capital is bullish on bitcoin. Internet security pioneer John McAfee, who took over as chief executive officer of the video-gaming company last year, is revamping MGT Capital Investments, Inc. (MGTI) into a cybersecurity firm that mines bitcoins. In a recent press release announcing new funding of $1.35 million from Bitmain, MGT Capital provided additional detail on its plans. The company intends to use the funds to buy 1,000 specialized computers for bitcoin mining that are expected to generate 225 bitcoins per month with an estimated value of $450,000. (See also: Bitmain & John McAfee to Open Bitcoin Mining Pool.)
In an interview with Bloomberg, McAfee predicted that MGT Capital will be profitable by the end of this year on the back of its bitcoin mining operations, the main revenue driver for the company. It reported losses of $5.80 million in March this year. With the latest tranche of funding and computers, MGT Capital will have increased the total number of its bitcoin mining computers to 1,300. Over time, MGT Capital intends to reduce its reliance on bitcoin mining as the sole driver of revenues and increase its cybersecurity presence. Earlier this year, the company signed a letter of intent with Nordic IT Sourcing Association, a think tank, to assemble "a state of the art cell phone with privacy features that stay one step ahead of hackers and eavesdroppers."
Multiple factors, such as strong demand from Asia and speculator action, have propelled bitcoin to record highs this month. This morning, the digital currency was trading at $2,791.70, almost twice as high as its April 30 close. Japan recently passed legislation that allows traders to accept bitcoin as legal tender. In turn, this is expected to boost demand for the currency. According to some estimates, 300,000 stores in Japan will accept bitcoin by the end of this year. (See also: Japan Finally Recognizes Bitcoin After Long Battle.)
Analysts are cautioning about bitcoin's recent upward trajectory. Brian Kelly from BKCM has termed it a "price frenzy" and warned of a correction that could be severe. "... But it's unclear if that correction will start from current prices of $2,700 or from some place much higher,” he wrote. But McAfee is bullish on bitcoin for the long term. "No matter how much government and regulators may scream and complain, there will be a world standard alternative currency. Bitcoin appears to be the one. ... It cannot possibly be a bubble," McAfee told Bloomberg. (See also: MGT Sues Intel Over McAfee's Name.)