Guess who’s jumping on the bitcoin bandwagon?
John McAfee, the pioneering and controversial anti-virus software developer, who took over as the chief executive officer of MGT Capital Investments Inc. last year and turned the video-game company into a cybersecurity firm. He expects the money-losing company to be profitable as it ramps up its bitcoin mining business, with the goal of becoming the biggest in the world.
"We will definitely be profitable before the end of the year," McAfee said in a phone interview Wednesday. "From bitcoin mining, we will get the experience and expertise to apply the blockchain to our security products."
MGT Capital announced plans last June for the first phase of its bitcoin operation, which was the company’s only revenue driver in the first quarter. It’s stationed in the mountains of Washington state and employs two people, whose primary job is to maintain the air conditioning system for the computers that are doing the mining, McAfee said. MGT Capital has a dozen employees.
The company’s bitcoin venture generated $312 million in sales for the three months ended March 31, 2017, according to a government filing. It had a net loss of $5.89 million.
MGT Capital said Monday that it received financing to buy 1,000 mining computers from Chinese firm Bitmain Technologies, bringing the total to around 1,300. It expects to start generating 225 bitcoins per month, up from about 100, which was the most recently disclosed number. The cryptocurrency is currently worth about $2,500 per coin.
Skeptics have warned that there’s a bubble in the making. Bitcoin and other digital currencies like ethereum have surged as more companies embrace the underlying technology and some investors seek financial refuge from political uncertainty across the globe.
"No matter how much government and regulators may scream and complain, there will be a world standard alternative currency," McAfee said. "Bitcoin appears to be the one… It cannot possibly be a bubble."
Bitcoin transactions are overseen by a network of so-called miners whose computers perform calculations to validate each transfer, preventing double-spending. Miners earn a reward of newly issued bitcoin. The pace of creation is limited, and no more than 21 million bitcoins will ever be issued.
MGT Capital grabbed investors’ attention last year after naming McAfee CEO. The news sent its shares into a frenzy, but the euphoria quickly faded after the U.S. Securities and Exchange Commission subpoenaed the company and the stock was delisted from the New York Stock Exchange. The company is now embroiled in a lawsuit with Intel Corp. over the use of McAfee moniker. Intel bought the McAfee computer-security business in 2011, but recently sold its majority stake. McAfee, who wants to change MGT’s name to John McAfee Global Technologies, sued Intel for the right to use his name.
MGT Capital employees who aren’t working on bitcoin are focused on the cybersecurity business, which McAfee anticipates will ultimately be the main revenue source as it expands product offerings, and the number of bitcoins left for mining dwindles.
The company’s Sentinel "anti-hacking system," which consists of software and hardware, can reduce the time a hacker has to operate, according to its website. MGT Capital is also developing a "privacy phone" that features a kill switch.
"I don’t know anyone more capable than me," said McAfee. "I have never lost in terms of business and I certainly don’t intend to start now."