PI Financial initiated research on Sphere 3D (ANY), which is merging with miner Gryphon Digital Mining, with a buy rating and 12-month price target of $10 per shares, the Canadian investment bank said on Thursday.
Sphere 3D, a data management company that trades on the Nasdaq, and privately held Gryphon Digital Mining, which focuses on mining bitcoin through 100% renewable energy, announced in June they were going public through a reverse merger. Under terms of the deal, Sphere said it will issue 111 million shares to Gryphon shareholders, who will control 77% of the combined company. Sphere holders will own the remaining 23%.
Shares of Sphere 3D, which will be named Gryphon Digital upon the completion of the merger, were trading around $6.35 at the time of publication, implying the potential for the stock to climb more than 50%, based on PI Financial’s price target.
PI analyst Kris Thompson noted that the company has orders for 67,200 Bitmain Antminer S19j Pro miners, equating to 6.7 EH/s of computing power by the third quarter of next year. Thompson wrote that Gryphon Digital Mining could rank among the top five miners globally.
Gryphon Digital also has an option to acquire an additional 160,000 machines by January 2022.
Thompson highlighted the significant bitcoin management experience of the combined entity. Rob Chang, Gryphon Digital Mining’s CEO, and Chris Ensey, the company’s chief technology adviser, both previously held senior executive positions at one of the largest miners, Riot Blockchain.
“Chang and team have had great success at Gryphon over the past year raising $14M in February to establish a renewable energy-driven bitcoin mining operation,” Thompson wrote.
The Sphere 3D-Gryphon Digital Mining merger is scheduled to be completed in the fourth quarter of this year, although Thompson wrote that he wouldn’t be surprised if the merger takes place in the first quarter of 2022, due to its complicated nature.