Northern Data published a statement on Thursday morning, responding to allegations that have been circulating on the Internet for some time. The key points of the allegations made by anonymous accounts, especially on Twitter, are, among other things, that one’s own business model is publicly misrepresented and, above all, is not competitive in the long term due to the price structure of the offers in the area of high-performance computing. In addition, Northern Data is dependent on a volatile Bitcoin business and few customers. The situation then escalated yesterday: After a report – also anonymous – appeared on the website “medium.com”, which reaffirmed these allegations, the Northern Data share price, which had been bullish for several months, fell sharply. At the beginning of July the paper had reached the previous top at 82.40 euros, then fell into a consolidation movement and plummeted yesterday to 40.70 euros. The situation remains volatile today. After a recovery to 57.00 euros, the share price is currently 45.60 euros and again around 7 percent below yesterday’s XETRA closing price.
Northern Data rejects the allegations in one – unfortunately only from the perspective of many shareholders Statement written in English – back (Editor’s note: After the publication of this report, a German translation published by the company). One speaks of a “smear campaign” against the company on social media channels on the Internet. The allegations were “either completely wrong or intentionally misleading,” said the company, which emerged from a merger of Northern Bitcoin AG with the US company Whinstone US, Inc. The company announces that it plans to take legal action against the originators of the allegations and publish future quarterly reports. In addition, the previous plans are confirmed: “We can assure our shareholders and stakeholders that our company is fully on track to achieve all of the goals set for 2020 and beyond,” says Northern Data. CEO Aroosh Thillainathan had recently confirmed this when asked by the 4investors editorial team after presenting the balance sheet for 2019.
In connection with a key point of the allegations that Northern Data presents itself as a provider of high-performance computing (HPC), but primarily offers Bitcoin mining hosting on unfavorable terms, the company points to the beginning diversification of its customer base. “We are currently seeing the greatest demand for HPC solutions from Bitcoin mining operations, and we are very happy to be able to meet the needs of this very demanding sector. However, we predict that demand for other applications will grow faster in the coming years, ”it says. The company sees increasing demand in sectors such as AI / machine learning, video rendering, life sciences and autonomous driving. The company announced that this should be reflected in the figures for the third quarter.
The accusation of being dependent on the Bitcoin price is also to be refuted: “Even if some of our customers are exposed to the volatility of the Bitcoin price, we are not, as we are paid in $ ct / kWh and agree with our customers Negotiated minimum consumption rate, ”said Northern Data in the statement. One is therefore only exposed to the credit risk of customers. Depending on the Bitcoin price, the company’s own sales are only in a few cases and here only to a small extent, according to the company.
There is also comment on the second central allegation that long-term uncompetitive prices, which are much too high for the industry, between $ 0.052 and $ 0.065 per kilowatt hour, are still owed, however, more detailed information is not available. The data are simply wrong, Northern Data comments on the allegations from the Internet, but without specifying the actual numbers more specifically or even making any suggestions as to their amount. In addition to energy costs, the price also includes “premium hosting services”, the company specifically calls “hardware installation and maintenance, AI-controlled management of operations, etc.”. Every customer connection is profitable on a “stand-alone basis”.
One operates Tier 3 level HPC data centers and be certified by ISAE3202. In addition, there would be “income from various services that are not directly related to electricity consumption”, so that the calculations by the originators of the allegations would make no sense. Details of the contracts with customers are not disclosed, reports Northern Data, which refers among other things to confidentiality clauses. Instead, you attack the perpetrators of the allegations: “The conclusions are therefore nonsensical and part of an obvious, aggressive defamation campaign,” the company said.
That Northern Data’s stock price is up after yesterday’s fall So far, despite the statement, has not been able to fully recover, shows: The uncertainty on the stock exchange is great and with the comment on the allegations, Northern Data does not seem to have built a sufficient line of defense so far. Northern Data missed the relief on Thursday. It would also come as no surprise if the “opposite side” replied.
At a glance – chart and news: Northern Data