What are these guys supposed to be, more cloud mining stuff? Another web wallet? Whatever they're doing, someone has really hope they aren't some kind of ponzi/pyramid... Let's see where this goes. Not really convinced...
From reading the article, I got the impression that they're a private mining firm:
What Bitcoin Shop (OTCQB: BTCS) does is in one sense very simple: The company verifies transactions made over the bitcoin network in exchange for, well, more bitcoins. This is known as "mining" in the bitcoin world, and a number of firms compete to most efficiently verify these transactions...
...It is in the recording of each transfer, which involves a complex verification system, that the "mining" takes place. By verifying each transaction and adding it to the global ledger, which is known as the "blockchain," a company like Bitcoin Shop nabs itself 25 bitcoins.
I think the company is not telling us everything. Mining is not that profitable anymore, not enough to validate a $2.3 million investment. They must be expanding into another market niche.
They obviously know something we don't but they have shown they're able to make profit with the current conditions to get the investors.
You shouldn't assume that they are profitable just because they managed to get investors on board. It's actually pretty common for VC investors to pour money into non-profitable companies, especially in the tech space. There was another story a while ago involving an exchange called Buttercoin which raised (and promptly burnt through) $1.3 million of funding despite never turning a profit:
US bitcoin marketplace Buttercoin is shutting its doors, despite launching just four months ago with at least $1.3m in investor backing.
Link:
http://www.coindesk.com/bitcoin-marketplace-buttercoin-folds-despite-1-3-million-investment/I agree with you, unless the chips are incredible or the electricty costs are very competitive, there is not much ROI at present in the mining sphere
It could translate to profits if the price shifts upward but as we are currently still in a downtrend for Bitcoin prices it seems like a business model and risk hedge that will just bleed.
That said if they were speculating for a Bitcoin Halving in a year this is a good time to enter and mine till that date passes, as it could keep them in a good position for that point in time.
Even if they predict the price to increase, it would probably make more sense to buy the bitcoins directly than go through the extra step of setting up miners in order to generate bitcoins. If they had access to cutting-edge ASICs then they might be profitable although I'm not sure if this would still be the case once manufacturing and R&D costs are taken into account. Cheap electricity is another factor that could make a mining more profitable, but virtually all large-scale mining firms (which would be their main competitors) already have access to cheap electricity rates anyway and given the current conditions, we already know that mining isn't currently very profitable for even them.
