It was announced today that creator of one of the most encouraging bitcoin tax compliance applications, NODE40 is being acquired by Canadian based HashChain Technology, a publicly traded blockchain technology company. Noted for its recently launched SaaS product that allows cryptocurrency users to accurately report their capital gains to the IRS, NODE40 will maintain its brand identity, with Founder and CEO Perry Woodin moving to Chief Strategy Officer.
NODE40 was acquired for $8M USD, plus 3.14M common shares of HashChain stock.
Under the asset purchase agreement for the acquisition of NODE40, HashChain will acquire the NODE40 businesses for a purchase price comprised of USD $8,000,000 in cash, payable as to USD $4,000,000 at closing and USD $2,000,000 on each of 180 days and one year following the closing date, and a total of 3,144,134 common shares in the capital of HashChain.
NODE40’s business is comprised of two major segments: specialized accounting software for cryptocurrency transactions and Dash masternode hosting.
Cryptocurrency Accounting Solution
NODE40 Balance, released last year is a stable cryptocurrency reporting software that integrates directly with certain major cryptocurrency exchanges. Members of the blockchain community transacting in, trading, or mining digital currency, have likely triggered a taxable event and can be unaware of how to properly disclose these transactions to the government. With a cryptocurrency market size of $537 billion, (more than JP Morgan’s value as reported by CNBC), government intervention into the cryptocurrency market is certain as is the need for more defined accounting solutions.
To address a strict regulatory environment, NODE40 uses a coin-holders transaction history and analyzes the blockchain to determine accurate valuations for every input and output comprising a transaction. Once a value has been assigned to every transaction, the service can report the current total asset value, income, and any realized gains or losses. It is expected that a greater number of countries will join those that have already imposed a higher degree of regulation like Australia, Israel, South Africa and others. NODE40 Balance is strategically positioned to work directly with tax authorities globally to adapt to their specific requirements. Coinbase, one of the leading exchanges for cryptocurrencies with billions of dollars exchanged on its platform, recently received a court order from the Internal Revenue Service (IRS), to hand over information on all customers who made a transaction worth $20,000 or more between 2013 and 2015, which is estimated to total 8.9 million transactions impacting more than 14,000 different account holders, according to Forbes.com.
“Cryptocurrency mining remains an important focus for HashChain, as we continue to acquire more Rigs and generate revenue on a large scale. The acquisition of the NODE40 Business is an important next step in creating a global blockchain technology company. Cryptocurrency accounting and reporting for tax purposes is a major concern in the industry at the moment. The recent Coinbase subpoena from the IRS highlights the significant need for the software developed by NODE40.”
Masternode Hosting Services
NODE40 also provides Dash masternode hosting services. The company frees cryptocurrency investors from the technical hurdles and time investment needed to run Dash masternodes. Masternodes are full blockchain nodes that run the Dash blockchain and provide services to the network, such as locking transactions with InstantSend and voting on budget funding. Masternodes require a 1,000 Dash collateral, and an ability to run 24 hours a day without exceeding a one-hour connection loss. Masternodes get paid 45% of the monthly block reward as an incentive for providing services to the network. As part of the acquisition of the NODE40 business, NODE40 will pay to HashChain certain masternode rewards earned over the 26 months following the closing.