Taal Rejects Proposal for Bitcoin Cash Mining ‘Tax’

Taal Distributed Information Technologies Inc. (CSE:TAAL | FWB:9SQ | OTCQB:SQRMF) (the “

Taal

”) announced that it is not in favour of, and will not support, the newly-announced proposal to cause mining operations active on the Bitcoin Cash (“

BCH

”) blockchain to pay a 12.5% contribution on earned rewards to a Hong Kong-based corporation backed by four leaders representing five of the current largest known BCH mining pools (the “

BCH Mining Group

”), as first announced on the website medium.com by the head of BTC.toppool.   

On January 22, 2020, it was announced that a funding plan (the “Mandatory Funding Plan”) had been privately agreed upon by the BCH Mining Group and will be implemented on May 15, 2020 in conjunction with the next protocol upgrade of the BCH network. It was stated the Mandatory Funding Plan is proposed because BCH protocol developers do not have sufficient funds to support their continued infrastructure work; as a result, the BCH community has been discussing how to pay for the sustained protocol development work needed for the BCH network. The BCH Mining Group announced that the Mandatory Funding Plan is intended to last 6 months, until November 15, 2020, and will divert approximately USD $6 million worth of BCH coins from miner block rewards to a new Hong Kong corporation which would then provide funding to BCH developers. No details have been provided about who controls this new Hong Kong-based corporation or who will decide how to spend the BCH coins raised from the 12.5% forced contribution by miners.

It is Taal’s view that the Mandatory Funding Plan is a required “tax” enforced by orphaning BCH blocks mined by any operations that do not submit to the new scheme dictated by the five pools in the BCH Mining Group. If dissenting miners do not wish to pay the 12.5% contribution, they will have their blocks rejected (orphaned) by the BCH Mining Group and lose the entire block reward they would normally earn for writing a block. If the BCH Mining Group control a majority of BCH mining activity (including the significant anonymous portion of mining hash on the BCH network), they have the ability to unilaterally impose their will – and the 12.5% effective “tax” – upon minority miners, or alternatively force those minority participants off the BCH network by making it economically unviable to continue mining BCH.

In its opinion, Taal is concerned that the BCH Mining Group’s scheme may be viewed as coercive and give rise to securities law issues and antitrust concerns in numerous jurisdictions where BCH is mined and traded. Taal’s mining operations have been active in the past on the BCH network, but Taal is opting to avoid any potential legal risks by rejecting any participation in the BCH Mining Group’s Mandatory Funding Plan when it takes effect. Taal will continue to mine on the Bitcoin SV (BSV) and Bitcoin Core (BTC) networks.

Taal advocates and supports an open blockchain technology ecosystem that will sustain long-term growth of applications which generate high-volume transactions, such as on the Bitcoin SV (BSV) blockchain. This will enable blockchain cloud computing economics to evolve into a transaction fee-based model fueled by dramatically larger transaction volumes on the blockchain, to ensure long-term profitability as the static portion of Bitcoin block rewards reduces over time. Decisions that change the economic design of a blockchain network, reached by private agreements among a small group of entities who impose their will on that entire network, are the antithesis of a stable, secure, transaction-fee based model that ensures long-term economic health of a blockchain ecosystem. This is why Taal supports Bitcoin SV (BSV) as having the best roadmap to enable sustained profitability for all blockchain network participants.

About Taal Distributed Information Technologies Inc.

Taal is a Canadian based technology company engaged, through its subsidiaries, in the business of operating, managing and developing cloud computing data infrastructure and system technology to support global blockchain applications related to Bitcoin SV, Bitcoin Core and other SHA-256 based digital assets.

For further information contact:

Angela HolowaychukPresident and Chief Executive OfficerTelephone: [phone]

The CSE accepts no responsibility for the adequacy or accuracy of this release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes "forward-looking information" as defined under applicable Canadian securities legislation. Forward‐looking information and statements include, but are not limited to, disclosure regarding possible events, that are based on assumptions about future economic conditions and courses of action, statements with respect to payments or contributions on earned rewards (including the size thereof), statements with respect to the anticipated results or expected effects of the plans and intentions of the BCH Mining Group, statements with respect to the anticipated results or expected effects of the Mandatory Funding Plan, statements with respect to the anticipated results or effects on miners who do not pay the 12.5% contribution and statements with respect to the economic viability of mining on BCH, and, in certain cases, can be identified by the use of words such as "expects", or variations of such words and phrases or statements that certain actions, events or results "may" or "will", or the negative forms of any of these words and other similar expressions. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties, uncertain and volatile equity and capital markets, lack of available capital, future demand for Bitcoin SV, Bitcoin Core and other digital assets and risks related to the mining thereof, integration issues, personnel and staffing requirements and technological change and obsolescence. Actual results and future events and actions could differ materially from those anticipated in such forward looking information. Accordingly, readers should not place undue reliance on forward-looking information. All forward looking information in this news release is made as of the date hereof and qualified by these cautionary statements and those in our continuous disclosure filings available on SEDAR at www.sedar.com. Taal disclaims any intention or obligation to update or revise such forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.