Status of 8 Chinese concept stocks in cryptocurrency: Stock prices have generally fallen by more than 90%, and mining operations have been forced to move overseas

Author: Xu Cihau, Financial Associated Press

According to incomplete statistics from Blockchain Daily, as of the close of U.S. stocks on March 19, 2022, the stock prices of 8 cryptocurrency Chinese concept stocks have all fallen by more than 80% from their peaks. The largest drop was from The9, at 99.77%; the smallest drop was from Canaan Inc., at 86.57%.

In 2021, the cryptocurrency market set many new records, with the total value of the sector soaring to $3 trillion in November last year. Especially with the successful listing of cryptocurrency exchange Coinbase and Bitcoin prices continuously reaching new highs, many companies in the Chinese concept stocks transformed into the cryptocurrency industry.

However, with the fluctuations in Bitcoin prices over the past year, the stock prices of cryptocurrency Chinese concept stocks have faced a Waterloo, dropping significantly from their peaks in March and April 2021, with most currently down over 90%.

At the same time, 7 out of the 8 Chinese concept stocks have laid out Bitcoin mining businesses. With strict regulations on virtual currency trading and mining in China, everyone has had to move their mining machines to overseas regions such as the United States and Kazakhstan.

Industry insiders analyzed to Blockchain Daily that the stock prices of cryptocurrency concepts are increasingly correlated with Bitcoin market trends, and the high volatility of Bitcoin has also brought high risks to these companies.

The stock prices of 8 cryptocurrency Chinese concept stocks have generally fallen by over 90%

Recently, Chinese concept stocks have faced a short-selling crisis, with stock prices generally remaining low, and the cryptocurrency Chinese concept stocks are no exception.

According to incomplete statistics from Blockchain Daily, as of the close of U.S. stocks on March 19, 2022, the stock prices of 8 cryptocurrency Chinese concept stocks have all fallen by more than 80% from their peaks. The largest drop was from The9, at 99.77%; the smallest drop was from Canaan Inc., at 86.57%.

（As of the close of U.S. stocks on March 19, price statistics）

As shown in the figure above, there are currently 8 cryptocurrency Chinese concept stocks, of which 7 are involved in mining or have indicated plans for mining businesses. A partner at Hangzhou Dongyuan Equity Investment stated to Blockchain Daily that mining is a business in the blockchain industry that requires low technical content but high capital.

Thus, we see that traditional P2P companies like SOS and Bit Digital, as well as internet lottery businesses like Bit Mining, have chosen cryptocurrency mining as their primary transformation.

Additionally, among the 8 Chinese concept stocks, 3 are involved in mining machine businesses, with Canaan Inc. and Ebang International both primarily engaged in mining machine sales and directly listed in the U.S., then extending into the industry chain based on mining machine business. Meanwhile, AnGaoMeng, as a financial services solution provider, has transformed into mining machine sales.

What’s different is that Canaan Inc. launched its self-operated mining business in June 2021 amid a boom in mining machine business. Ebang International, on the other hand, chose to develop towards the exchange side.

A senior Bitcoin miner told Blockchain Daily that mining machine sales actually depend on Bitcoin market conditions. When Bitcoin prices are good, sales are good, and performance is strong; conversely, when prices drop, performance suffers.

The miner further analyzed that after clarifying internal issues, Canaan Inc. actively expanded overseas markets during the internal strife at Bitmain; Ebang International previously focused on the domestic market, and after the domestic cleanup of Bitcoin mining last year, it had to expand into exchanges and other industries due to obstacles in mining machine sales.

Sun Shuang, a researcher at Guosheng Securities Blockchain Research Institute, told Blockchain Daily that Canaan Inc.'s self-operated mining business is expected to contribute to smoothing performance.

Sun Shuang analyzed that self-operated mining can effectively balance Bitcoin market fluctuations, avoid occupying the company's inventory, and help the company gain dividends during Bitcoin bull markets.

Zhan Kaiyuan also told reporters that the stock price performance of cryptocurrency concept stocks is increasingly strongly correlated with Bitcoin market trends, and the high volatility of Bitcoin has also brought high risks to these companies.

Taking Coinbase as an example, its stock price fluctuations have a very strong correlation with Bitcoin prices.

Coinbase chose an excellent timing for its IPO. It went public in April 2021 when Bitcoin prices peaked at $64,800, and then fell, while Coinbase's stock price also declined from a high of $429.54 on the first day of trading to the current $176.81.

This is reflected in other cryptocurrency Chinese concept stocks as well; companies like Canaan Inc., Ebang International, and Bit Mining all experienced a significant surge in March and April 2021, followed by a sharp decline.

Taking Canaan Inc. as an example, its stock price followed Bitcoin prices starting from October 2020, rising from a low of $1.76 to a peak of $39.1 in March 2021; subsequently, as Bitcoin prices fluctuated and corrected, Canaan Inc.'s stock price also significantly corrected, closing at $5.34 on March 20, 2022.

Here are the specific situations of the 8 cryptocurrency Chinese concept stocks:

The9

The9 was once one of the largest online game developers and operators in China. In 2002, it became the exclusive agent for the online game "Miracle" in mainland China, and from 2004, The9 gained immense popularity by acting as the agent for "World of Warcraft," and it was listed on NASDAQ in the same year.

After losing the agency rights for "World of Warcraft," The9's stock price fell from a historical high of $1,539.8 per share to the $2 range; it then attempted to broaden its scope multiple times until it entered the "crypto circle."

On January 4, 2021, it announced its entry into the cryptocurrency mining sector, and the "Bitcoin effect" was immediate. On the night of the official announcement, The9's stock price opened high at $5.71 after the U.S. stock market opened, rising 87.01% to $6.62 that day, and at one point reaching $8.10, an increase of 128.81%.

On February 22, 2021, its valuation reached $89.6, marking a recent high.

For the currently hot metaverse, The9 certainly will not miss out.

On August 30, 2021, The9 announced that it would officially enter the NFT business, launching the NFT trading and community platform NFTSTAR (Star Universe) through its wholly-owned subsidiary NFTSTAR Singapore Pte Ltd based in Singapore.

SOS

SOS was formerly known as China Rapid Finance, focusing on P2P lending. It was listed on the New York Stock Exchange in April 2017. According to its initial business plan, it aimed to become the leader in the Chinese P2P consumer loan market.

In July 2020, the company changed its name to SOS. With the name change, the focus of its business shifted from fintech to "emergency rescue services." In January 2021, SOS announced that it had purchased 15,645 cryptocurrency mining machines. On February 9, 2021, it officially announced the early arrival of 5,000 mining machines, causing its stock price to soar from a low of $3.75 to an intraday high of $15.88. As of the close on March 19, it was $0.679.

According to SOS's semi-annual report for the period ending June 30, 2021, net revenue was $186 million, a 17-fold increase year-on-year. The financial report indicated that the cryptocurrency business accounted for 8.2% of total revenue, and as of June 30, 2021, the cryptocurrency mining business had generated 131.1 Bitcoins and 1,851.1 Ethereum.

AnGaoMeng

According to public information, AnGaoMeng Group Holdings is a financial services solution provider focused on providing innovative trading platform solutions and financial technology. It was listed on the NASDAQ Global Market on April 18, 2018.

According to the disclosed financial report, as of December 31, 2020, revenue was $53,300.

In August 2021, the company announced its transformation into the blockchain industry, launching its first ASIC cryptocurrency miner, KOIMinerC16 ("C16"). The C16 is equipped with the C3012 chip manufactured using the N+1 process by Semiconductor Manufacturing International Corporation. The C16 has a hash rate of up to 113 TH/s, a power efficiency ratio of 30 J/T, and supports the mining of cryptocurrencies such as Bitcoin and Bitcoin Cash.

According to the financial report for December 2021, AnGaoMeng's total revenue in the third quarter grew to $5.34 million, an increase of about $5.3 million compared to the same period in 2020, with significant revenue growth mainly coming from the sales of cryptocurrency mining machines and computing hardware.

Bit Mining

Bit Mining was originally known as 500.com.

In 2014, when the internet lottery concept was at its peak, 500.com’s stock price once reached $54. With the arrival of regulatory policies in 2015, 500.com suspended online lottery sales and reported losses for more than 20 consecutive quarters. Its stock price fell to a low of $2.51 and remained below $3.

On December 22, 2020, 500.com released a series of significant announcements. One of them was the announcement of a targeted issuance of nearly 20% of its shares, with the recipient being Luo Wenxin (also known as "Luo Zhaoxing"), the actual controller of Good Luck Information Technology Co., Ltd., and the founder of 500.com.

After the return of founder Luo Wenxin, the company began its transformation to form a full industry chain of cryptocurrency mining business, including mining machines, mining sites, and mining pools.

After transforming into cryptocurrency mining, Bit Mining's stock price also rose significantly. From a low of $2.62 on December 21, 2020, it surged to a high of $35 on February 16, 2021, an increase of 13 times.

Singularity Future

According to public information, Singularity Future was originally known as Zhonghuan Shipping. It is a provider of shipping and freight logistics solutions.

In 2021, Zhonghuan Shipping appointed Mr. Nie Lei as the new Chief Operating Officer (COO) and appointed Yin Tang as the new Chief Technology Officer (CTO), beginning its transformation into the blockchain business. Yin Tang has extensive experience in deploying Bitcoin mining machine computing power, building mining sites, and designing internal structures and power design architectures, having participated in the establishment and development of Bitmain's Shenzhen factory, and is currently a strategic supplier for Bitmain, maintaining a close cooperative relationship.

On the day of the announcement, the stock price surged over 65%, triggering trading halts twice.

On February 16 of the same year, Zhonghuan Shipping announced that it had signed a binding letter of intent (LOI) to acquire 51% of Inner Mongolia Jiulian Intelligent Big Data Park Service Co., Ltd. Jiulian Intelligent owns a Bitcoin mining computing center with a total computing power of 150,000 KW, accounting for about 2.8% of the global Bitcoin computing power.

Riding the rising Bitcoin market in February, Zhonghuan Shipping's stock price reached a high of $12.28 per share on February 22, a new high in five years.

On March 2, 2021, Zhonghuan Shipping announced that the company would accept Bitcoin as a payment method for its global shipping, freight, and logistics services. Payments made in Bitcoin would be settled at the applicable rate on the payment date.

According to the latest financial report, as of December 31, 2021, the company had a fair value of cryptocurrency exceeding $210,000. It did not disclose the quantity of cryptocurrency held or the number of mining machines.

Ebang International

As the second listed mining machine stock, Ebang International's stock price fell below its issue price on the first day of trading. After peaking at $14.95 in September of the same year, it began a path of fluctuating decline. As of now, compared to the issue price, Ebang International has fallen over 70%, with a total market value of only $243 million.

According to the latest financial report, the total net revenue for the first six months of 2021 was $18.3 million, with a net loss of $4.26 million (approximately 27.45 million RMB).

With increasingly strict regulations in the cryptocurrency industry, coupled with the volatile Bitcoin prices and a global chip shortage, Ebang International is planning to develop fintech businesses, expand production of multi-currency mining machines, and pursue a "multi-legged" strategy including self-operated mining.

On February 15, 2022, Ebang International announced that it had obtained registration approval from Australian regulators for its cryptocurrency exchange and would launch its own exchange in Australia.

Bit Digital

According to public information, Bit Digital was originally known as the "first Chinese car loan stock" Dianniu Financial, which fully transformed into Bitcoin mining after clearing its P2P car loan business in February 2020, and renamed the company to "Bit Digital" on September 14 of the same year.

According to the latest financial report, as of November 17, 2021, the transfer of Chinese mining machines to North America was completed. As of December 31, 2021, the company owned 27,744 Bitcoin mining machines and 731 Ethereum mining machines, with estimated maximum total hash rates of 1.603 EH/s and 0.297 TH/s, respectively. In the fourth quarter, Bit Digital obtained 240.57 Bitcoins, but has not yet disclosed the full-year data for 2021.

Canaan Inc.

As the first mining machine stock, according to the latest financial report, Canaan Inc. achieved revenue of 4.987 billion RMB in 2021, a year-on-year increase of over 10 times, setting a historical high for net profit at 2 billion RMB.

Canaan Inc. started low and rose high in 2021, achieving significant growth in performance for four consecutive quarters, completing a total of 22.342 million T in computing power sales for the year, a year-on-year increase of 238.5%.

At the same time, it actively expanded its self-operated mining business. The financial report indicated that in the fourth quarter of 2021, its mining operations in Kazakhstan faced multiple challenges such as logistics issues and tight winter power supply, but the company still completed the deployment of machines at its partner's site in Kazakhstan.

Canaan Inc. predicts that in the first quarter of 2022, its revenue is expected to reach 1.5-1.6 billion RMB, with a year-on-year growth of 275%-300%.