China’s Blockchain Router Maker Faces Cash Crisis As Mined Cryptocurrencies Drop 97% and P2P Lending Falls
The cryptocurrency market is in the red today as bitcoin slides below $8,000. China’s leading smart WiFi router maker Hiwifi which hopes to rake in more profits by launching a blockchain router is facing financial difficulties and capital chain ruptures partly due to the the bearish crypto markets.
Wang Chuyun , Hifiwi’s founder, issued an open letter on Thursday, saying that the company is greatly affected by the difficulty in repayment of its partner, the Shenzhen-based P2P platform I Wealth, and the company’s cash flow is halted.
As blockchain and cryptocurrencies get hot in China, the router maker jumped launched the world’s first blockchain route, called Gee X in late 2017. It also announced the “Gee X plan”, upgrading 2 million traditional wifi routers to blockchain routers.
Gee X router users can mine cryptocurrencies by sharing their idle bandwidth, storage space, computing power and act as a blockchain network node. In January 2018, Hiwifi released a statement saying that the company would not launch their own tokens. But their promotional material read that the blockchain router could mine three cryptocurrencies: ACT, ETF, QTUM. The feature of mining Qtum tokens lured a great number of Qtum fans to buy the router, driving up the private beta key code to more than 600 yuan.
However, the fact that Gee X could mine QTUM was proved to be a gimmick later. The device actually was used to produce two tokens: ACT and GCT.
On May 15th, Gee X router started selling at the JD.com, priced priced at 1,024 yuan which was more expensive than most of their commercial counterparts. But its pre-sale revenue surprisingly exceeded 500 million yuan. In order to encourage more nodes to join, Hiwifi also announced to send ETH to qualified nodes as a reward.
And the cryptocurrencies’ once price surge drove the Gee X’s sales. It was reported that ACT’s price rose to its highest on April 25 at 2.10 yuan from its lowest point of 0.88 yuan on March 19. Due to ACT upswing, many contract-free B70 devices saw a price increase, which were priced at 500 to 1000 yuan.
However, the price of ACT falls to 0.3566 yuan and GCT falls to o.o609 yuan at the press time, down 97% from their ICO price.
At present, one Gee X router could mine 5 GCT and 0.3 ACT per day, as well as 0.02 ETH every 40 days. A rough estimate suggests that users who bought Gee X at a high price take more than 500 days to recoup the investment based on the current cryptocurrencies’ prices and mining output without calculating the electricity and other costs.
The case signals that the mode of using wifi routers to mine cryptocurrencies possibly come to an end.