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Chinese Listed Companies in Bitcoin Mining Overseas: Partner or Predator?

Some Chinese listed companies have taken the bandwagon of bitcoin mining after the bitcoin bull run throughout 2017, either under the guise of cloud computing or providing mining hosting services, in an effort to bypass regulations considering the country’s tough stance on bitcoin.

A recent report that Huatie HengAn, a subsidiary of Chinese publicly listed company Huatie, lost over $23 million for its secret bitcoin mining business, has caused quite a stir among investors and triggered investigations from regulators.

In this follow-up report, we find that more listed companies in China have been involved in cryptocurrency mining though the country is considering to ban the “wasteful” activity.

As per the prospectus of leading bitcoin mining machine manufacturer Ebang, the second largest customer, an anonymous Xinjiang-based company, is very likely the aforementioned Huatie HengAn as it fits all the description shown in the prospectus; It is more worth noting that its largest client – Beijing Xincailiang Tech, is a subsidiary of Shenzhen-listed technical company Wholeasy. The firm contributed 17.7% of Ebang’s miner sales for the first half year in 2018.

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Varied from Huatie HengAn, who secretly mined bitcoin in 2018 under the name of cloud computing, Xincailiang has built crypto mining farms overseas and offer miner host services. While public information shows Xincailiang is mainly engaged in case planning and big data traffic distribution in the field of mobile games in China.

Partner?

In August 2018, its parent company Wholeasy released an announcement that Mobcolor Technologies USA LLC, a subsidiary of Xincailiang, had reached cooperation with California power supplier 3G Venture LLC, Singapore-based enterprise Vast Day Industry Trade Company PTE.Limited (VDIT) to “construct mining center for digital cloud computing”.

According to the agreement, 3G Venture could offer 100,000 square feet for Mobcolor with the rental of $18 million per year and 90MW of power capacity at $0.055/kWh, and Mobcolor’s Chinese parent company bought 65,000 mining rigs from Ebang and then resold them to VDIT who entrusted the mining operation to Mobcolor. The Chinese company’s U.S. subsidiary charged VDIT $0.075/kWh and $24 million rental per year.

Though jumped on the bitcoin mining bandwagon amid the sluggish in 2018, the company seems quite confident about the prospect of crypto mining as the agreement shows the cooperation was signed three years.

Predator?

Indeed, Wholeasy is not the only Chinese listed company looking to build mines overseas.

“A plurality of bitcoin mining farms in Iran and the Middle East are run by a company named RHY, which is a NEEQ-listed Chinese company.” A miner named Ma Jingguo said.

According to its official website, RHY is a “large-scale blockchain mine in the world”. It claims to be the largest mining company in the world, having a power supply capacity of 450MW which could power up to 300,000 miners at the same time.

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“In 2016, the company has invested in the construction of large-scale substations and natural gas power stations in energy-rich countries dominated by the Middle East. It has become the core blockchain data center with the most competitive electricity rates in the industry.” read the introduction about the firm.

“As the majority of its mines are located in Iran, #MininginIran was first hyped by the company.” Ma said.

It is tough for Chinese companies to conduct bitcoin mining operations both at home and abroad, but they have advantages in capital, talents and other resources over bitcoin mining startups, their only concern is to be compliant. In such a context, go overseas is a possible solution for them.

Considering the country is tightening its grip on cryptocurrency, these ambitious companies are making big layout overseas in bitcoin mining, a process they believe could secure better returns than crypto pump-and-dump ploy. Will they become big players in the crypto industry in the following years? And as more institutional money is coming to bitcoin and crypto mining, what’s the prospect for bitcoin? Leave your comment below.

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