Chinese Listed Company Lost over $23 Million for Its Secret Crypto Mining Business
Construction company turned crypto mining firm Huatie HengAn has recently been sold at the price of around 12 million yuan ($2 million), after witnessing its value plunge more than 90% from the initial 170 million Chinese yuan ($25 million) in less than one year.
Started as a subsidiary of the public listed company Huatie in mainland China, Huatie HengAn claims that it’s mainly engaged in rental service of cloud computing server. While according to its annual financial filings, the company’s alleged main business is believed to be involved with crypto mining, as it has purchased a total of 36,500 units of “servers” in 2018 from Avalon and Ebang who are known as two giants in crypto mining gear manufacturing and produce no computer servers.
The low-price reselling of the company has drawn great attention from the crypto community as it could be the first listed company in the country revealed to be engaged in crypto business though it may operate under the name of cloud computing.
Per its parent company’s financial report, as of December 31, 2018, the impairment and depreciation loss of its alleged cloud-computing servers has amounted to over 95 million yuan ($14 million), that’s more than half of the initial investment (around $25 million). By comparison, its revenue of the year was 53 million yuan ($8 million). As of February 28 this year, the net loss has increased to nearly 158 million yuan (roughly $23 million), leaving the net asset being only 12 million yuan ($2 million).
The prolonged crypto winter has affected the profit prospects of most mining business especially in the year of 2018. Japanese IT giant GMO reported a loss of about $12 million for its crypto mining business in 2018 and even said to quit making and selling crypto miners. IPOs of the big three mining giants – Bitmain, Canaan and Ebang – have failed following a year of bear market.
It seems the crypto winter is still affecting the sentiment in the crypto space, despite the recent market upturn, bitcoin miners have been prudent, as it was reported that some mining farms in Sichuan still have a big surplus of miner slots though the long-awaited rainy season is upcoming. In addition, the Chinese government has recently been considering the elimination of crypto mining within its territory.