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Chinese publicly-traded information and communications firm, Zhongjia Bochuang (ZJBC), with a market cap of $900 million, announced plans to enter into the Bitcoin mining space.
ZJBC announced plans to buy $155 million of Bitcoin mining application-specific integrated circuits (ASIC) produced by local producer MicroBT, part of the WhatsMiner series. The two parties have signed a memorandum of understanding. The ZJBC announcement stated that the firm intends to purchase the hardware over the next two years:
“The scale for the first year will be no less than 20,000 units with the first batch to be delivered by May 2021 with no less than 2,000 units.”
The announcement may be frowned upon as local authorities in China’s Inner Mongolia region recently applied pressure to local crypto mining operations by their consideration of closing all mining operations. In addition, cryptocurrency exchanges in China are banned. Interestingly, MicroBT are connected to Chinese state, with about 2.8% equity in their hands. This can be seen as a conflict of interest, while more realistically, others believe it is an effort on getting increased control in the industry.
ZJBC are not new to bitcoin mining operations, with one of their subsidiaries already offering their services as was outlined in a message to their shareholders recently:
“Our fully-owned subsidiary Changshi Telecommunication has been involved in building and maintaining blockchain computing facilities since 2018 and brought in over 50 million yuan [$7.6 million] in revenue in 2018 already.”
Despite the government’s complicated attitude towards cryptocurrency, the industry has flourished with a strong official support on the development of blockchain technology, which is not only connected with crypto but drives key innovations in areas as trade finance and supply management.
We are therefore seeing numerous financial efforts and investments being made recently that involve Chinese companies.
In just February, Chinese bitcoin mining machine manufacturer, Ebang International Holdings, which debuted on the Nasdaq in June 2020, had two fundraising rounds, bringing in $170 million.
In the same month, Code Chain New Continent Ltd, a Chinese waste recycling company, also raised $25 million by share placement in order to fund venturing into bitcoin mining.