January 17, 2021

Cryptheory

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Struggling online lottery firm announces move into block reward mining

2 min read


Shenzhen-based and Nasdaq-listed firm 500.com (NYSE: WBAI) announced that it had entered a definitive purchase agreement with an undisclosed party to buy ASIC mining machines. This new venture diverges the company even further from its roots as a China-facing online lottery operator.

To pay for the hardware, the online sports lottery firm will issue $14.4 million worth of newly issued Class A ordinary shares as consideration to the unnamed non-U.S. seller. 500.com pegs the total amount of shares to be issued at 11,882,860, valued at US$1.21 per share. They base this figure on the closing trading price of the company’s American Depositary Share (“ADS”) on January 8, 2021, the last trading day before the agreement’s date. 

The seller’s ASIC mining machines include the S17, T17, M20s, and S9 models from Bitmain and MicroBT. The total hash power capacity of the ASIC machines being acquired is estimated to be approximately 918.5 PH/S.

500.com expects the transaction to close in the first quarter of 2021. It is subject to the completion of certain undisclosed conditions precedent to the closing of the deal. There is no guarantee that either party will satisfy the closing conditions or that 500.com will complete the proposed transaction.

Assuming no delay in the process or timetable, 500.com plans to install all ASIC mining machines purchased from the sellers within four weeks. 500.com is desperate to diversify its revenue streams by earning income from adding new blocks to the BTC network in the first half of 2021. Although the firm’s 2020 results are not out yet, it has struggled as of late, reporting a net loss of $6.5 million in the three months ending September 30.

Per a CalvinAyre.com report, the company’s third-quarter finished with its auditors quitting. They cited ‘material weakness’ in the company’s internal controls as their reason. This followed the earlier February resignation of its CEO, Zhengming Pan, over a bribery scandal in Japan. 

The news follows the sudden end-of-year announcement that longtime CTO and former interim CEO Zhaofu Tian was resigning from the firm effective on New Year’s Day. That announcement came during the last week of the year and sighted “personal reasons” as the impetus for the departure. One could speculate that new CEO Mr. Xianfeng Yang might have shown Tian the exit door once he was appointed to lead the company on December 21. 

500.com announced that it currently has no plan to appoint a successor for Tian as it moves into this new technology-oriented field. 

See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.





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