Bit Mining, formerly known as 500 Lottery Network, has reported a significant financial turnaround in its second-quarter earnings for 2021. The company announced a net income of approximately RMB 28.739 billion (about USD 4.451 billion), a dramatic increase from the previous quarter and the same period last year. This marks the first profitable quarter after six consecutive years of losses, following the decision to suspend lottery operations and pivot to cryptocurrency mining.
Key Financial Highlights
The second-quarter results show a remarkable improvement. Net income surged to RMB 28.739 billion, compared to RMB 19.6 million in the first quarter of 2021 and RMB 3.6 million in the second quarter of 2020. Under non-GAAP measures, the company achieved a net profit of RMB 9.8 million (approximately USD 1.5 million).
This positive performance influenced the company's stock, which rose by 7.05% to close at USD 6.83, even as other blockchain-related stocks experienced declines.
Strategic Moves Behind the Turnaround
Exiting the Lottery Business
A major factor in Bit Mining's resurgence was the decision to divest from its lottery-related operations. On July 23, the company announced the dissolution of its Variable Interest Entity (VIE) structure and the disposal of its lottery business in China. This segment had been unprofitable since 2015.
The lottery business, which involved information services rather than actual sales, was retained initially as a potential opportunity should regulations change. However, with the full transition to cryptocurrency mining, the company opted to transfer the business at zero cost, effectively removing a financial burden.
Abandoning the VIE Structure
With the lottery business gone and cryptocurrency operations based entirely overseas, the VIE structure became unnecessary. The financial results of the VIE subsidiaries will no longer be consolidated into the company's reports. This streamlining allows Bit Mining to focus exclusively on its core operations without the complexity and drag of unprofitable segments.
Core Business Segments Driving Growth
Bit Mining has transformed into a comprehensive cryptocurrency enterprise, engaging in mining, data center operations, and mining pools.
Dominance of Mining Pool Operations
The acquisition of the BTC.com mining pool was a pivotal move. Completed on April 15, this acquisition included the pool's entire business, domain, and cryptocurrency wallet. BTC.com represents about 10% of the global Bitcoin hashrate, ranking fifth worldwide.
In the second quarter, revenue from the mining pool business reached RMB 27.299 billion (USD 4.228 billion), constituting 95% of the company's total revenue. This segment has provided a stable income stream despite market volatility.
Expansion of Mining Operations
Following regulatory changes in China, Bit Mining rapidly relocated its mining hardware to overseas locations. The company has delivered 7,849 Bitcoin miners with a total hashrate of 292.7 PH/s to Kazakhstan. Of these, 3,293 miners (121.0 PH/s) are already operational, with the remainder awaiting deployment.
In the second quarter, the company's mining operations produced approximately 186 Bitcoin. When combined with the 147 Bitcoin mined in the first quarter and 356 Bitcoin received from a prior transaction, the company has significantly built its digital asset holdings.
The company has also ventured into Ethereum mining, with an initial hashrate of 600 GH/s currently producing about 13 ETH daily. Plans are underway to expand this capacity to 4800 GH/s by the end of October 2021.
Data Center Developments
The company's data center in Sichuan, China, was closed in June due to local regulatory actions. However, it still contributed revenue of USD 11.4 million, accounting for 2.6% of second-quarter income.
Looking forward, Bit Mining is investing in new data centers outside mainland China. The company has signed letters of intent to invest in global cryptocurrency data centers, with a new facility expected to generate revenue by the end of the third quarter of 2021.
Significant Digital Asset Holdings
As of June 30, 2021, Bit Mining reported holding cryptocurrency assets valued at approximately RMB 410.8 million (USD 63.6 million). This portfolio includes:
- 1,147 Bitcoin (BTC)
- 1,083 Ethereum (ETH)
- 61.4 million Dogecoin (DOGE)
- Various other cryptocurrencies
These assets were primarily accumulated through the merged mining pool operations and the company's own mining activities launched in late February.
Global Expansion Strategy
Bit Mining is aggressively pursuing international growth to diversify its operations and mitigate regional regulatory risks.
The company has entered into a binding investment term with Dory Creek, LLC, a subsidiary of Bitdeer, Inc., to jointly develop a cryptocurrency mining facility in Texas, USA. Bit Mining has committed USD 25.74 million to this project.
Additionally, a binding term sheet has been signed with a partner in Kazakhstan to build and operate a 100 MW mining farm. Bit Mining plans to invest RMB 60 million (USD 9.33 million) for an 80% ownership stake in this venture.
The company continues to actively seek other high-quality mining farm resources worldwide to support its global expansion strategy. 👉 Explore global mining strategies
Frequently Asked Questions
What is Bit Mining's main source of revenue?
Bit Mining's primary revenue source is its mining pool operations, which contributed 95% of its total income in the second quarter of 2021. This segment provides a more stable income compared to direct cryptocurrency mining.
Why did Bit Mining abandon its lottery business?
The lottery business had been consistently unprofitable since 2015. Exiting this segment allowed the company to eliminate a financial drain and focus entirely on its profitable cryptocurrency operations, which are all conducted overseas.
How has Bit Mining adapted to mining bans in China?
The company acted swiftly to relocate its mining equipment to overseas locations, primarily Kazakhstan. It has also invested in new data center projects outside of mainland China and is diversifying its global operations to reduce regional risk.
What cryptocurrencies does Bit Mining hold?
As of June 2021, the company holds a diverse portfolio of digital assets, including Bitcoin, Ethereum, Dogecoin, and others, with a total value exceeding RMB 410 million.
Is Bit Mining involved in Ethereum mining?
Yes, the company has begun Ethereum mining operations at locations outside mainland China. It currently has a hashrate of 600 GH/s and plans a significant expansion to 4800 GH/s by late 2021.
What are Bit Mining's future growth plans?
The company is executing a global expansion strategy, with active investments in mining facilities in the United States and Kazakhstan. It continues to seek additional international opportunities to grow its mining and data center operations. 👉 Learn about advanced mining operations