A leading Chinese cryptocurrency mining enterprise announced today a restructuring of the business to de-consolidate subsidiaries related to its lottery operations.
VIE Structure Eliminated
Bit Mining Limited is eliminating its variable interest entity (VIE) structure and related Chinese lottery business for nil consideration, the New York Stock Exchange (NYSE)-listed company revealed in a press release.
The company’s affiliated subsidiaries under the VIE structure, responsible for running the business related to the Chinese lottery, accounted for RMB2.7 million ($400,000) in revenue in the first quarter ended March 31, 2021, 13.6% of the company’s total, but incurred a net loss of RMB9.8 million ($1.5 million) for the same 3-month period.
Following the expansion of Bit Mining’s cryptocurrency mining business out of China, the company does not believe the de-consolidation of the VIE businesses, which hold 6.3% or RMB82.8 million ($12.6 million) of total assets and debts of RMB161.6 million ($24.6 million), will have a material impact on its operational results.
Shift in Strategy
The decision to remove the lottery-related subsidiaries is part of the strategy to become a leader in the field of cryptocurrency mining adopted and first announced in December 2020 by the formerly known 500.com company.
Back then, operating under the 500.com name company, announced it signed definitive agreements to purchase cryptocurrency mining machines, acquire the mining pool run under the BTC.com brand, including the domain and the cryptocurrency wallet from Bitdeer Technologies Holding Company, as well as for the acquisition of a 7-nanometer mining machine manufacturer Bee Computing (HK) Limited.
500.com also announced it would increase its stake in Hong Kong-listed subsidiary and owner of big data centers Loto Interactive Limited and continue with its expansion into the cryptocurrency mining space.
In March 2021, the Board of Directors decided to change the name of the company to Bit Mining Limited, as well as the ticker symbol, subject to shareholder approval, to signal the shift of the main focus of the business to cryptocurrency mining, and in April, at an extraordinary general meeting, shareholders approved the decision to rename the company, effective immediately.
Bit Mining said in the press release the financial results of the businesses from the VIE structure would no longer be reported as part of the company’s consolidated financial statements as the company decided to call it a quit on the continued losses incurred by the Chinese lottery-related operations and focus entirely on its overseas crypto mining business.