Bit Mining released its financial report for the second quarter of 2021, and the mining business of Ethereum became a new growth point

Hong Kong, August 17, 2021 EST, BIT Mining Limited,$BIT Mining Limited(BTCM)$), an enterprise focusing on encrypting mining in digital currency (hereinafter referred to as "the Company"), today announced its unaudited financial report for the second quarter of 2021.

The company achieved net income of about RMB 2,873.9 million (about US $445.1 million) in the second quarter. The net income in the first quarter of 2021 was about RMB 19.6 million, a substantial increase of RMB 2.8543 billion from the previous month; In the second quarter of 2020, the net income was about RMB 3.6 million, a substantial increase of RMB 2,870.3 million year-on-year.

Under non-GAAP, the company's net profit in the second quarter was about RMB 9.8 million (about US $1.5 million), and it achieved quarterly profit for the first time since it announced the transformation of cryptocurrency mining at the end of 2020.

In addition, thanks to the forward-looking layout and rapid advancement of Ethereum mining business, Ethereum mining business has become a new growth point of the company's performance.

Progress of Encrypted Mining Business in Digital Cash

Bit Mining has completed a comprehensive transformation. At present, the company's business covers the whole industrial chain of cryptocurrency including cryptocurrency mining, mines and mining pools in digital cash.

The company started the mining business of Ethereum outside Chinese mainland. As of the press release date, the theoretical computing power of the company's online mining machines reached 600GH/s. Based on the current computing power of Ethereum and the price of Ethereum US $3,309, the company can produce 13 Ethereum coins per day, with a value of about 43,017 US dollars. Based on the price of Ethereum on the press release date, the direct cost of the company's Ethereum mining business accounts for less than 10% of the revenue. It is estimated that before the end of October 2021, the company will deploy Ethereum mining machines with a total computing power of 4,800 GH/s.

As of press time, the theoretical computing power of bitcoin mining machines held by the company reached 1,425.3 PH/s. At present, the company is adopting the development strategy of global cryptocurrency mining business. The company has shipped 7,849 bitcoin mining machines to Kazakhstan, with a total capacity of about 292.7 PH/s. Among them, 3,293 bitcoin mining machines with a total power of about 121.0 PH/s have been deployed and put into operation, and the remaining 4,556 bitcoin mining machines will be deployed. In the second quarter of 2021, the company's mining business generated about 186 bitcoins, and the confirmed revenue was about 9.5 million US dollars, accounting for 2.1% of the company's total revenue in the second quarter.

In the big data center business, the company signed several letters of intent to invest in the global encrypted digital currency big data center in May and June. On June 21, 2021, according to the written notice of State Grid Sichuan Ganzi Electric Power Co., Ltd., the company announced that two big data centers in Sichuan had stopped operating. In the second quarter of 2021, Sichuan's big data center confirmed revenue of about 11.4 million US dollars, accounting for 2.6% of the company's total revenue in the second quarter. We are currently building a new big data center outside Chinese mainland, which is expected to bring us revenue by the end of the third quarter of 2021. At the same time, the company is still actively looking for other high-quality mine resources to better implement its global development strategy.

On April 15, 2021, the company completed the acquisition of all mining pool businesses in BTC.com, including BTC.com website and other businesses. As a leading multi-currency integrated service pool, BTC.com's final power accounts for about 10% of the total bitcoin computing power, and it has been relatively stable. During the period from April 15, 2021 to June 30, 2021, the revenue recognized by the mine pool business was about 422.8 million US dollars, accounting for 95.0% of the company's total revenue in the second quarter. In the second quarter of 2021, the main business cost (excluding depreciation and amortization cost) of mine pool business was USD 414.4 million.

Dissolve VIE structure and dispose of China lottery business

The company has carried out lottery business in China through VIE structure. In July 2021, the company announced its decision to dissolve its variable interest entity ("VIE") structure related to China lottery business. As the VIE structure related to China lottery business has been dissolved, the related VIE subsidiaries will no longer be included in the scope of consolidation, and their financial results will no longer be included in the company's financial statements in the third quarter and beyond.

Note [1] The price of Ethereum is based on the price at 0:00 UMT in https://coinmarketcap.com.

Summary of results in the second quarter of 2021

1) The net income in the second quarter of 2021 was about RMB 2,873.9 million (about US $445.1 million), and the net income in the first quarter of 2021 was about RMB 19.6 million, a substantial increase of RMB 2,854.3 million from the previous month; In the second quarter of 2020, the net income was about RMB 3.6 million, a substantial increase of RMB 2,870.3 million year-on-year. The mine pool business merged on April 15, 2021 generated revenue of about RMB 2,729.9 million (about US $422.8 million), accounting for 95.0% of the total revenue of this quarter.

2) The operating loss in the second quarter of 2021 was about RMB 101.3 million (about US $15.7 million), and the operating loss in the first quarter of 2021 was about RMB 16.5 million, a substantial increase of RMB 84.8 million from the previous month; The operating loss in the second quarter of 2020 was about RMB 52.3 million, a substantial increase of RMB 49 million year-on-year. The substantial increase in month-on-month and year-on-year was mainly due to the provision of impairment loss of encrypted digital currency and net loss of encrypted digital currency disposal.

3) In the second quarter of 2021, the operating profit under non-GAAP [2] was about RMB 6.4 million (about US $1 million), the operating loss under non-GAAP in the first quarter of 2021 was about RMB 16.2 million, and the operating loss under non-GAAP in the second quarter of 2020 was about RMB 33.7 million.

4) The net loss attributable to Bit Mining in the second quarter of 2021 was about RMB 97.9 million (about US $15.2 million), the net profit attributable to Bit Mining in the first quarter of 2021 was RMB 13.2 million, and the net loss attributable to Bit Mining in the second quarter of 2020 was RMB 86.3 million.

5) In the second quarter of 2021, the net profit attributable to bit mining under non-GAAP [2] was about RMB 9.8 million (about US $1.5 million), and the net loss attributable to bit mining under non-GAAP in the first quarter of 2021 was about RMB 22.8 million; In the second quarter of 2020, the net loss attributable to Bit Mining under non-GAAP was about RMB 34 million.

6) In the second quarter of 2021, the basic and diluted loss per American Depositary Receipt was RMB 1.64 (about US $0.25).

7) 7In the second quarter of 2021, the basic and diluted earnings per American Depositary Receipts under non-GAAP were RMB 0.16 (about USD 0.03).

Note [2] Accounting under non-GAAP does not include equity incentive fees, Impairment of long-term equity investment, impairment of encrypted digital currency, net loss of encrypted digital currency disposal, change of fair value of derivative financial instruments, equity income of shareholding before revaluation of fair value on the date of merger and acquisition, and deferred income tax income related to valuation allowance.

Financial results for the second quarter of 2021

Net income

The net income in the second quarter of 2021 was about RMB 2,873.9 million (about US $445.1 million), a substantial increase of RMB 2,870.3 million compared with the net income of RMB 3.6 million in the second quarter of 2020; Compared with the net income of RMB 19.6 million in the first quarter of 2021, it increased significantly by RMB 2.8543 billion. Net income mainly includes mine pool business income of about RMB 2,729.9 million (about US $422.8 million), data center business income of about RMB 73.8 million (about US $11.4 million) and mining business income of about RMB 61.6 million (about US $9.5 million). The substantial year-on-year and quarter-on-quarter increase is mainly due to the merger of mine pool business income since April 15, 2021 in this quarter.

Operating costs and expenses

The operating costs and expenses in the second quarter of 2021 were about RMB 2,866.1 million (about US $443.9 million), an increase of RMB 2.811 billion compared with RMB 55.1 million in the second quarter of 2020; Compared with RMB 36.3 million in the first quarter of 2021, it increased by RMB 2,675.9 million.

The main reasons for the year-on-year increase in operating costs and expenses are: the distribution costs related to the mine pool business increased by about RMB 2,675.9 million; Service fees related to data center business increased by about RMB 55.3 million; The equity incentive fee arising from the granting of stock options to employees of the Company decreased by approximately RMB18. 3 million.

The main reasons for the decrease in operating costs and expenses are: the distribution costs related to the mine pool business increased by about RMB 2,675.9 million; Service fees related to data center business increased by approximately RMB55. 3 million.

In the second quarter of 2021, the main business cost was about RMB 2.810.5 billion (about US $435.3 million), and the main business cost increased by RMB 280.59 billion compared with RMB 4.6 million in the second quarter of 2020; Compared with RMB 8.5 million in the first quarter of 2021, it increased by about RMB 2.802 billion. Main business costs include direct main business costs of about 2,767.2 million yuan (about 428.6 million US dollars) and depreciation and amortization costs of about 43.3 million yuan (about 6.7 million US dollars). Among them, the direct main business costs mainly include the direct costs related to mining pool business of about RMB 2,675.9 million (about US $414.4 million), the direct costs related to data center of about RMB 59.2 million (about US $9.2 million) and the direct costs related to mining business of about RMB 28.5 million (about US $4.4 million). The year-on-year and month-on-month increase in main business costs is mainly due to the increase in distribution costs related to mine pool business by about RMB 2,675.9 million; Service fees related to data center business increased by approximately RMB55. 3 million.

The marketing expenses in the second quarter of 2021 were about RMB 3.4 million (about US $500,000), a decrease of about RMB 1.6 million or 32% compared with RMB 5 million in the second quarter of 2020; Compared with RMB 2.5 million in the first quarter of 2021, it increased by about RMB 900,000 or 36%. The main reasons for the year-on-year decline in marketing expenses are: the equity incentive fees generated by granting stock options to employees of the Company decreased by about RMB 2 million; Staff expenses are reduced by about RMB400, 000; Marketing expenses increased by approximately RMB1.4 million.

The management expenses in the second quarter of 2021 were about RMB 45.9 million (about US $7.1 million), an increase of about RMB 10.5 million or 29.7% compared with RMB 35.4 million in the second quarter of 2020 and the first quarter of 2021RMB22. 6 million increased by approximately RMB23. 3 million or 103.1%. The year-on-year increase in management expenses was mainly due to: The consulting fee will increase by about RMB 1, 7.3 million yuan, The merger of lottery mutual entertainment and mining pool business resulted in an increase of about RMB 5.7 million in staff expenses, The transaction formalities cost of mining pool business increased by about RMB 1.4 million, the equity incentive cost generated by granting stock options to employees of the Company decreased by about RMB 12.1 million, and the amortization cost of decoration related to the termination of some office space leases in Shenzhen decreased by about RMB 4.5 million. The month-on-month increase in management expenses was mainly due to the increase in consulting fees of about RMB 10 million, the increase in staff expenses of about RMB 7.1 million due to the merger of lottery mutual entertainment and mining pool business, the increase in office space rental fees of about RMB 1.5 million due to the merger of lottery mutual entertainment, and the increase in transaction fees of mining pool business of about RMB 1.3 million.

The service development cost in the second quarter of 2021 was about RMB 6.4 million (about US $1 million), a decrease of about RMB 3.7 million or 36.6% compared with RMB 10.1 million in the second quarter of 2020; Compared with RMB 2.7 million in the first quarter of 2021, it increased by about RMB 3.7 million or 137%. The year-on-year decrease in service development fees is mainly due to the decrease of equity incentive fees generated by granting stock options to employees of the Company by about RMB 4.2 million, and the increase of employee fees caused by the merger of lottery mutual entertainment and mining pool business by about RMB 1 million. The month-on-month increase was mainly due to the increase in staff costs of about RMB2. 8 million caused by the merger of lottery mutual entertainment and mining pool business.

Net loss of encrypted digital currency disposal

In the second quarter of 2021, the net loss of encrypted digital currency disposal was about RMB 55.6 million (about US $8.6 million), which was mainly due to the decline in the market price of encrypted digital currency and the net loss caused by the first-in-first-out method to calculate the disposal cost of encrypted digital currency. There was no such event in the second quarter of 2020 and the first quarter of 2021.

Encrypted digital cash impairment loss

Due to the decline in the market price of encrypted digital currency, the impairment loss of encrypted digital currency in the second quarter of 2021 was about RMB 57.3 million (about US $8.9 million). There was no such event in the second quarter of 2020 and the first quarter of 2021.

Operating loss

The operating loss in the second quarter of 2021 was about RMB 101.3 million (about US $15.7 million), and the operating loss in the second quarter of 2020 was about RMB 52.3 million; The operating loss in the first quarter of 2021 was about RMB 16.5 million;

The increase in operating losses year-on-year and month-on-month is mainly due to: 1) the revenue and operating costs and expenses of the encrypted digital currency mining business started at the end of February 2021, the merged data center business on March 31, 2021 and the merged mine pool business on April 15, 2021 increased; 2) In the second quarter of 2021, the impairment loss of encrypted digital currency due to the decline in the market price of encrypted digital currency was about RMB 57.3 million; 3) In the second quarter of 2021, due to the decline in the market price of encrypted digital currency, the net loss of encrypted digital currency disposal caused by the first-in-first-out method was about RMB 55.6 million.

In the second quarter of 2021, the operating profit under non-GAAP was about RMB 6.4 million (about US $1 million), the operating loss under non-GAAP in the second quarter of 2020 was about RMB 33.7 million, and the operating loss under non-GAAP in the first quarter of 2021 was about RMB 16.2 million. The main reasons for the year-on-year and month-on-month turnaround of operating profit under non-US accounting standards are the profit growth brought by the encrypted digital currency mining business started at the end of February 2021, the merged data center business on March 31, 2021 and the merged mine pool business on April 15, 2021.

Net profit attributable to bit mining (net loss)

The net loss attributable to Bit Mining in the second quarter of 2021 was about RMB 97.9 million (about US $15.2 million), the net loss attributable to Bit Mining in the second quarter of 2020 was about RMB 86.3 million, and the net profit attributable to Bit Mining in the first quarter of 2021 was about RMB 13.2 million.

The main reasons for the increase in year-on-year losses are as follows: 1) The revenue from the encrypted digital currency mining business started at the end of February 2021, the merged data center business on March 31, 2021 and the merged mine pool business on April 15, 2021 increased by about RMB 2,870.3 million and the operating costs and expenses increased by about RMB 2.811 billion; 2) In the second quarter of 2021, the impairment loss of encrypted digital currency due to the decline in the market price of encrypted digital currency was about RMB 57.3 million; 3) In the second quarter of 2021, due to the decline in the market price of encrypted digital currency, the net loss of encrypted digital currency disposal caused by the first-in-first-out method was about RMB 55.6 million; 4) In the second quarter of 2020, the provision for impairment of long-term equity investment calculated by the equity method was about RMB 33.7 million; There is no such event in this quarter.

The main reasons for the increase in month-on-month losses are as follows: 1) The revenue from the encrypted digital currency mining business started at the end of February 2021, the merged data center business on March 31, 2021 and the merged mine pool business on April 15, 2021 increased by about RMB 2,854.3 million and the operating expenses increased by about RMB 2,829.8 million; 2) In the second quarter of 2021, due to the encrypted market price of digital currencyThe impairment loss of encrypted digital cash due to the decline is about RMB 57.3 million; 3) In the second quarter of 2021, due to the decline in the market price of encrypted digital currency, the net loss of encrypted digital currency disposal caused by the first-in-first-out method was about RMB 55.6 million; 4) At the time of merger of Lotto Mutual Entertainment at the end of March 2021, the equity income of the shareholding before recognition according to the fair value on the date of merger was about RMB 36.1 million. There is no such event in this quarter.

In the second quarter of 2021, the net profit attributable to Bit Mining under non-GAAP was about RMB 9.8 million (about US $1.5 million), In the second quarter of 2020, the net loss attributable to bit mining under non-GAAP was about RMB 34 million, and in the first quarter of 2021, the net loss attributable to bit mining under non-GAAP was about RMB 22.8 million. The main reasons for turning losses into profits year-on-year and month-on-month are the profit growth brought by the encrypted digital currency mining business started at the end of February 2021, the merged data center business on March 31, 2021 and the merged mine pool business on April 15, 2021.

Cash and cash equivalents and restricted monetary funds

As of June 30, 2021, the company has cash and cash equivalents of about RMB 65.4 million (about US $10.1 million), and the restricted monetary funds [3] are about RMB 284.7 million (about US $44.1 million); As of March 31, 2021, the company has cash and cash equivalents of about RMB 173.4 million (about US $26.5 million), and restricted monetary funds of about RMB 309.8 million (about US $47.3 million).

Encrypt digital currency assets

As of June 30, 2021, the company has encrypted digital currency assets of about RMB 410.8 million (about US $63.6 million), about 1,147 bitcoins, 1,083 Ethereum, 61.4 million dog coins and other encrypted digital currency assets, mainly from the mine pool business merged on April 15, 2021 and the encrypted digital currency mining business started at the end of February 2021.

Note [3] Restricted monetary funds refer to: 1) commercial bank deposits used for mortgage loans for special purposes of general offers for lottery entertainment; 2) Funds deposited in commercial banks pending final release; And 3) Funds authorized by the government pending final release.

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Modify on 2021-09-27 16:53

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