Chinese online lottery company 500.com (NYSE: WBAI) acquired Bee Computing, a Hong Kong-registered maker of Bitcoin mining machines, for $ 100 million, according to a document filed Monday with the U.S. Securities and Exchange Commission. USA
500.com, which changed its name to BIT Mining Limited in March, has been quietly shifting its focus from its struggling online lottery business to bitcoin mining for the past four years. The company accelerated that transition late last year amid bitcoin’s historic bull run, making it one of many publicly traded companies trying to make a profit from the bitcoin price surge.
It is now one of the few large-scale companies in the crypto mining business after acquiring the third-largest mining pool, BTC.com, and three mining farms under its Loto Interactive unit. The company is venturing into the business of making mining machines with the latest deal, which comes at a time when mining companies are in short supply of those machines.
BIT Mining said that Bee Computing has worked with MTK, which is Asia’s largest chip designer, to make a seven-nanometer chip for bitcoin mining. Taiwan Semiconductor Manufacturing Co. (TSMC) will supply the chips, according to Yufei Jiang, CEO of Bee Computing.
Jiang said that Bee Computing has been endorsed by some of the most influential companies in the semiconductor industry. MTK invested $ 9.5 million in a Series B round, and Taiwan-based ASE Group, which is the leading semiconductor assembly and testing company, invested $ 3 million in the same round.
The performance of Bee Computing’s current mining model is similar to Bitmain’s T17, which tends to have higher power consumption than Bitmain’s S17, but is less powerful than Bitmain’s latest S19 model.
Jiang said Bee Computing’s research and development slowed during the bear market a few years ago, but the company may pick up the pace with new capital from BIT Mining.
BIT Mining will invest $ 30 million in Bee Computing research to develop better 7nm chips for bitcoin mining and higher quality miners for ether and litecoin. Jiang said the company could test new chips in October.
Crypto miners use the Application Specific Integrated Circuit (ASIC), which is an integrated circuit chip, to mine cryptocurrencies such as bitcoin. The 7 nm figure refers to the size of the transistor. The smaller the component, the more it can fit into a piece of silicon and the more powerful the mining machine becomes, making the chip one of the most sought-after components by any major bitcoin mining manufacturer.
To put that in context, the latest model from leading crypto mining machine manufacturer Bitmain uses 7nm chips. Designing stable, high-performance chips for mining machines is very expensive and challenging even for some big players in the semiconductor industry, according to Jiang.
While Bitmain is studying new models that use 5nm chips, it can be difficult to make them because TSMC would make most of the chips for automakers or cell phone companies like Apple.
Bee Computing produces much less annually than Bitmain, due to the fixed number of 7nm chips that TSMC assigns to each mining equipment manufacturer. In the near future, Bee Computing plans to supply all new mining machines to BIT Mining until it has a surplus to sell.
BIT Mining had disclosed that it purchased $ 8.5 million worth of mining machines in February from Bee Computing.
According to the purchase agreement, BIT Mining will pay Bee Computing $ 35 million in shares at the end of the second quarter of this year and will send the other $ 65 million in shares after the acquired company manages to produce a certain number of mining machines. 7nm ASIC bitcoins. as well as manufacturing higher performance bitcoin, ethereum and litecoin mining machines.
BIT Mining officially announced its strategic shift to bitcoin mining in December. In February, the company bought the business of Bitdeer Technologies’ crypto mining group BTC.com, which was majority owned by former Bitmain CEO Jihan Wu. You have purchased at least $ 14 million worth of mining machines in an equity deal.
Combined with existing mining pool services provided by BIT Mining’s subsidiary, Loto Interactive, the company would be one of the largest mining pools in the world, according to data from BTC.com.
Loto Interactive has three large data centers in central China’s Sichuan Province crypto mining hub due to Sichuan’s rich hydropower in the summer. Loto Interactive previously only provided maintenance venues and services, rather than buying mining machines and profiting from cryptocurrency mining. The company began operating its own miners earlier this year.
If a company only operates a mining site for miners to make a profit, it doesn’t have much exposure to cryptocurrency prices, it would face more price-related risks, and it could make more profit if it starts buying mining machines and running them on its own. mining sites.
Tsinghua Unigroup is the portfolio shareholder of BIT Mining, but it is unclear how the Chinese semiconductor conglomerate is involved in the company’s business.