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- In response to the current government crackdown on mining, Bit Mining is considering exiting the Chinese market
- The New York Stock Exchange-listed company revealed Monday that it raised the money by selling 100 million shares and warrants to buy another 100 million to approved investors
- Bit Mining, based in Shenzhen, is soliciting $50 million to cover its exit from the Chinese market
Bit Mining, a crypto mining company based in Shenzhen, is raising $50 million to expand beyond the Chinese market. The firm announced on July 12 that it has reached an agreement to raise $50 million through a private placement with a select group of institutional and authorized investors. In response to the current government crackdown on mining, Bit Mining is considering exiting the Chinese market.
Bit Mining offers for its investors
Bit Mining will offer 100 million Class A ordinary shares at a purchase price of $5.00 per ten shares as part of the private placement. Each share includes a warrant, which investors can use to buy more shares in the future. The warrants will have a three-year period and will be exercisable six months after they are issued, at a price of $6.81 per ten Class A ordinary shares.
The dominance of China in the mining industry is well-known
Although data for the global distribution of mining power for 2021 is not yet available, previous estimates have suggested that China accounted for 65 percent to 75 percent of global bitcoin mining, with Xinjiang, Inner Mongolia, Sichuan, and Yunnan accounting for the majority of it. Sichuan and Yunnan are renewable energy meccas thanks to their hydropower, while Xinjiang and Inner Mongolia are home to many of China’s coal facilities.
Inner Mongolia has already begun to reduce the number of miners. After failing to fulfill Beijing’s environmental standards, province leaders opted to tell bitcoin miners two months to leave, blaming the province’s energy shortfalls on the cryptocurrency industry.
While it’s unclear how China will handle the next steps, Nic Carter of Castle Island Ventures believes a staggered deployment is inevitable. According to Nic Carter, they appear to be moving quickly from policy declaration to real execution.
The hash rate, a word used in the bitcoin industry to indicate the computational capacity of all miners in the network, is used to measure the exodus.
Given the reduction in hash rate, Carter believes that installations are being shut off across the country. He also believes that 50 percent to 60 percent of bitcoin’s total hash rate will eventually depart China. Despite the fact that China’s announcement has yet to become policy, it hasn’t stopped miners like Alejandro De La Torre from cutting their losses and exiting.
Where are the miners going?
Miners at scale are driven to travel to the world’s cheapest sources of power since they compete in a low-margin business where their only variable cost is often electricity. Kazakhstan, China’s next-door neighbour, is one possible destination. The country’s coal mines provide a cheap and plentiful source of electricity. It also helps that Kazakhstan has a more relaxed attitude toward construction, which is good news for miners who need to establish physical infrastructure in a short amount of time.
H.C. Wainwright & Co., a New York-based investment bank, is acting as the offering’s sole placement agent, with the private placement slated to finish on July 16. As a result of China’s mining crackdown, many Chinese miners are eyeing Texas for its low-cost electricity. Bit Mining wants to invest $26 million in a 57-megawatt data center in the crypto-friendly state, according to a June 24 article in Nikkei Asia.
Bit Mining has shipped its first batch of mining devices to Kazakhstan with great success. There were 320 mining machines in the initial batch, with a total hash rate capacity of 18.2 petahash per second (PH/s). A second and third batch of 2,600 mining machines will be delivered by July 1, according to the company.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
