Shalini Nagarajan

Crypto miner BIT Mining (BTCM) once made most of its self-mining revenue from Ethereum. After the Merge, it’s increasingly relying on Dogecoin and Litecoin for fresh cash.



The miner, based in Ohio and listed on the New York Stock Exchange, reported revenue of $72.9 million for last quarter — a near-20% jump from the previous period but down 75% year on year.



BIT Mining’s revenue comes from three primary business areas: mining crypto itself, mining as part of a pool and hosting services in its datacenters.&nbsp;



The firm’s mining pool revenue came in at $60 million last quarter, making up 82% of its total inflows, while self-mining and datacenters each brought in about $6 million.



As noted by analyst Mike Fay (via Seeking Alpha), Ethereum mining contributed more than three-quarters of BIT’s self-mining revenue leading up to <a href="https://blockworks.co/news/the-investors-guide-to-the-ethereum-merge" target="_blank" rel="noreferrer noopener">the Merge</a> last September.&nbsp;



The event transitioned Ethereum away from energy-intensive proof of work to proof of stake, eliminating the need for crypto miners as part of consensus.&nbsp;



BIT Mining’s self-mining revenue predictably nosedived after the switch, dropping from $7.1 million in Q3 2022 to $1.9 million in the following period.&nbsp;



The firm mined $6.2 million crypto in the first quarter of 2023 — most of it litecoin (<a href="https://blockworks.co/price/ltc" target="_blank" rel="noreferrer noopener">LTC</a>) and dogecoin (<a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">DOGE</a>) after shutting down certain bitcoin mining rigs.



Dogecoin and Litecoin <a href="https://blockworks.co/news/litecoin-dogecoin-see-mining-surge" target="_blank" rel="noreferrer noopener">hashrates skyrocketed to all-time highs</a> directly around the Merge, although their hashing algorithms differ from Ethereum&#8217;s. Crypto miners are able to direct their rigs at Dogecoin and Litecoin simultaneously through what’s known as &#8220;merge-mining.&#8221;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13979731/embed#?secret=cPIkUgrOrr" data-secret="cPIkUgrOrr" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">BTCM has drastically underperformed the crypto market, as well as major miners Riot and Marathon</figcaption></figure>



<h2 class="wp-block-heading">BIT Mining sold ETH over staking it</h2>



Fay found one move particularly confounding: BIT Mining sold one-third of its ETH holdings between quarters, amounting to 1,602 ETH ($3 million at current prices).&nbsp;



On the other hand, the firm held 62% more dogecoin quarter on quarter, going from 42.8 million DOGE ($3.1 million) to 69.5 million DOGE ($5 million). Its bitcoin holdings (289 BTC worth $7.8 million) remained unchanged.



That means BIT Mining’s crypto balance sheet was almost 28% DOGE at the end of Q1 2023. Its total assets were $40.2 million with $39 million liabilities, including lease obligations.



“The company’s crypto treasury management decisions are odd from where I sit,” Fay wrote in his <a href="https://seekingalpha.com/article/4608582-bit-mining-limited-selling-ethereum-holding-dogecoin" target="_blank" rel="noreferrer noopener">report</a>. “While I&#8217;ve made it no secret that I think assets like Dogecoin don&#8217;t have much of a future, in my view the more egregious decision is selling the ETH on the balance sheet when the company could be generating rewards by staking it natively on-chain.”



Fay continued: “It&#8217;s difficult to understand why management would opt instead for holding meme coins rather than selling all DOGE production and staking Ethereum at virtually no cost. BTCM is still an avoid for me.” Blockworks has reached out to BIT Mining for comment.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13979887/embed#?secret=lzVuKSaTon" data-secret="lzVuKSaTon" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Thanks to rising ETH prices this year, BIT Mining’s ether stash is worth practically the same</figcaption></figure>



In any case, BIT Mining has reportedly only managed to generate a positive net income for one quarter between 2016 and 2022 while increasingly diluting its shares as of 2021.



BIT Mining, which commands a $31 million market cap, is up 85% across 2023 so far but down the same amount over the past year.



David Canellis contributed reporting.



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Bit Mining

Ethereum Miner Dumped ETH After Merge in Favor of Dogecoin

Jacquelyn Melinek

<div id="highlights-block_60ec5d0c28986" class="highlights">
 <ul>
 <li>BIT Mining’s stock was added to the MSCI China Small Cap Index in late May</li>
 <li>The company is based in Shenzhen, China and focuses on cryptocurrency mining, mining pools, and data center operations</li>
 </ul>
 
</div>



BIT Mining Limited, a cryptocurrency mining company, announced today it has entered securities purchase agreements to raise $50 million in a private placement, the company said. 



HC Wainwright &amp; Co, a New York City-based investment bank focused on capital markets and equity research, will be the sole placement agent for the offering. It is expected to close on or about July 16, the company said in a statement.&nbsp;



The company said proceeds are going to be used to acquire additional mining machines, create new data centers overseas, expand its infrastructure and boost its working capital position.



BIT Mining, formerly known as 500.com before changing its name in April 2021, is based in Shenzhen, China and focuses on cryptocurrency mining, mining pools, and data center operations. It owns the entire mining pool business operated under BTC.com and has the third-largest mining pool,<a href="https://btc.com/stats/pool"> according to publicly available data</a>.   



The company was not available for immediate commentary request by Blockworks on July 12.&nbsp;



The agreements to raise money are with institutional and accredited investors and under terms of the private placement. Additionally, the company said it will issue 100 million Class A ordinary shares and warrants to purchase up to an additional 100 million shares for investors at a price of $5 per ten shares, with one warrant included in the price of each share.



The warrants will have a term of three years and will be exercisable for six months following their issuance date at an exercise price of US$6.81 per ten Class A ordinary shares, it said. Ten shares can be converted into one American depositary share of the company if certain conditions are satisfied, it added.&nbsp;



Recently, China has renewed its crackdown on the cryptocurrency industry. In the most recent push, The People’s Bank of China (PBoC) told key financial institutions to <a href="https://cms.blockworks.co/stocks-rally-after-tumultuous-week-while-cryptos-extend-drop-amid-intensifying-china-crackdown-markets-wrap/">block all cryptocurrency transactions</a>, which was one of several anti-crypto efforts by the country’s government to impede trading of the digital currencies, Blockworks previously reported. Additionally, China’s Qinghai province issued a <a href="https://cms.blockworks.co/chinas-qinghai-province-shuts-down-crypto-mines/">ban on cryptocurrency mining operations</a> in June and over 90% of China’s bitcoin mining is estimated to be shut down, according to a <a href="https://www.globaltimes.cn/page/202106/1226598.shtml">report</a>. 



The securities for the private placement are not applicable to US-based securities laws and are not able to be offered or resold in the US except if it&#8217;s a part of an exemption from the requirements of the <a href="https://www.investopedia.com/terms/s/securitiesact1933.asp">Securities Act of 1933</a> and applicable state securities laws, it said.&nbsp;



In mid-May, BIT Mining invested <a href="https://www.prnewswire.com/news-releases/bit-mining-limited-announces-to-invest-in-a-cryptocurrency-mining-data-center-in-texas-301294965.html">$25.74 million</a> in a cryptocurrency mining data center in Texas to jointly construct and operate the Texas Mining Center with Dory Creek. Separately, BIT Mining’s stock (<a href="https://www.google.com/search?q=BTCM&amp;oq=BTCM&amp;aqs=chrome..69i57j46i433j0i433j46i433j69i60l4.1028j0j7&amp;sourceid=chrome&amp;ie=UTF-8">BTCM</a>) was added to the MSCI China Small Cap Index in late May, in addition to the New York Stock Exchange. Its shares on NYSE were down 15.61% to $5.73 as of 10:40 am ET on July 12.