SOLAI Ltd 6-K, filed Sep 27, 2024
SOLAI Ltd (SLAIY)
About this 6-K
SOLAI Ltd filed this 6-K on September 27, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2024
Commission File Number: 001-36206
428 South Seiberling Street
Akron, Ohio 44306
United States of America
+1 (346) 204-8537
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
This report on Form 6-K is hereby incorporated by reference into the Company’s Registration Statement on Form F-3, as amended, initially filed with the U.S. Securities and Exchange Commission on July 30, 2021 (Registration No. 333-258329), and shall be a part thereof from the date on which this current report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BIT MINING LIMITED | |
| ||
| By: | /s/ Xianfeng Yang |
| Name: | Xianfeng Yang |
| Title: | Chief Executive Officer |
| | |
Date: September 27, 2024 | | |
Exhibit 99.1
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIT MINING LIMITED
As of December 31, 2023 and June 30, 2024
and for the six months ended June 30, 2023 and 2024
BIT MINING LIMITED
CONTENTS
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
(Unaudited)
| | | | As of December | | As of June |
| | Notes | | 31, 2023 | | 30, 2024 |
ASSETS |
| |
|
|
|
|
Current assets: |
| |
|
|
|
|
Cash and cash equivalents |
| |
| |
| |
Accounts receivable | | | | | | |
Prepayments and other current assets |
| 7 |
| |
| |
Cryptocurrency assets |
| 6 |
| |
| |
Current assets of discontinued operations | | | | | | — |
Total current assets |
| |
| |
| |
| | | | | | |
Non-current assets: |
| |
|
|
|
|
Property and equipment, net |
| 8 |
| |
| |
Intangible assets, net |
| 9 |
| |
| |
Deposits |
| |
| |
| |
Long-term investments |
| 5 |
| |
| |
Right-of-use assets | | 10 | | | | |
Long-term prepayments and other non-current assets |
| |
| |
| |
Total non-current assets |
| |
| |
| |
| | | | | | |
TOTAL ASSETS |
| |
| |
| |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| |
|
|
|
|
Current liabilities: |
| |
|
|
|
|
Accounts payable | | | | | | |
Accrued payroll and welfare payable | | | | | | |
Accrued expenses and other current liabilities | | 11 | | | | |
Operating lease liabilities – current | | 10 | | | | |
Income tax payable | | | | | | |
Current liabilities of discontinued operations | | | | | | — |
Total current liabilities |
| |
| |
| |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
1
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
(Unaudited)
| | | | As of December | | As of June |
|
| Notes |
| 31, 2023 |
| 30, 2024 |
Non-current liabilities: |
|
|
|
|
|
|
Operating lease liabilities - non-current | | 10 | | | | |
Total non-current liabilities |
|
|
| |
| |
| | | | | | |
TOTAL LIABILITIES |
|
|
| |
| |
| | | | | | |
Shareholders’ equity: |
|
|
|
|
|
|
Class A ordinary shares, par value US$ |
| 16 |
| |
| |
Class A preference shares, par value US$ | | 16 | | | ||
Class B ordinary shares, par value US$ |
| 16 |
|
| ||
Additional paid-in capital |
| 16 |
| |
| |
Treasury shares |
|
|
| ( |
| ( |
Accumulated deficit and statutory reserve |
| |
| ( |
| ( |
Accumulated other comprehensive loss | | | | ( | | ( |
Total shareholders’ equity |
|
|
| |
| |
| | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
| |
| |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
2
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares and per share (or ADS) data)
(Unaudited)
| | | | For the six months ended June 30, | ||
|
| Notes |
| 2023 |
| 2024 |
| | | | | | |
Revenues |
|
|
| |
| |
Operating costs and expenses: |
|
|
| |
| |
Cost of revenue |
|
|
| ( |
| ( |
Sales and marketing expenses |
|
|
| ( |
| ( |
General and administrative expenses |
|
|
| ( |
| ( |
Service development expenses |
|
|
| ( |
| ( |
Total operating costs and expenses |
|
|
| ( |
| ( |
Other operating income |
|
|
| — |
| |
Other operating expenses |
|
|
| ( |
| ( |
Net gain on disposal of cryptocurrency assets | | | | | | — |
Impairment of cryptocurrency assets | | | | ( | | — |
Changes in fair value of cryptocurrency assets | | | | — | | |
Operating loss from continuing operations |
|
|
| ( |
| ( |
Other income, net |
|
|
| |
| |
Interest income |
|
|
| |
| |
Gain from equity method investments |
| 5 |
| |
| |
Gain from disposal of long-term investments | | 5 | | | | — |
Gain from short-term investments |
| |
| — |
| |
Changes in fair value of derivative instruments |
|
|
| |
| |
(Loss) income from continuing operations |
|
|
| ( |
| |
Income tax benefits |
| 12 |
| — |
| — |
Net (loss) income from continuing operations |
|
|
| ( |
| |
(Loss) income from discontinued operations, net of applicable income taxes | | 4 | | ( | | |
Gain on disposal of discontinued operations, net of applicable income taxes | | 4 | | — | | |
Net (loss) income from discontinued operations, net of applicable income taxes | | | | ( | | |
Net (loss) income | | | | ( | | |
Other comprehensive loss: | | | | | | |
Foreign currency translation loss | | | | ( | | ( |
Other comprehensive loss, net of tax | | | | ( | | ( |
Comprehensive (loss) income |
|
|
| ( |
| |
| | | | | | |
(Losses) earnings per share-Basic and Diluted |
| 15 |
|
|
|
|
Net (loss) income from continuing operations |
|
|
| ( |
| |
Net (loss) income from discontinued operations |
|
|
| ( |
| |
Net (loss) income | | | | ( | | |
(Losses) earnings per ADS*-Basic and Diluted |
| 15 |
|
|
|
|
Net (loss) income from continuing operations |
|
|
| ( |
| |
Net (loss) income from discontinued operations |
|
|
| ( |
| |
Net (loss) income | | | | ( | | |
Weighted average number of Class A and Class B ordinary shares outstanding: |
| 15 |
| |
|
|
Basic |
|
|
| |
| |
Diluted |
|
|
| |
| |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
3
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of U.S. dollars (“US$”))
(Unaudited)
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | | | |
Cash flows from operating activities | | | | |
Net (loss) income |
| ( |
| |
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
Amortization of right-of-use assets | | | | |
Depreciation of property and equipment |
| |
| |
Amortization of intangible assets |
| |
| |
Share-based compensation |
| |
| |
Gain from equity method investments | | ( | | ( |
Gain from disposal of long-term investments | | ( | | — |
Losses on disposal of property and equipment |
| — |
| |
Net gain on disposal of cryptocurrency assets | | ( | | — |
Impairment of cryptocurrency assets | | | | — |
Changes in fair value of derivative instruments | | ( | | ( |
Gain from short-term investments | | — | | ( |
Gain on disposal of discontinued operations | | — | | ( |
Changes in fair value of cryptocurrency assets | | — |
| ( |
Changes in operating assets and liabilities: | | | | |
Accounts receivable |
| ( |
| |
Prepayments and other current assets |
| ( |
| |
Cryptocurrency assets | | ( | | ( |
Long-term prepayments and other non-current assets | | — | | |
Accounts payable | | | | ( |
Operating lease liabilities | | ( | | ( |
Accrued expenses and other current liabilities |
| |
| ( |
Accrued payroll and welfare payable |
| ( |
| ( |
Income tax payable |
| |
| ( |
Deposits | | ( | | |
Net cash used in operating activities |
| ( |
| ( |
| | | | |
Cash flows from investing activities |
|
|
|
|
Proceeds from the disposal of subsidiaries, net of cash disposed |
| — |
| ( |
Cash received from return of long-term investments | | — | | |
Cash received from disposal of cryptocurrency assets | | | | |
Cash received from return of short-term investments | | | | — |
Proceeds from disposal of long-term investments | | | | — |
Proceeds from disposal of property and equipment | | — | | |
Net cash provided by investing activities |
| |
| |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands of U.S. dollars (“US$”)
(Unaudited)
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | | | |
Cash flows from financing activities | | | | |
Proceeds from exercise of warrants |
| — |
| |
Net cash provided by financing activities |
| — |
| |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| |
| ( |
Net decrease in cash, cash equivalents and restricted cash |
| ( |
| ( |
Cash, cash equivalents and restricted cash at beginning of the period |
| |
| |
Cash, cash equivalents and restricted cash at end of the period |
| |
| |
|
|
|
|
|
Supplemental disclosures of cash flow information: | | | | |
Income tax paid |
| — |
| — |
Interest received | | | | |
Interest paid |
| — |
| — |
| | | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | |
Payment of expense and non-current assets in the form of cryptocurrencies | | | | — |
Loan to a third party in the form of cryptocurrencies | | | | — |
Deposits received from customers of mining data center in the form of cryptocurrencies | | — | | |
Cryptocurrencies collected from short-term investments | | — | | |
Cryptocurrencies paid to place short-term investments | | — | | |
Cryptocurrencies collected from derivative contracts | | — | | |
Cryptocurrencies paid to place derivative contracts | | — | | |
Property, plant and equipment transferred from long-term prepayment | | | | |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
5
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in U.S. dollars (“US$”) except for number of shares)
(Unaudited)
| | Number of | | Number of | | Number of | | | | | | | | | | Accumulated | | Accumulated | | |
| | Class A | | Class A | | Class B | | | | | | Additional | | | | other | | deficit and | | Total |
| | ordinary | | preference | | ordinary | | Ordinary | | Preference | | paid-in | | Treasury | | comprehensive | | statutory | | shareholders’ |
|
| shares |
| shares |
| shares |
| shares |
| shares |
| capital |
| shares |
| loss |
| reserve |
| equity |
| | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2022 |
| |
| | | |
| |
| — | | |
| ( |
| ( |
| ( |
| |
Net loss |
| — |
| — | | — |
| — |
| — | | — |
| — |
| — |
| ( |
| ( |
Foreign currency translation loss |
| — |
| — | | — |
| — |
| — | | — |
| — |
| ( |
| — |
| ( |
Share-based compensation |
| |
| — | | — |
| — |
| — | | |
| — |
| — |
| — |
| |
Balance as of June 30, 2023 |
| |
| | | |
| |
| — | | |
| ( |
| ( |
| ( |
| |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
6
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
(Amounts in thousands of U.S. dollars (“US$”) except for number of shares)
(Unaudited)
|
| Number of |
| Number of | | Number of |
| |
| | | |
| |
| Accumulated |
| Accumulated |
| |
| | Class A | | Class A | | Class B | | | | | | Additional | | | | other | | deficit and | | Total |
| | ordinary | | preference | | ordinary | | Ordinary | | Preference | | paid-in | | Treasury | | comprehensive | | statutory | | shareholders’ |
|
| shares | | shares |
| shares |
| shares |
| shares |
| capital |
| shares |
| loss |
| reserve |
| equity |
Balance as of December 31, 2023 |
| |
| | | |
| |
| — | | |
| ( |
| ( |
| ( |
| |
| — | | — | | — | | — |
| — | | — |
| — | | — | | |
| | |
Net income | | — | | — | | — | | — | | — | | — | | — | | — | | | | |
Foreign currency translation loss |
| — |
| — | | — |
| — |
| — | | — |
| — |
| ( |
| — |
| ( |
Share-based compensation |
| |
| — | | — |
| |
| — | | |
| — |
| — |
| — |
| |
Issuance of ordinary shares as incentive shares | | | | — | | — | | — | | — | | | | — | | — | | — | | |
Issuance of ordinary shares from exercise of Series B warrants | | | | — | | — | | — | | — | | | | — | | — | | — | | |
Balance as of June 30, 2024 |
| |
| | | |
| |
| — | | |
| ( |
| ( |
| ( |
| |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
7
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of Renminbi (“RMB”) United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
1. ORGANIZATION
BIT Mining Limited (the “Company”) was incorporated under the laws of the Cayman Islands on April 20, 2007 under the original name of “Fine Success Limited”, which was changed to “500wan.com” on May 9, 2011, and changed to “500.com Limited” on October 9, 2013. The Company changed to the new name of “BIT Mining Limited” and the new ticker symbol “BTCM” effective April 20, 2021.
The Company has completed the transformation of its business and become an enterprise that primarily engages in cryptocurrency mining, data center operation and mining pool operation in 2021, and further disposed of its mining pool business in January 2024.
As of June 30, 2024, the Company has subsidiaries incorporated in countries and jurisdictions including British Virgin Islands, Cayman Islands, Hong Kong, the United States of America (“USA”), Canada, mainland China, Malta, Cyprus and Curacao. The Company and its subsidiaries are hereinafter collectively referred to as the “Group”.
As of June 30, 2024, the Company’s major subsidiaries are listed below:
| | | | | | Percentage of | | |
| | Date of | | Place of | | ownership by | | |
Entity |
| establishment |
| establishment |
| the Company |
| Principal activities |
| | | | | | | | |
Subsidiaries |
|
| |
| |
|
|
|
Fine Brand Limited (“BVI”) | | | | | % | |||
BT Mining Limited (BT Mining) | | | | | % | |||
500wan HK Limited (“500wan HK”) | | | | | % | |||
Bee Computing (HK) Limited (“Bee Computing”) | | | | | % | |||
Yibao Energy (Guangzhou) New Energy Technology Limited (“Yibao Energy”) | | | | | % | |||
E-Sun Sky Computer (Shenzhen) Co., Ltd. (“E-Sun Sky Computer”) | | | | | % | |||
Star Light Inc. (“Star Light”) | | | | | % | |||
Skill Esport Limited (“Skill Esport”) | | | | | % | |||
Summit Bend US Corporation (“Summit Bend”) | | | | | % | |||
Star Light Ohio I Corporation (“Ohio I”) | | | | | % | |||
Star Light Ohio II Corporation (“Ohio II”) | | | | | % | |||
Asgard Data Centers LLC (“Asgard”) | | | | | % | |||
Alliance International Technologies Limited (“Alliance International Technologies”)** | | | | | % | |||
1324492 B.C.Ltd | | | | | % | |||
The Multi Group Ltd (“The Multi Group” or “TMG”) | | | | | % | |||
Multi Warehouse Ltd* | | | | | % | |||
Multi Brand Gaming Ltd* | | | | | % | |||
Multilotto UK Ltd* | | | | | % | |||
Lotto Warehouse Ltd* | | | | | % | |||
Wasp Media Ltd* | | | | | % | |||
Round Spot Services Ltd* | | | | | % | |||
Multi Pay N.V.* | | | | | % | |||
Oddson Europe Ltd* | | | | | % |
* A subsidiary of the Multi Group
** Alliance International Technologies is the holding company of the mining pool business prior to the disposition in January 2024 and is also engaged in cryptocurrency mining operation.
Going Concern
The accompanying unaudited interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP applicable to a going concern. This presentation contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
8
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
1. ORGANIZATION (continued)
The Group has incurred net loss from continuing operations of US$
The assessment of the Group’s ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. The Group considered the projected cash flows for the next twelve months after the issuance of the unaudited interim financial statements. Such cash flows included cash inflows from disposal of cryptocurrency assets at projected prices. Due to a high degree of uncertainties in future prices of cryptocurrency assets, the Group cannot assert that it is probable it will have sufficient cash and cash equivalents to maintain the Group’s planned operations for the next twelve months following the issuance of these unaudited interim financial statements. The Group has considered both quantitative and qualitative factors that are known or reasonably knowable as of the date of this unaudited interim financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Group’s ability to continue as a going concern.
In response to these conditions, the Group may seek to sell additional equity securities or debt securities or borrow from lending institutions. These financing plans are subject to market conditions, and are not within the Group’s control, and therefore, cannot be deemed probable. There is no assurance that the Group will be successful in implementing its plans. As a result, the Group has concluded that management’s plans do not alleviate substantial doubt about the Group’s ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
9
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and use of estimates
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s most recent consolidated annual financial statements filed with the SEC on Form 20-F.
The accompanying unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for the consolidated financial statements. Certain information and note disclosures normally included in the Group’s annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with such rules and regulations. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair statement of the Group’s financial position as of June 30, 2024 and results of operation and cash flows for the six months ended June 30, 2023 and 2024. Results for the six months ended June 30, 2024 are not necessarily indicative of the results expected for the full fiscal year or for any future period.
The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s unaudited interim condensed consolidated financial statements include, but are not limited to, allowance for credit losses, useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation, valuation of derivative instruments, implicit interest rate of operating lease, accrual for contingencies, and going concern. Actual results could materially differ from those estimates.
Principles of consolidation
The unaudited interim condensed consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. The results of the subsidiaries are consolidated from the date on which the Company obtains control and continue to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. All significant intercompany balances and transactions among the Company and its subsidiaries have been eliminated on consolidation.
Reclassification
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications (except for the reclassification of discontinued operations) had no impact on the reported financial position or net (loss) earnings.
Foreign currency translation
The functional currency of the Company, BVI, 500wan HK, Bee Computing, Alliance Technologies, Skill Esport, Summit Bend, Ohio I, Ohio II, Asgard and its discontinued operation Sunstar Technology is the US$. The functional currency of the Multi Group and its subsidiaries is EUR. E-Sun Sky Computer, Yibao Energy, and its discontinued operations Beijing Guixinyanghang and Chuangyinghuanyu Technology determined their functional currencies to be RMB, which is their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. The Group uses the monthly average exchange rate for the year and the spot exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss as a component of shareholders’ equity.
10
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation (continued)
Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Exchange gains and losses resulting from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive (loss) income.
Cryptocurrency assets
Cryptocurrency assets are included in current assets in the accompanying unaudited interim condensed consolidated balance sheets. Cryptocurrency assets generated from the cryptocurrency mining business and the mining pool business, which is classified as discontinued operations, are accounted for in connection with the Group’s revenue recognition policy disclosed below.
Effective January 1, 2024, the Group adopted ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) using a modified retrospective approach, which requires cryptocurrency assets to be measured at fair value each reporting period with changes in fair value recorded in net income or loss. Upon adoption, the Group recognized a fair value adjustment on cryptocurrency assets from continuing operations and discontinued operations of $854 and $
Prior to the adoption of ASU 2023-08, cryptocurrencies held were accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, or more frequently, when events or changes in circumstances occur, principally decreases in the quoted prices of the cryptocurrencies, indicating that it is more likely than not that the indefinite-lived asset is impaired. In determining if an impairment had occurred, the Group considered the intraday lowest quoted price of one unit of cryptocurrency asset since acquiring the cryptocurrency asset. If the then current carrying value of the unit of cryptocurrency exceeded the fair value so determined, an impairment loss has occurred with respect to those units of cryptocurrencies in the amount equal to the difference between their carrying values and the fair value determined. To the extent an impairment loss was recognized, the loss established the new cost basis of the asset. Subsequent reversal of impairment losses was not permitted. For the six months ended June 30, 2023, the Group recognized impairment loss of US$
Cryptocurrencies generated from the cryptocurrency mining business, and cryptocurrencies generated and distributed to mining pool participants in relation to the discontinued mining pool business, are included within operating activities in the accompanying unaudited interim condensed consolidated statements of cash flows. The purchases and sales of cryptocurrencies are included within investing activities in the accompanying unaudited interim condensed consolidated statements of cash flows.
11
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative contracts
Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. The Group does not apply hedge accounting to the derivative contracts, which are recognized as either assets or liabilities on the unaudited interim condensed consolidated balance sheets at fair value, with changes recognized as changes in fair value of derivative instruments.
From June 2023 to October 2023, the Group entered into several collar arrangements with a third party with
From October 2023 to June 2024, the Group entered into several accumulator agreements with a third party with terms ranging from to
The derivative contracts are valued by the issuer of the instruments using pricing models whose inputs are calibrated from observable market data, mainly quoted Ethereum, Bitcoin or Litecoin prices, and do not involve material subjectivity. Such valuations are classified within level 2 of the fair value hierarchy.
As of December 31, 2023 and June 30, 2024, the Group recognized derivative asset of US$
Fair value measurements
Financial instruments primarily include cash and cash equivalents, accounts receivable, prepayments and other current assets, derivative asset, equity investments without readily determinable fair values, equity method investments, accounts payable and accrued expenses and other current liabilities. The Group carries the investment under the measurement alternative basis and equity method investment on other-than-temporary basis. Derivative asset related to the derivative contracts is measured at fair value based on Level 2 inputs on a recurring basis. The carrying values of other financial instruments approximate their fair values due to their short-term maturities.
The Group’s non-financial assets, including cryptocurrency assets prior to the adoption of ASU 2023-08, intangible assets, goodwill and property and equipment are measured at fair value when an impairment charge is recognized. Fair value of cryptocurrencies is based on quoted prices in active markets.
The Group applies ASC 820 (“ASC 820”), “Fair Value Measurements and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2— Include other inputs that are directly or indirectly observable in the marketplace.
12
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurements (continued)
Level 3— Unobservable inputs which are supported by little or no market activity.
ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
Related party transactions
A related party is generally defined as (i) any person holds 10% or more of the Company’s securities and their immediate families (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Revenue recognition
The Group’s revenues were derived principally from cryptocurrency mining and data center services. The Group also generated revenue from its mining pool business, which is classified as discontinued operations in the unaudited interim condensed consolidated statements of comprehensive (loss) income.
The Group accounts for revenues under ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”).
Revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which the Group expects to be entitled to in exchange for those goods or services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies a performance obligation.
13
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The primary sources of the Group’s revenues are as follows:
Cryptocurrency mining
The Group has entered into cryptocurrency mining pools, by executing contracts with the mining pool operators to provide computing power to the mining pools. The contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the mining pool operators. In exchange for providing computing power, the Group is entitled to considerations in the form of cryptocurrencies from the mining pool operators (less pool operator fees to the mining pool operators which are recorded net with revenues), which is calculated based on a predetermined formula agreed by the Group and the mining pool operators as a part of the contracts. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the pool operators. The Group is entitled to consideration even if a block is not successfully placed by the mining pool operators. The transaction consideration the Group receives is noncash consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. All considerations are variable and revenue is recognized when the computing power is provided to the mining pools and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions.
Data center services
The Group provides data center services such as providing its customers with rack space, utility, and cloud services such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month.
Mining pool services
The Group operates its mining pool, BTC.com, to enable providers of computing power (“pool participants”) to participate in crypto-mining activities in an efficient manner in the blockchain network. It receives all the mining rewards, and then allocates mining rewards to each pool participant net of the pool operator fees based on the sharing mechanism predetermined. Using computing power provided by the pool participants, the Group provides transaction verification services to the blockchain networks and transaction requesters (the “primary mining pool services” or the Company as the “primary mining pool operator”). The Company also entered into arrangements with certain third-party mining pool operators to contribute a portion of the computing power it obtained from BTC.com pool participants to the third-party mining pool operators. In exchange, the Company is entitled to considerations in the form of cryptocurrencies from the third-party mining pools operators calculated based on a predetermined formula regardless of whether the third-party mining pool operators successfully validate the blocks (the “sub mining pool services” or the Company as the “sub mining pool operator”) (primary mining pool services and sub mining pool services collectively referred as the “mining pool services”).
14
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Primary mining pool services
As the primary mining pool operator, the Group provides transaction verification services. Transaction verification services are an output of the Group’s ordinary activities. The mining rewards the Group receives from the blockchain network include the block rewards and the transaction verification fees related to the transactions included in the block. For block rewards, the customer is the blockchain as the Group attempts to be the first vendor to solve an algorithm that it will then place as a successful block on the blockchain in exchange for cryptocurrency block rewards awarded by the blockchain protocols. For transaction verification fees, the requester for each blockchain transaction request is the customer.
A contract with the blockchain for the block rewards or with the transaction requester for the transaction verification fees exists upon the transfer of a verified block to the blockchain. The performance obligation is to validate each block. Revenue is recognized at the point when the block validation is successfully completed, which is also when the Group receives the rewards. Revenue, which is noncash consideration, is measured at the fair value of block rewards and transaction verification fees earned at contract inception. The Group considers itself the principal in transactions with the blockchain networks as it coordinates all the computing power within the mining pool, utilizes such aggregated computing power to validate blocks, collects centrally all mining rewards and distributes them in accordance with the predetermined sharing mechanisms. The Group has control over the pool participants’ computing power. Although the pool participants can enter and exit the pool at will and deploy the qualifying types of mining machines at the choices of the pool participants, during the mining process, the Group dictates the tasks and the participants’ mining machines merely follow the allocation prescribed by the Group. As a result, the Group is primarily responsible for fulfilling the promise to provide the specified service, which is to transfer a verified block to the blockchain. Further, under existing sharing mechanisms, the Group is exposed to the risk that actual block rewards may differ from expected rewards, therefore, bears the inventory risk before the specified service has been transferred to the blockchain network. Therefore, the Group recognizes the mining pool revenue on a gross basis by recording all of the transaction fees and block rewards earned under the primary mining pool services as revenue, and the portion of the transaction fees and block rewards remitted to pool participants as cost of revenue.
Sub mining pool services
As the sub mining pool operator, using computing power obtained from pool participants, the Group provides computing power to certain third-party mining pool operators in exchange for considerations in the form of cryptocurrencies from the third-party mining pool operators. As the Group is entitled to consideration, which is calculated based on a predetermined formula agreed by the Group and the mining pool operators as a part of the contracts, even if a block is not successfully placed by the third-party mining pool operators, the Group entered into such arrangements to stabilize the mining rewards it is entitled to. Same to cryptocurrency mining arrangements, the contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the third-party mining pool operators. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the third-party pool operators. The transaction consideration the Group receives is noncash variable consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. The revenue is recognized when the computing power is provided to the third-party mining pool operators and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions.
The Group considers itself the principal in sub mining pool service transactions as the pool participants of BTC.com do not directly enter into contracts with the third-party mining pool operators and the Group is primarily responsible for fulfilling the promise to provide the computing power and to remit a portion of the mining rewards to the pool participants. In case of the non-performance of the third-party mining pool operators, the Group is obligated to compensate the pool participants for considerations they are entitled to. As a result, the Group determined that it controls the computing power before it is provided to the third-party mining pool operators. The Group recognizes the mining pool revenue on a gross basis by recording all of the mining rewards earned under the sub mining pool services as revenue, and the portion of mining rewards remitted to pool participants as cost of revenue.
15
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Contract balances
The Group does not have any contract assets. The Group’s contract liabilities include advance from customers, which is recorded when consideration is received from a customer prior to providing services to the customer under the terms of a contract. As of December 31, 2023 and June 30, 2024, the Group recorded advance from customers balance of US$
Refer to Note 17 regarding the discussion of the Group’s disaggregate revenue data.
Cost of services
Cost of data center services
The cost of data center services consists primarily of direct production costs related to data center service, including the direct service charges for operations. The amounts were US$
Cost of cryptocurrency mining
The cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges. The amounts before inter-segment elimination were US$
Depreciation fees
Depreciation fees, which consist primarily of depreciation of machinery and equipment related to cryptocurrency mining and data center services, were US$
Amortization fees
Amortization fees, which consist primarily of amortization of intangible assets arising from business combination and assets acquisitions, were US$
Cost of services also comprise employee costs, account handling expense and other direct costs incurred in providing services. These costs are expensed as incurred.
16
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
On November 27, 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in ASU 2023-07 are required to be adopted for fiscal years beginning after December 15, 2023, with early adoption permitted. The Group is currently evaluating the impact of adopting the standard.
On December 14, 2023, FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires that entities disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The new standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact of adopting the standard.
On March 21, 2024, the FASB issued Accounting Standards Update No. 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the impact of adopting the standard.
3. CONCENTRATION OF RISKS
Concentration of credit risk
Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash and cash equivalents and restricted cash. As of June 30, 2024, substantially all of the Group’s cash and cash equivalents were deposited in financial institutions located in mainland China, Hong Kong and United States, which management believes are of high credit quality.
Concentration of customers
For the six months ended June 30, 2023 and 2024, the customers accounted for 10% or more of the Group’s revenues generated from continuing operations were as follows:
|
| For the six months ended June 30, | | ||
|
| 2023 |
| 2024 |
|
| | US$ |
| US$ | |
A | | * | % | | % |
B | | | % | * | % |
C | | | % | * | % |
D | | * | % | | % |
E | | | % | | % |
17
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
3. CONCENTRATION OF RISKS (continued)
Concentration of customers (continued)
As of December 31, 2023 and June 30, 2024, the customers accounted for 10% or more of the Group’s accounts receivable generated from continuing operations were as follows:
|
| As of December 31, | | As of June 30, | |
|
| 2023 |
| 2024 |
|
| | US$ |
| US$ | |
A | | | % | | % |
B | | | % | * | % |
C | | | % | | % |
D | | * | % | | % |
Concentration of suppliers
For the six months ended June 30, 2023 and 2024, the supplier accounted for 10% or more of the Group’s costs incurred for continuing operations was as follows:
| | For the six months ended June 30, |
| ||
| | 2023 | | 2024 |
|
| | US$ | | US$ |
|
A |
| | % | | % |
As of December 31, 2023 and June 30, 2024, the suppliers accounted for 10% or more of the Group’s accounts payable from continuing operations were as follows:
|
| As of December 31, | | As of June 30, | |
|
| 2023 |
| 2024 |
|
| | US$ |
| US$ | |
A | | | % | | % |
B | | | % | | % |
18
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
4. DISCONTINUED OPERATIONS
Disposition of mining pool business
On December 28, 2023, the Group entered into an agreement with Esport - Win Limited, a Hong Kong limited liability company, to sell its entire mining pool business for a total consideration of US$
19
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
4. DISCONTINUED OPERATIONS (continued)
Disposition of mining pool business (continued)
The following table represents a summary of the assets and liabilities disposed on January 31, 2024, and the related gain resulting from the transaction.
|
| As of January 31, 2024 |
| | US$ |
Consideration* | | |
| | |
Cash and cash equivalents |
| |
Accounts receivable, net | | |
Prepayments and other current assets | | |
Cryptocurrency assets* | | |
Property and equipment, net | | |
Intangible assets, net | | |
Accounts payable | | ( |
Accrued payroll and welfare payable | | ( |
Accrued expenses and other current liabilities | | ( |
| | |
Net liabilities of discontinued operations | | ( |
| | |
Gain from disposal of discontinued operations | | |
*For accounting purpose, the
The assets and liabilities for discontinued operations of the mining pool business were as follows as of December 31,2023:
|
| As of |
| | December 31, 2023 |
| | US$ |
ASSETS |
|
|
Cash and cash equivalents |
| |
Accounts receivable, net |
| |
Prepayment and other current assets |
| |
Cryptocurrency assets |
| |
Property and equipment, net** |
| |
Intangible assets, net** |
| |
Current assets of discontinued operations |
| |
| | |
LIABILITIES |
|
|
Accounts payable |
| ( |
Accrued payroll and welfare payable |
| ( |
Accrued expenses and other current liabilities |
| ( |
Current liabilities of discontinued operations |
| ( |
** For presentation purpose, property and equipment, net and intangible assets, net as of December 31, 2023 have been classified as current assets of discontinued operations in the consolidated balance sheets as the disposition occurred in January 2024.
20
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
4. DISCONTINUED OPERATIONS (continued)
Disposition of mining pool business (continued)
Cash flows in respect of the disposal were as follows:
| | For the six months |
| | ended June 30, |
|
| 2024 |
| | US$ |
Cash and cash equivalent deconsolidated |
| |
Proceeds from the disposal of subsidiaries |
| — |
Proceeds from the disposal of subsidiaries, net of cash disposed |
| ( |
The operating results from discontinued operation of the mining pool business were as follows for the six months ended June 30, 2023 and 2024:
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
Major classes of line items constituting pre-tax profit of discontinued operations | | |
| |
| | | | |
Revenues | | | | |
Cost of revenue | | ( |
| ( |
Sales and marketing expenses | | ( |
| ( |
General and administrative expenses | | ( |
| ( |
Service development expenses | | ( |
| ( |
Other operating income | | |
| |
Net gain on disposal of cryptocurrency assets | | |
| |
Impairment of cryptocurrency assets | | ( |
| — |
Changes in fair value of cryptocurrency assets | | — |
| ( |
(Loss) income from discontinued operations, before income tax | | ( |
| |
Income tax expense | | — |
| — |
Net (loss) income from discontinued operations, net of income tax | | ( |
| |
The condensed cash flows of for the mining pool business were as follows for the six months ended June 30, 2023 and 2024:
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
Net cash used in operating activities | | ( |
| ( |
Net cash provided by investing activities | | |
| |
| | | | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | | |
| |
Net decrease in cash, cash equivalents and restricted cash | | ( |
| ( |
21
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
4. DISCONTINUED OPERATIONS (continued)
Disposition of mining pool business (continued)
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of such amounts shown in the consolidated statements of cash flows.
| | As of | | As of |
| | December 31, | | June 30, |
|
| 2023 | | 2024 |
| | US$ | | US$ |
Cash, cash equivalents and restricted cash – consolidated balance sheets |
| | | |
Cash, cash equivalents and restricted cash, discontinued operations |
| | | — |
Cash, cash equivalents and restricted cash – consolidated statements of cash flows |
| | | |
5. INVESTMENTS
Long-term Investments
|
| As of |
| As of |
| | December 31, | | June 30, |
| | 2023 | | 2024 |
| | US$ | | US$ |
Carrying amount of equity investments without readily determinable fair value |
| |
| |
Carrying amount of equity method investments |
| |
| |
Carrying amount of long-term investments |
| |
| |
Equity investments without readily determinable fair value
In accordance with ASC 321, the Group elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The carrying amount of the Group’s equity investments measured using the measurement alternative was US$
Equity method investments
Investments were classified as equity method investments as the Group have significant influence over the entities. The net operating income from equity method investments for the six months ended June 30, 2023 and 2024 was US$
22
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
6. CRYPTOCURRENCY ASSETS
The amounts represented the cryptocurrencies held by the Group’s continuing operations as of December 31, 2023 and June 30, 2024. The movement of cryptocurrencies was as follows:
|
| For the year ended | | For the six months |
| | December 31, 2023 | | ended June 30, 2024 |
| | US$ | | US$ |
Beginning balance |
| |
| |
| — | | | |
Cryptocurrencies mined from mining business |
| |
| |
Deposits returned to customers of mining data center | | ( | | |
Deposits received from customers of mining data center |
| — |
| |
Payment of service expense and long-lived assets |
| ( |
| ( |
Disposal of cryptocurrency assets |
| ( |
| ( |
Utility fee received from customers of mining data center | | | | |
Cryptocurrencies purchased using fiat currency | | | | |
Cryptocurrencies collected from derivative contracts | | | | |
Cryptocurrencies paid to derivative contracts | | ( | | ( |
Cryptocurrencies collected from short-term investments* | | — | | |
Cryptocurrencies paid to short-term investments* | | — | | ( |
Cryptocurrencies transferred from discontinued operations to continuing operations | | — | | |
Impairment of cryptocurrency assets | | ( | | |
Changes in fair value of cryptocurrency assets | | — | | |
Others | | | | |
Ending balance of cryptocurrency assets, net |
| |
| |
* From January to March 2024, the Group invested in several wealth management products with payments and collections in USDT. All such products were redeemed at their respective net asset values as of June 30, 2024. The Group recorded a gain from such short-term investments in the amount of US$
23
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
6. CRYPTOCURRENCY ASSETS(continued)
The following table summarizes the units, cost basis, and fair value of cryptocurrency assets:
| | June 30, 2024 | ||||
|
| Units |
| Cost Basis |
| Fair Value |
Bitcoin |
| |
| |
| |
Dogecoin |
| |
| |
| |
Ethereum |
| |
| |
| |
Litecoin |
| |
| |
| |
Ethereum Classic |
| |
| |
| |
USDT |
| |
| |
| |
USDC | | | | | | |
Other cryptocurrency assets* |
| |
| |
| |
| | |
| |
| |
* Includes various other cryptocurrency asset balances, none of which individually represented more than 1% of total cryptocurrency assets as of June 30, 2024.
7. PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of the following:
|
| As of |
| As of |
| | December 31, | | June 30, |
| | 2023 | | 2024 |
| | US$ | | US$ |
| | | | |
Receivables from third-party payment service providers |
| |
| |
Utility deposits | | | | |
Other deposits | | | | — |
Deferred expense* |
| |
| |
Loans to the third parties | | | | |
| | | | |
Receivables from disposal of mining pool business - current portion | | — | | |
Others |
| |
| |
Less: allowance for credit losses |
| ( |
| ( |
Prepayments and other receivables |
| |
| |
* Deferred expense represents cash paid in advance to vendors, such as consultant expense and compliance expense, which would be amortized according to their respective service periods.
24
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
8. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following:
|
| As of |
| As of |
| | December 31, | | June 30, |
| | 2023 | | 2024 |
| | US$ | | US$ |
| | | | |
Machinery and equipment | | | | |
Electronics and office equipment | | |
| |
Motor vehicles | | |
| |
Leasehold improvements | | |
| |
Construction in progress | | — | | |
| | | | |
Property and equipment, cost | | |
| |
Less: Accumulated depreciation | | ( |
| ( |
Less: Provision for impairment | | ( | | ( |
| | | | |
Property and equipment, net | | |
| |
Depreciation expenses from continuing operations for the six months ended June 30, 2023 and 2024 were approximately US$
The impairment as of December 31, 2023 and June 30, 2024 was mainly due to the impairment of mining machines in the Kazakhstan and USA. There was
25
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
9. INTANGIBLE ASSETS, NET
Intangible assets consist of the following:
|
| As of |
| As of |
| | December 31, | | June 30, |
| | 2023 | | 2024 |
| | US$ | | US$ |
Cost: |
|
|
|
|
Computer software |
| |
| |
License agreement |
| |
| |
Internet domain name |
| |
| |
Brand name |
| |
| |
Strategic contract | | | | |
Unpatented technology | | | | |
|
| |
| |
Accumulated amortization: |
| |
| |
Computer software |
| ( |
| ( |
License agreement |
| ( |
| ( |
Internet domain name |
| ( |
| ( |
Brand name |
| ( |
| ( |
Strategic contract | | ( | | ( |
Unpatented technology | | ( | | ( |
|
| ( |
| ( |
| | | | |
Impairment *: | | | | |
Computer software | | ( | | ( |
License agreement | | ( | | ( |
Brand name | | ( | | ( |
Strategic Contract | | ( | | ( |
| | ( | | ( |
Intangible assets, net |
| |
| |
* The impairment as of December 31, 2023 and June 30, 2024 was due to the impairment incurred in prior years. There was
Amortization expense for the six months ended June 30, 2023 and 2024 were approximately US$
|
| US$ |
| | |
2024 remaining |
| |
2025 |
| |
2026 |
| |
2027 |
| |
2028 | | |
2029 and thereafter |
| |
| | |
Total |
| |
26
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
10. OPERATING LEASES
The Group entered into various operating lease agreements for offices space. The remaining lease terms range from
The following table presents the operating lease related assets and liabilities recorded on the Group’s unaudited interim condensed consolidated balance sheets.
| | As of |
| As of |
| | December 31, | | June 30, |
|
| 2023 |
| 2024 |
| | US$ |
| US$ |
Right-of-use assets | | |
| |
| | | | |
Operating lease liabilities - current | | |
| |
Operating lease liabilities – non-current | | |
| |
Total operating lease liabilities | | |
| |
For the six months ended June 30, 2023, the Group had operating lease costs from continuing operations of approximately US$
As of June 30, 2024, the weighted average remaining lease term was
The following table summarizes the maturity of operating lease liabilities as of June 30, 2024:
| | US$ |
2024 remaining |
| |
2025 |
| |
2026 |
| |
Total |
| |
Less: imputed interest |
| ( |
Present value of lease liabilities |
| |
27
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
|
| As of |
| As of |
| | December 31, | | June 30, |
| | 2023 | | 2024 |
| | US$ | | US$ |
| | | | |
Advance from end users* |
| |
| |
Deposit from customers** | | | | |
Business tax and other taxes payable |
| |
| |
Professional fees and services payable |
| |
| |
Promotional events payables |
| |
| |
Legal contingencies*** | | | | |
Others |
| |
| |
Accrued expenses and other current liabilities | | | | |
* Advance from end users represents payments received by the Group in advance from the end users prior to the services to be provided.
** Deposit from customers represents deposit payments received by the Group from customers in the data center business.
***Legal contingencies represent the accrual based on the Group’s best estimate for monetary penalties that would be charged by DOJ and SEC for their investigations into the Group. See Note 14 for more details.
12. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.
USA
Summit Bend, Ohio I, Ohio II and Asgard are incorporated in the USA. Under the current laws, profits tax in USA is generally assessed at the rate
28
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
12. INCOME TAXES (continued)
British Virgin Islands
Under the current laws of the British Virgin Islands, subsidiaries incorporated in British Virgin Islands are not subject to tax on income or capital gains.
Curacao
Multi Pay N.V. is incorporated in the Curacao, Under the current laws, profits tax in Curacao is generally assessed at the rate of
Malta
Under the current laws, profits tax in Malta is generally assessed at the rate of
Hong Kong
500wan HK, Sunstar Technology, Skill Esport and Bee Computing are incorporated in Hong Kong, under the current laws, profits tax in Hong Kong is generally assessed at the rate of
Mainland China
A new enterprise income tax law (the “EIT Law”) in mainland China was enacted and became effective on January 1, 2008. The EIT Law applies a uniform
The Group records a valuation allowance on its deferred tax assets that is sufficient to reduce the deferred tax assets to an amount that is more likely than not to be realized. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit in future earnings will be realized.
As of June 30, 2024, the Group had net operating losses (“NOLs”) of approximately US$
The Group accounted for uncertainties in income taxes in accordance with ASC 740. The management evaluated the Group’s tax positions and concluded that
29
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
13. SHARE-BASED PAYMENT
On March 28, 2021, the shareholders and board of directors of the Company approved the 2021 Share Incentive Plan (the “Plan”). The Plan provides for the grant of options, restricted shares and other share-based awards. These options were granted with exercise prices denominated in US$, which is the functional currency of the Company. The board of directors has authorized under the Plan the issuance of up to
A summary of share option and restricted shares activity and related information for the year ended December 31, 2023 and for the six months ended June 30, 2024 are as follows:
Share options granted to employees and directors
|
| |
| |
| Weighted |
| Weighted |
| |
| | | | Weighted | | average | | average | | |
| | | | average | | grant date | | remaining | | Aggregated |
| | Number of | | exercise | | fair value per | | contractual | | intrinsic |
| | options | | price | | share | | year | | value |
| | | | US$ | | US$ | | (Years) | | US$ |
| | | | | | | | | | |
Outstanding, January 1, 2023 | | | | | | | | | | |
Granted | | | | | | | | — | | |
Expired | | ( | | | | | | — | | |
Exercised | | | | | | | | — | | |
Outstanding, December 31, 2023 | | | | | | | | — | | |
Granted | | | | | | | | — | | |
Forfeited | | | | | | | | — | | |
Exercised | | | | | | | | — | | |
Outstanding, June 30, 2024 (unaudited) | | | | | | | | — | | |
Vested and expected to vest at June 30, 2024 (unaudited) | | | | | | | | — | | |
Exercisable at June 30, 2024 (unaudited) | | | | | | | | — | | |
Restricted shares granted to employees and directors
|
| |
| Weighted |
| |
| | | | average | | |
| | | | grant date | | Aggregated |
| | Number of | | fair value per | | intrinsic |
| | options | | share | | value |
| | | | US$ | | US$ |
| | | | | | |
Outstanding, January 1, 2023 | | — |
| — | | — |
Granted | | |
| |
| |
Forfeited | | — |
| — |
| — |
Exercised | | ( |
| |
| |
Outstanding, December 31, 2023 |
| |
| |
| |
Granted |
| |
| |
| |
Forfeited |
| |
| |
| — |
Exercised |
| ( |
| |
| |
Outstanding, June 30, 2024 (unaudited) | | — | | — | | — |
30
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
13. SHARE-BASED PAYMENT (continued)
The aggregate intrinsic value in the table above represents the difference between the fair value of Company’s ordinary share and the exercise price.
In addition, on March 27, 2024, the Company issued
As of June 30, 2024, there was
Total share-based compensation expenses relating to options and restricted shares granted to employees and directors for the six months ended June 30, 2023 and 2024 are included in:
| | For the six months ended June 30, 2023 | ||||
| | Employees | | Directors | | Total |
|
| US$ |
| US$ |
| US$ |
| | | | | | |
Cost of revenue |
| |
| |
| |
General and administrative expenses |
| |
| |
| |
Service development expenses |
| |
| |
| |
| | | | | | |
|
| |
| |
| |
| | For the six months ended June 30, 2024 | ||||
| | Employees | | Directors | | Total |
|
| US$ |
| US$ |
| US$ |
| | | | | | |
Cost of revenue |
| |
| — |
| |
General and administrative |
| |
| — |
| |
Service development |
| |
| — |
| |
| | | | | | |
|
| |
| — |
| |
Warrant issued for private placement
On July 12, 2021, the Company completed a private placement, in which it issued warrants to purchase up to
On June 27, 2022, the Company completed a private placement, in which it issued certain pre-funded warrants to purchase
31
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
13. SHARE-BASED PAYMENT (continued)
Warrant issued for private placement (continued)
On August 16, 2022, the Company completed a private placement, in which it issued Series A warrants to purchase
A summary of warrants and pre-funded warrant activity and related information for the year ended December 31, 2023 and for the six months ended June 30, 2024 are as follows:
| | | | | | Weighted | | |
| | | | | | Average | | |
| | Class A | | Weighted Average | | Remaining | | Aggregate |
| | Ordinary Shares | | Exercise Price | | Contractual Life | | Intrinsic Value |
|
| |
| US$ |
| (Years) |
| US$ |
Outstanding, January 1, 2023 |
| |
| |
|
| — | |
Granted |
| — |
| — |
| — |
| — |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| — |
| — |
| — |
| — |
Outstanding, December 31, 2023 |
| |
| |
|
| — | |
Granted |
| — |
| — |
| — |
| — |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| ( |
| |
| — |
| — |
Outstanding, June 30, 2024 (unaudited) |
| |
| |
|
| — | |
Vested and expected to vest at June 30, 2024 (unaudited) |
| |
| |
|
| — | |
Exercisable at June 30, 2024 (unaudited) |
| |
| |
|
| — |
14. COMMITMENTS AND CONTINGENCIES
Guarantees
The Group accounts for guarantees in accordance with ASC topic 460 (“ASC 460”), “Guarantees”. Accordingly, the Group evaluates its guarantees to determine whether (a) the guarantee is specifically excluded from the scope of ASC 460, (b) the guarantee is subject to ASC 460 disclosure requirements only, but not subject to the initial recognition and measurement provisions, or (c) the guarantee is required to be recorded in the financial statements at fair value.
32
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
14. COMMITMENTS AND CONTINGENCIES (continued)
Guarantees (continued)
The memorandum and articles of association of the Company require that the Company indemnify its officers and directors, as well as those who act as directors and officers of other entities at the Company’s request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedings arising out of their services to the Company. The indemnification obligations are more fully described in the memorandum and articles of association. The Company purchases standard directors and officers’ insurance to cover claims or a portion of the claims made against its directors and officers. Since a maximum obligation is not explicitly stated in the Company’s memorandum and articles of association and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.
Historically, the Group has not been required to make payments related to these obligations, and the fair value for these obligations is zero as of December 31, 2023 and June 30, 2024.
Indemnity cost
There was
Legal proceedings
From time to time, the Group is subject to legal proceedings and claims in the ordinary course of business. The Group records a liability when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis.
On December 31, 2019, the Group announced the formation of a special investigation committee, consisting of the independent members of the board, to internally investigate (i) alleged illegal money transfers made in connection with the potential development of an integrated casino resort project in Japan and (ii) the previous arrests that were made by the Tokyo District Public Prosecutors Office. The prosecutions resulted in the conviction of government officials and former intermediaries, including an external consultant of the Company who also formerly served as a director of our subsidiary in Japan. The Group agreed to enter into a DPA with the DOJ and submitted the Offer of Settlement to the SEC to resolve the previously-disclosed investigations by the DOJ and SEC related to the potential development of an integrated casino resort project in Japan, in which the Group agreed to a combined penalty amount of US$
Operating lease commitments
The information of lease commitments is provided in Note 10.
33
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
15. (LOSSES) EARNINGS PER SHARE
Basic and diluted (losses) earnings per share for each of the six months ended June 30, 2023 and 2024 presented is calculated as follows:
| | For the six months ended June 30, | ||||||
| | 2023 | | 2024 | ||||
|
| US$ |
| US$ |
| US$ |
| US$ |
|
| Class A |
| Class B |
| Class A |
| Class B |
| | | | | | | | |
(Losses) earnings per share from continuing operations—basic: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations —basic |
| ( |
| — |
| |
| |
| | | | | | | | |
Denominator: |
| |
|
|
| |
|
|
Weighted average number of ordinary shares outstanding |
| |
| |
| |
| |
Denominator used for (losses) earnings per share |
| |
| |
| |
| |
(Losses) earnings per share from continuing operations — basic |
| ( |
| — |
| |
| |
| | | | | | | | |
(Losses) earnings per share from continuing operations—diluted: | | | | | | | | |
Numerator: |
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations — diluted |
| ( |
| — |
| |
| |
Reallocation of net (loss) income from continuing operations as a result of conversion of Class B to Class A shares |
| — |
| — |
| |
| |
Net (loss) income from continuing operations attributable to ordinary shareholders |
| ( |
| — |
| |
| |
| | | | | | | | |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic (losses) earnings per share |
| |
| |
| |
| |
Conversion of Class B to Class A ordinary shares |
| |
| — |
| |
| |
Denominator used for (losses) earnings per share** |
| |
| |
| |
| |
(Losses) earnings per share from continuing operations—diluted |
| ( |
| — |
| |
| |
| | | | | | | | |
(Losses) earnings from continuing operations per ADS*: |
|
|
|
|
|
|
|
|
Denominator used for (losses) earnings per ADS - basic |
| |
| — |
| |
| |
Denominator used for (losses) earnings per ADS - diluted** |
| |
| — |
| |
| |
(Losses) earnings from continuing operations per ADS – basic |
| ( |
| — |
| |
| |
(Losses) earnings from continuing operations per ADS – diluted |
| ( |
| — |
| |
| |
34
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
15. (LOSSES) EARNINGS PER SHARE (continued)
| | For the six months ended June 30, | ||||||
| | 2023 | | 2024 | ||||
|
| US$ |
| US$ |
| US$ |
| US$ |
| | Class A | | Class B | | Class A | | Class B |
| | | | | | | | |
(Losses) earnings per share from discontinued operations—basic: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Net (loss) income from discontinued operations —basic |
| ( |
| — |
| |
| — |
| | | | | | | | |
Denominator: |
| |
| |
| |
| |
Weighted average number of ordinary shares outstanding |
| |
| |
| |
| |
Denominator used for (losses) earnings per share |
| |
| |
| |
| |
(Losses) earnings per share from discontinued operations — basic |
| ( |
| — |
| |
| — |
| | | | | | | | |
(Losses) earnings per share from discontinued operations—diluted: |
| |
| |
| |
| |
Numerator: |
| |
| |
| |
| |
Net (loss) income from discontinued operations — diluted |
| ( |
| — |
| |
| — |
Reallocation of net (loss) income from discontinued operations as a result of conversion of Class B to Class A shares |
| — |
| — |
| — |
| — |
Net (loss) income from discontinued operations attributable to ordinary shareholders |
| ( |
| — |
| |
| — |
| | | | | | | | |
Denominator: |
| |
| |
| |
| |
Weighted average number of ordinary shares outstanding used in calculating basic (losses) earnings per share |
| |
| |
| |
| |
Conversion of Class B to Class A ordinary shares |
| |
| — |
| |
| — |
Denominator used for (losses) earnings per share** |
| |
| |
| |
| |
(Losses) earnings per share from discontinued operations—diluted |
| ( |
| — |
| |
| — |
| | | | | | | | |
(Losses) earnings from discontinued operations per ADS*: |
| |
| |
| |
| |
Denominator used for (losses) earnings per ADS - basic |
| |
| — |
| |
| — |
Denominator used for (losses) earnings per ADS – diluted** |
| |
| — |
| |
| — |
(Losses) earnings from discontinued operations per ADS – basic |
| ( |
| — |
| |
| — |
(Losses) earnings from discontinued operations per ADS – diluted |
| ( |
| — |
| |
| — |
| * | American Depositary Shares, which are traded on the NYSE. Each ADS represents one hundred Class A ordinary shares of the Company. |
** | For the six months ended June 30, 2024, |
35
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
16. EQUITY TRANSACTIONS
During the six months ended June 30, 2023,
During the six months ended June 30, 2024,
On January 5, 2024, in connection with the private placement completed in August 2022, part of Series B warrants were exercised into
On March 27, 2024, pursuant to the agreement the Company entered into in April 2022 in relation to the acquisition of Bee Computing, the Group issued
As of June 30, 2024,
17. SEGMENT REPORTING
The Group continually monitors the reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In December 2023, the Group entered into an agreement to sell its mining pool business, and classified it as discontinued operations in the financial statements for the six months ended June 30, 2023 and 2024. In accordance with ASC 280, “Segment Reporting”, the Group’s chief operating decision maker has been identified as the Board of Directors and the chief executive officer, who makes resource allocation decisions and assesses performance based on the different business operating results. As a result, the Group has
36
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
17. SEGMENT REPORTING (continued)
The following table presents summary information by segment for continuing operations for the six months ended June 30, 2023 and 2024, respectively.
| | For the six months ended June 30, | ||
| | 2023 | | 2024 |
| | US$ | | US$ |
Reportable segment revenues: |
|
|
|
|
Data center |
| |
| |
Cryptocurrency mining |
| |
| |
Inter-segment1 |
| ( |
| ( |
Total segment and consolidated revenue |
| |
| |
Reportable segment cost of revenue-exclusive depreciation and amortization: |
| |
| |
Data center |
| ( |
| ( |
Cryptocurrency mining |
| ( |
| ( |
Inter-segment1 |
| |
| |
Total segment and consolidated cost of revenue-exclusive depreciation and amortization |
| ( |
| ( |
Reportable segment cost of revenue-depreciation and amortization: |
| |
| |
Data center |
| ( |
| ( |
Cryptocurrency mining | | ( | | ( |
Total segment and consolidated cost of revenue-depreciation and amortization |
| ( |
| ( |
Total segment and consolidated cost |
| ( |
| ( |
Reconciling items: |
|
|
|
|
Operating expenses |
| ( |
| ( |
Other operating income |
| — |
| |
Other operating expenses |
| ( |
| ( |
Net gain on disposal of cryptocurrency assets |
| |
| — |
Impairment of cryptocurrency assets |
| ( |
| — |
Changes in fair value of cryptocurrency assets | | — | | |
Operating loss |
| ( |
| ( |
Other income, net |
| |
| |
Interest income |
| |
| |
Gain from equity method investments | | | | |
Gain from disposal of long-term investments |
| |
| — |
Changes in fair value of derivative instruments |
| |
| |
Gain from short-term investments | | — | | |
Net (loss) income from continuing operations |
| ( |
| |
1 | The inter-segment eliminations mainly consist of data center revenue of US$ |
37
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
17. SEGMENT REPORTING (continued)
The following table presents the revenue from continuing operations by geographical locations for the six months ended June 30, 2023 and 2024, respectively.
| | For the six months ended June 30, | ||
Revenues |
| 2023 |
| 2024 |
| | US$ | | US$ |
Hong Kong |
| |
| |
USA |
| |
| |
Inter-segment |
| ( |
| ( |
|
| |
| |
The following table presents the long-lived assets (including property and equipment, net and right-of-use assets) by geographical locations as of December 31, 2023 and June 30, 2024, respectively.
Long-lived assets |
| As of December 31, 2023 |
| As of June 30, 2024 |
| | US$ | | US$ |
USA |
| |
| |
Hong Kong |
| |
| |
Mainland China |
| |
| |
|
| |
| |
18. SUBSEQUENT EVENTS
Loan agreement with Shenzhen Fantasy Technology Co., Ltd
On July 18, 2024, the Group entered into a convertible loan agreement to lend a principal of RMB
38
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations for the six months ended June 30, 2023 and 2024. This section should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this interim report. See “Exhibit 99.1— Unaudited Interim Condensed Consolidated Financial Statements of BIT Mining Limited as of December 31, 2023 and June 30, 2024 and for the six months ended June 30, 2023 and 2024.” We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements for fiscal year 2023, and the notes thereto, which appear in our annual report on Form 20-F for the year ended December 31, 2023, or the Annual Report, filed with the U.S. Securities and Exchange Commission, or the SEC, on May 15, 2024.
Unless otherwise indicated or the context otherwise requires, all references to “our company,” “the Company,” “we,” “our,” “ours,” “us” or similar terms refer to BIT Mining Limited, its predecessor entities, its subsidiaries and consolidated affiliated subsidiaries.
All such financial statements were prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. We have made rounding adjustments to some of the figures included in this management’s discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors.
Overview
We primarily engaged in cryptocurrency mining business, data center operation and mining machine manufacturing. We are pursuing a development strategy to focus on cryptocurrency mining operations globally.
On December 28, 2023, we agreed to sell our entire mining pool business operated under BTC.com (the “Business”) to Esport – Win Limited, a Hong Kong limited liability company, for a total consideration of US$5 million. While the closing of the transaction occurred on February 29, 2024, for accounting purposes the Business was deemed to be disposed of on January 31, 2024 when the Company relinquished control and received the first payment of the consideration by retaining 71.37 bitcoins of the Business for compliance and safety purposes when transferring the Business to Esport – Win Limited. The retained bitcoins have a fair value of US$3 million as determined using US$42,034.57 per bitcoin, which was published by Coinbase.com on January 29, 2024 at UTC 0:00. The disposal of the Business represents a strategic shift and has a major effect on our results of operations. Accordingly, it is reported as discontinued operations in our unaudited condensed consolidated financial statements for all periods presented.
Description of Key Statement of Operations Items from Continuing Operations
Revenues
The table below sets forth our revenues in aggregate and by service types after inter-segment elimination therein for the six months ended June 30, 2023 and 2024:
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
| | (in thousands) | ||
Revenues: | | | | |
Cryptocurrency mining |
| 11,590 |
| 9,092 |
Data center |
| 9,465 |
| 10,267 |
Total revenues |
| 21,055 |
| 19,359 |
Cryptocurrency mining business
As of the date of this interim report, the total hash rate capacity of our Dogecoin (“DOGE”)/Litecoin (“LTC”) mining machines in operation is approximately 20,194.5 GH/s. For the six months ended June 30, 2024, we produced 50.6 million DOGE and 14,407 LTC from our DOGE/LTC cryptocurrency mining operations and recognized revenue of approximately US$7.7 million.
1
Considerable uncertainty persists in the market despite the recent modest recovery and narrow growth in cryptocurrency asset prices. Facing this current environment, we remain determined to improve our quality and efficiency. Due to the decline in the Bitcoin (“BTC”) price and the increased difficulty in cryptocurrency mining activities, all BTC mining machines were shut down since June 25, 2024. For the six months ended June 30, 2024, we produced 14 BTC from our BTC cryptocurrency mining operations and recognized revenue of approximately US$0.8 million. We also recognized revenue of approximately US$0.6 million from our Ethereum Classic (“ETC”) cryptocurrency mining operations.
Data center service
For the six months ended June 30, 2024, our 82.5 megawatt space (the “82.5 Megawatt Space”) at the Ohio Mining Site recognized approximately $10.3 million in service fee revenue, representing a slightly increase of US$0.8 million compared with the six months ended June 30, 2023.
Total revenues were US$19.4 million for the six months ended June 30, 2024, representing a decrease of US$1.7 million or 8.1%, from US$21.1 million for the six months ended June 30, 2023. The decrease was mainly attributable to the decrease in cryptocurrency mining revenue due to higher computing power of the whole network for the six months ended June 30, 2024 compared with that for the six months ended June 30, 2023, resulting in an increased difficulty in cryptocurrency mining activities.
Operating Costs and Expenses
The table below sets forth our operating costs and expenses for the six months ended June 30, 2023 and 2024:
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
| | (in thousands) | ||
Operating Costs and Expenses: |
|
|
|
|
Cost of revenue |
| 19,696 |
| 14,984 |
Sales and marketing expenses |
| 89 |
| 22 |
General and administrative expenses |
| 10,868 |
| 6,721 |
Service development expenses |
| 161 |
| 69 |
Total operating costs and expenses |
| 30,814 |
| 21,796 |
Our operating costs and expenses consist primarily of cost of revenue, sales and marketing expenses, general and administrative expenses and service development expenses.
Cost of revenue
Our cost of revenue is directly related to the services we provide, and generally fluctuates in line with our revenues. Our cost of revenue primarily consists of: (i) direct production costs related to data center service for operation, leasing expense of servers hosting and other equipment used in providing online services and cryptocurrency mining business; (ii) depreciation of machinery and equipment related to cryptocurrency mining and data center services; (iii) amortization fees, which consist primarily of amortization of intangible assets arising from business combination and asset acquisition; and (iv) cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges.
Sales and marketing expenses
Our sales and marketing expenses consist primarily of (i) promotional and marketing expenses, which primarily consist of expenses associated with various promotional events, (ii) salary and benefit expenses for sales and marketing employees.
General and administrative expenses
Our general and administrative expenses consist primarily of: (i) share-based compensation expenses; (ii) salary and benefit expenses for our management and general administrative employees; (iii) third-party professional service fees, which consist primarily of professional service fees paid to third-party professionals; (iv) depreciation expenses mainly for improvement of leasehold; (v) office expenses, which consist primarily of office rental and other office administrative expenses; and (vi) travel, communication and other business expenses, which consist primarily of expenses associated with business travels.
2
Service development expenses
Our service development expenses consist primarily of salary and benefit expenses for our research and development employees, share-based compensation expenses and rental expenses.
Results of Operations
The following summary of the unaudited consolidated financial data for the periods and as of the dates indicated is qualified by reference to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and related notes.
Our historical results do not necessarily indicate our results to be expected for any future period.
| | For the six months ended June 30, | ||
| | 2023 | | 2024 |
|
| (Unaudited) |
| (Unaudited) |
| | US$ | | US$ |
| | (in thousands, except for per share data) | ||
Consolidated Statement of Comprehensive (Loss) Income Data: |
|
|
|
|
Revenues |
| 21,055 |
| 19,359 |
Operating costs and expenses: |
|
|
|
|
Cost of revenue |
| (19,696) |
| (14,984) |
Sales and marketing expenses |
| (89) |
| (22) |
General and administrative expenses |
| (10,868) |
| (6,721) |
Service development expenses |
| (161) |
| (69) |
Total operating costs and expenses |
| (30,814) |
| (21,796) |
Other operating income |
| — |
| 7 |
Other operating expenses |
| (302) |
| (53) |
Net gain on disposal of cryptocurrency assets |
| 4,611 |
| — |
Impairment of cryptocurrency assets |
| (1,426) |
| — |
Changes in fair value of cryptocurrency assets |
| — |
| 1,974 |
Operating loss from continuing operations |
| (6,876) |
| (509) |
Other income, net |
| 541 |
| 138 |
Interest income |
| 42 |
| 1 |
Gain from equity method investments |
| 325 |
| 133 |
Gain from disposal of long-term investments |
| 614 |
| — |
Gain from short-term investments |
| — |
| 155 |
Changes in fair value of derivative instruments |
| 275 |
| 103 |
(Loss) income before income tax from continuing operations |
| (5,079) |
| 21 |
Income tax benefits |
| — |
| — |
Net (loss) income from continuing operations |
| (5,079) |
| 21 |
(Loss) income from discontinued operations, net of applicable income taxes |
| (772) |
| 240 |
Gain on disposal of discontinued operations, net of applicable income taxes |
| — |
| 18,687 |
Net (loss) income from discontinued operations, net of applicable income taxes |
| (772) |
| 18,927 |
Net (loss) income |
| (5,851) |
| 18,948 |
Other comprehensive loss: |
|
|
|
|
Foreign currency translation loss |
| (440) |
| (115) |
Other comprehensive loss, net of tax |
| (440) |
| (115) |
Comprehensive (loss) income |
| (6,291) |
| 18,833 |
| | | | |
(Losses) earnings per share-Basic and Diluted |
|
|
|
|
Net (loss) income from continuing operations |
| (0.01) |
| 0.00 |
Net (loss) income from discontinued operations |
| (0.00) |
| 0.02 |
Net (loss) income |
| (0.01) |
| 0.02 |
Weighted average number of Class A and Class B ordinary shares outstanding: |
|
|
|
|
Basic |
| 1,093,318,465 |
| 1,119,383,655 |
Diluted |
| 1,093,318,465 |
| 1,119,383,655 |
3
About Non-GAAP Financial Measures
As a supplement to net (loss) income, we use the non-GAAP financial measure of adjusted net (loss) income which is U.S. GAAP net (loss) income as adjusted to exclude the impact of share-based compensation expenses, changes in fair value of derivative instruments, changes in gain from short-term investments and gain from disposal of long-term investments. All adjustments are non-cash and we believe they are not reflective of our general business performance. This non-GAAP financial measure is provided as additional information to help our investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of our current financial performance and prospects for the future. This non-GAAP financial measure should not be considered in addition to or as a substitute for or superior to U.S. GAAP net (loss) income. In addition, our definition of adjusted net (loss) income may be different from the definition of such term used by other companies, and therefore comparability may be limited.
Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in the following table:
| | For the six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
| | (in thousands, except for per share data) | ||
Operating loss from continuing operations | | (6,876) | | (509) |
| | | | |
Adjustment for share-based compensation expenses |
| 754 |
| 995 |
Adjusted operating (loss) income (non-GAAP) from continuing operations |
| (6,122) |
| 486 |
| | | | |
Net (loss) income |
| (5,851) |
| 18,948 |
Net (loss) income from discontinued operations, net of applicable income taxes |
| (772) |
| 18,927 |
Net (loss) income from continuing operations |
| (5,079) |
| 21 |
Adjustment for share-based compensation expenses |
| 754 |
| 995 |
Adjustment for changes in fair value of derivative instruments |
| (275) |
| (103) |
Adjustment for changes in gain from short-term investments |
| — |
| (155) |
Adjustment for gain from disposal of long-term investments |
| (614) |
| — |
Adjusted net (loss) income (non-GAAP) from continuing operations |
| (5,214) |
| 758 |
| | | | |
(Loss) income from discontinued operations, net of applicable income taxes |
| (772) |
| 18,927 |
Adjusted net (loss) income from discontinued operations (non-GAAP) |
| (772) |
| 18,927 |
Adjusted net (loss) income (non-GAAP) |
| (5,986) |
| 19,685 |
| | | | |
Weighted average number of Class A and Class B ordinary shares outstanding: |
|
|
|
|
Basic |
| 1,093,318,465 |
| 1,119,383,655 |
Diluted |
| 1,093,318,465 |
| 1,119,383,655 |
| | | | |
(Losses) earnings per share (non-GAAP)-Basic |
|
|
|
|
Adjusted net (loss) income from continuing operations (non-GAAP) |
| (0.01) |
| 0.00 |
Adjusted net (loss) income from discontinued operations (non-GAAP) |
| (0.00) |
| 0.02 |
Adjusted net (loss) income (non-GAAP) |
| (0.01) |
| 0.02 |
(Losses) earnings per share (non-GAAP)-Diluted |
|
|
|
|
Adjusted net (loss) income from continuing operations (non-GAAP) |
| (0.01) |
| 0.00 |
Adjusted net (loss) income from discontinued operations (non-GAAP) |
| (0.00) |
| 0.02 |
Adjusted net (loss) income (non-GAAP) |
| (0.01) |
| 0.02 |
4
The six months ended June 30, 2024 compared with the six months ended June 30, 2023
Discussions below reflect results of operations related to continuing operations
Revenues
For the six months ended June 30, 2024, revenues were mainly comprised of revenues after inter-segment elimination from the cryptocurrency mining business of US$9.1 million and the data center business of US$10.3 million. For the six months ended June 30, 2023, revenues were mainly comprised of revenues after inter-segment elimination from the cryptocurrency mining business of US$11.6 million and the data center business of US$9.5 million. The decrease in cryptocurrency mining revenue was mainly attributable to the higher computing power of the whole network for the six months ended June 30, 2024 compared with that for the six months ended June 30, 2023, resulting in an increased difficulty in cryptocurrency mining activities. There was no significant change in the revenue generated from the data center business.
Operating costs and expenses
Our operating costs and expenses decreased from US$30.8 million for the six months ended June 30, 2023 to US$21.8 million for the six months ended June 30, 2024, primarily due to the following:
Cost of revenue. For the six months ended June 30, 2024, cost of revenue was mainly comprised of cost of revenue after inter-segment elimination from the cryptocurrency mining business of US$6.0 million and from the data center business of US$9.0 million. For the six months ended June 30, 2023, cost of revenue was mainly comprised of cost of revenue after inter-segment elimination from the cryptocurrency mining business of US$7.0 million, and from the data center business of US$12.7 million.
The gross profit for the six months ended June 30, 2024 and 2023 were US$4.4 million and US$1.4 million, respectively. For the cryptocurrency mining business, the gross profit for the six months ended June 30, 2024 and 2023 were US$3.1 million and US$4.6 million, respectively. For the data center business, the gross profit for the six months ended June 30, 2024 was US$1.3 million and the gross loss for the six months ended June 30, 2023 was US$3.2 million. The improvement from a gross loss for the six months ended June 30, 2023 to a gross profit for the six months ended June 30, 2024 was mainly attributable to a combination of higher profitability from a new arrangement with an existing data center customer and lower electricity price during the six months ended June 30, 2024.
Sales and marketing expenses. Sales and marketing expenses slightly decreased by US$0.1 million from US$0.1 million for the six months ended June 30, 2023 to nil for the six months ended June 30, 2024.
General and administrative expenses. General and administrative expenses decreased from US$10.8 million for the six months ended June 30, 2023 to US$6.7 million for the six months ended June 30, 2024, representing a decrease of US$4.1 million or 38.0%. The decrease was mainly due to (i) a decrease of US$3.4 million in consulting service fee as mining machine development had been completed in 2023, and (ii) incurrence of US$0.3 million in legal consulting fees due to the power outage occurred in the six months ended June 30, 2023 while there was no such event in the six months ended June 30, 2024.
Service development expenses. Service development expenses slightly decreased by US$0.1 million from US$0.2 million for the six months ended June 30, 2023 to US$0.1 million for the six months ended June 30, 2024.
Other operating expenses
Other operating expenses slightly decreased by US$0.2 million from US$0.3 million for the six months ended June 30, 2023 to US$0.1 million for the six months ended June 30, 2024.
Net gain on disposal of cryptocurrency assets
Net gain on disposal of cryptocurrency assets was US$4.6 million for the six months ended June 30, 2023, which was mainly due to fluctuating market prices for cryptocurrency assets by using first-in-first-out (“FIFO”) to calculate the cost of disposition. Effective January 1, 2024, the Company adopted ASU 2023-08, which requires cryptocurrency assets to be measured at fair value. Therefore, there was no gain or loss on disposal of cryptocurrency assets for the six months ended June 30, 2024.
5
Impairment of cryptocurrency assets
Impairment of cryptocurrency assets was US$1.4 million for the six months ended June 30, 2023, mainly due to the provisions for impairment of cryptocurrency assets held as a result of fluctuations in cryptocurrency prices. Upon adoption of ASU 2023-08 on January 1, 2024, there was no impairment of cryptocurrency assets for the six months ended June 30, 2024.
Changes in fair value of cryptocurrency assets
Changes in fair value of cryptocurrency assets of US$2.0 million for the six months ended June 30, 2024 were due to the remeasurement on the fair value of the cryptocurrency assets held as we adopted ASU 2023-08 on January 1, 2024, while the accounting treatment is different before the adoption.
Operating loss from continuing operations
As a result of the foregoing factors, we recorded operating loss of US$0.5 million for six months ended June 30, 2024, representing a decrease of US$6.4 million, compared with operating loss of US$6.9 million for the six months ended June 30, 2023.
Income (loss) before income taxes from continuing operations
Income before income taxes from continuing operations was US$0.02 million for the six months ended June 30, 2024, representing an improvement of US$5.1 million from loss before income taxes from continuing operations of US$5.1 million for the six months ended June 30, 2023.
Income tax benefits
We recorded income tax benefits of nil for the six months ended June 30, 2023 and 2024.
Net income (loss) from continuing operations
As a result of the foregoing factors, we recorded net income of US$0.02 million from continuing operations for the six months ended June 30, 2024, as compared to net loss of US$5.1 million from continuing operations for the six months ended June 30, 2023.
Liquidity and Capital Resources
Our principal sources of liquidity have been cash provided by our operating activities and cash received from disposal of cryptocurrency assets. As of June 30, 2024, we had US$2.3 million in cash and cash equivalents.
As a holding company with no material operations of our own, we conduct our operations primarily through our wholly-owned subsidiaries outside mainland China.
We have incurred net loss from continuing operations of US$5.1 million for the six months ended June 30, 2023 and minimal net income from continuing operations of US$0.02 million for the six months ended June 30, 2024. We also had negative cash flow from operating activities of US$17.1 million and US$12.1 million for the six months ended June 30, 2023 and 2024, respectively. While we have prepared our interim condensed consolidated financial statements on the basis of our belief that we can continue our business as a going concern, we will be required to pay monetary penalties in amounts which, combined with our losses, projected cash needs and the uncertainty of prices of our cryptocurrency assets, raises substantial doubt upon our ability to continue as a going concern. We agreed to enter into a deferred prosecution agreement (the “DPA”) with the U.S. Department of Justice (the “DOJ”) and submitted an offer of settlement (the “Offer of Settlement”) to the U.S. Securities and Exchange Commission (the “SEC”) to resolve the previously-disclosed investigations by the DOJ and SEC related to the potential development of an integrated casino resort project in Japan, in which we agreed to a combined penalty amount of US$10 million. The Offer of Settlement is subject to review and approval by the Commissioners of the SEC. Based on the latest status of the discussions as of the date of this interim report, the Company has accrued US$10 million for the combined penalty amounts on the Company’s financial statements as of June 30, 2024. Payments of the combined penalty amounts will further deplete our liquidity and cash position. In addition, we have received a letter from the NYSE related to our failure to comply with applicable market capitalization and equity criteria in the NYSE’s continued listing standards. We have submitted a business plan as to how we intend to regain compliance and are now subject to quarterly monitoring for compliance with the plan. If we do not regain compliance, our ADSs could be delisted from the NYSE. If our ADSs were delisted from the NYSE, the liquidity and the trading price of our ADSs would be materially and adversely affected.
6
The assessment of our ability to meet our future obligations is inherently judgmental, subjective and susceptible to change. We considered the projected cash flows for the next 12 months after the issuance of the unaudited interim financial statements. Such cash flows included cash inflows from disposal of cryptocurrency assets at projected prices. Due to a high degree of uncertainties in future prices of cryptocurrency assets, we cannot assure that it is probable we will have sufficient cash and cash equivalents to maintain our planned operations for the next 12 months following the issuance of our unaudited interim financial statements. We have considered both quantitative and qualitative factors that are known or reasonably knowable as of the date of this interim report and concluded that there are conditions present in the aggregate that raise substantial doubt about our ability to continue as a going concern.
In response to these conditions, we may seek to sell additional equity securities or debt securities or borrow from lending institutions. These financing plans are subject to market conditions, and are not within our control, and therefore, cannot be deemed probable. There is no assurance that we will be successful in implementing our plans. As a result, we have concluded that such plans do not alleviate substantial doubt about our ability to continue as a going concern.
The following table sets forth a summary of our cash flows for the six months ended June 30, 2023 and 2024.
| | Six months ended June 30, | ||
|
| 2023 |
| 2024 |
| | US$ | | US$ |
| | (in thousands) | ||
Net cash used in operating activities | | (17,070) | | (12,143) |
Net cash provided by investing activities |
| 15,889 |
| 11,416 |
Net cash provided by financing activities |
| — |
| 30 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| 297 |
| (284) |
Cash, cash equivalents and restricted cash at the beginning of the period |
| 5,574 |
| 3,277 |
Cash, cash equivalents and restricted cash at the end of the period |
| 4,690 |
| 2,296 |
Net cash used in operating activities
Net cash used in operating activities for the six months ended June 30, 2024 was US$12.1 million, which was primarily attributable to (i) net income of US$18.9 million adjusted by (ii) depreciation of property and equipment of US$5.2 million, (iii) changes in fair value of cryptocurrency assets of US$1.7 million, and (iv) gain on disposal of discontinued operations of US$18.7 million. Net cash used in operating activities for the six months ended June 30, 2024 was also attributable to (i) an increase in cryptocurrency assets of US$14.9 million, and (ii) a decrease in accrued expenses and other current liabilities of US$1.5 million.
Net cash used in operating activities for the six months ended June 30, 2023 was US$17.1 million, which was primarily attributable to (i) net loss of US$5.9 million adjusted by (ii) depreciation of property and equipment of US$4.9 million, (iii) impairment of cryptocurrency assets of US$3.3 million, and (iv) net gain on disposal of cryptocurrency assets of US$5.8 million. Net cash used in operating activities for the six months ended June 30, 2023 was also attributable to (i) an increase in prepayments and other current assets of US$4.0 million, (ii) an increase in cryptocurrency assets of US$24.2 million, (iii) an increase in accounts payable of US$3.5 million, and (iv) an increase in accrued expenses and other current liabilities of US$11.3 million.
Net cash provided by investing activities
Net cash provided by investing activities for the six months ended June 30, 2024 was US$11.4 million, which was primarily attributable to cash received from disposal of cryptocurrency assets of US$11.5 million.
Net cash provided by investing activities for the six months ended June 30, 2023 was US$15.9 million, which was primarily attributable to (i) cash received from disposal of cryptocurrency assets of US$10.9 million, (ii) cash received from return of short-term investments of US$2.4 million, and (iii) proceeds from disposal of long-term investments of US$2.6 million.
Net cash provided by financing activities
Net cash provided by financing activities for the six months ended June 30, 2024 was US$0.03 million, which was attributable to proceeds from exercise of warrants of US$0.03 million.
Net cash provided by financing activities for the six months ended June 30, 2023 was nil.
7
Cash and Cash Equivalents
As of June 30, 2024, we had cash and cash equivalents of US$2.3 million, compared with cash and cash equivalents of US$3.2 million as of December 31, 2023.
Cryptocurrency Assets
As of June 30, 2024, we had cryptocurrency assets of US$16.7 million in aggregate, which is the U.S. dollar equivalent of 115 BTC, 34.8 million DOGE, 1,062 ETC, 9,899 LTC, and various other cryptocurrency assets, including those generated from its cryptocurrency mining businesses.
Off-balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Cautionary Statement Regarding Forward Looking Statements
We have made statements in this interim report that constitute forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “could” and similar expressions. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.
These forward-looking statements include statements about:
| ● | our business and operating strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected time; |
| ● | developments in, or changes to, laws, regulations, governmental policies, incentives, taxation and regulatory and policy environment affecting our operations and the cryptocurrency and blockchain industry; |
| ● | our future business development, financial condition and results of operations; |
| ● | expected changes in our revenues, costs or expenditures; |
| ● | general business, political, social and economic conditions in mainland China and the international markets we have operations; and |
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law; we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update this forward-looking information. Nonetheless, we reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this interim report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
8