500.com sees Bitcoin mining as way to dig out of deep fiscal gap

Asian on the web gambling operator 500.com is once once again trying to diversify its income streams, this time by acquiring into Bitcoin mining.

On Monday, the Nasdaq-listed 500.com announced that it had entered into a definite purchase agreement with “certain non-US persons” to receive ‘Bitcoin mining machines’ in exchange for practically 11.9m recently issued 500.com Class A shares worth some US$14.4m.  

500.com expects the offer to be finished sometime in the recent quarter, with another 4 months needed to set up all the acquired mining equipment (which will have a overall hash energy potential of 918.5 PH/s – 1 PH/s is 1 quadrillion hashes for each second). The sweet Bitcoin mining revenue is envisioned to get started flowing in the to start with 50 percent of 2021. 

Monday’s information follows an before personal placement 500.com declared a number of times right before Xmas. That announcement in-depth a share membership offer with Hong Kong-centered Very good Luck Data Technology Co, which agreed to obtain almost 86m new 500.com shares “to be settled in US dollars or in crypto-currencies, like Bitcoin.”

That announcement bundled a proposal by 500.com’s board to “explore business possibilities in the blockchain and cryptocurrency industries primarily based on some achievements experience of its associate, Loto Interactive Ltd.” Loto Interactive, previously acknowledged as MelcoLot, distributes retail lottery terminals for China’s welfare and sports lottery functions. 

500.com’s most up-to-date cash-generating plan can take the company even additional afield from its roots as a China-struggling with on line lottery operator. That business enterprise product fell aside in 2015 when Beijing ‘temporarily’ suspended on the internet gross sales next the discovery that many provincial lottery directors weren’t reporting all on the internet income. 

500.com responded by acquiring a payment processing outfit that it offered just six months afterwards (for a revenue). 500.com then bought the Malta-based mostly mum or dad of Multilotto.com, which quickly grew to become liable for 99% of 500.com’s earnings. 

But that stream went dry one 12 months ago when 500.com neglected to renew Multilotto’s gaming license in Sweden, which had been liable for over 60% of the site’s clients. Multilotto was last but not least cleared to resume Swedish operations past September. 

500.com claimed revenue of US$5.7m and a net loss of $91.1m in 2019. The company’s 2020 final results will not be issued for yet another thirty day period or so but the business reported a internet loss of $6.5m in the three months ending September 30. The 3rd quarter finished with 500.com’s auditors quitting, citing ‘material weakness’ in the company’s internal controls. 

That weak spot reportedly contributed to 500.com’s Japanese corruption scandal, which sprung from the company’s unwell-fated initiatives to branch out into land-centered casino gambling. The web consequence was legal convictions for 500.com consultants who bribed Japanese legislators in an work to boost 500.com’s longshot odds of winning a Japanese built-in vacation resort license. 

In other 500.com information, the corporation introduced that main technological know-how officer Zhaofu Tian experienced resigned a couple times after Xmas for “personal causes.” Interestingly, the organization stated it has “no system to appoint a successor at this stage.” Which absolutely would make feeling, simply because when you’re diversifying into a new enterprise totally dependent on technological know-how, the very last point you need is some egghead telling you what to do.