The stock price soared 6.5 times in 3 months, miners earned 300 million a day, which industries will benefit from Bitcoin?

Source: China Securities

Original title: "Crazy! A 6.5-fold increase in 3 months, "miners" earn 300 million yuan a day... Funds are "crazy" about Bitcoin, and the surge has brought wealth to the "surrounding" areas. What other industries have benefited?"

On the evening of April 13, the digital currency market rose across the board. Bitcoin, the largest currency by market value, Ethereum, the second largest currency by market value, and Binance Coin, the third largest currency by market value, all hit record high prices. Among them, the price of Bitcoin exceeded US$63,000 per coin.

This year, Bitcoin has become the darling of many funds, which has also benefited the entire industry chain. Data shows that in the past 30 days, Bitcoin miners have earned an average of about $50 million per day, which is about four times that of last year.

Driven by the continued bullish expectations of digital currencies, many listed companies have transformed themselves into "manufacturing" Bitcoin, playing a role equivalent to the original issuer of stocks. Two Chinese lottery companies and a gaming company listed on the US stock market have announced their transformation into "mining".

Among them, the gaming company The 9 has deployed tens of thousands of mining machines in Xinjiang, Sichuan and Gansu, China, causing the stock price of this Chinese gaming company to rise 6.5 times in the past three months. The latest Xianyu Index shows that the average transaction price of graphics cards has risen by nearly 1,060 yuan recently, nearly doubling compared with the same period last year.

Three major digital currencies have made a strong breakthrough

After a month of consolidation, the price of Bitcoin exceeded $63,000 per coin, driving a rebound in the digital currency market across the board. The prices of many varieties hit historical highs.

Compared with Bitcoin, the world's largest currency by market value, Ethereum and Binance Coin, the world's second and third largest currencies, have shown stronger price growth.

On the evening of April 13, trading data showed that the price of Ethereum, the second largest coin by market value, broke through $2,200, setting a new record high. Just three days ago, Ethereum once plunged by 10%, giving investors a sign of a sharp correction, but in fact, only six hours after the last plunge, Ethereum began to be snapped up by funds.

Binance is almost the only digital currency among all digital currencies that has "actual business" and application scenarios.

Unlike Bitcoin, which does not generate any actual business or net profit, Binance, as the world's largest digital currency brokerage company, plays a role similar to the New York Stock Exchange, the Hong Kong Stock Exchange, and a securities company integrated into one. This gives Binance advantages in user scale and application scenarios that many digital currencies cannot achieve. This also makes the price trend of Binance Coin more stable and more ferocious - in the past seven days, the price of Binance Coin has risen by 45%.

As of now, the market value of Binance Coin is equivalent to RMB 570 billion, which is twice the total market value of CITIC Securities (23.370, 0.07, 0.30%). However, unlike CITIC Securities, whose main business is concentrated in China, Binance has become an international enterprise with users in many countries around the world.

Binance founder Zhao Changpeng previously revealed that Binance’s actual number of employees is about 600, and its expected net profit in 2020 is expected to reach US$1 billion.

$1 billion of sweeping funds waiting for it to fall

Every round of market crash caused by panic is an opportunity for institutional funds to buy Bitcoin.

It is worth mentioning that on April 8, digital currencies plummeted across the board. Data from cryptocurrency analysis company Glassnode showed that the major digital currency brokerage companies attracted $1 billion in capital inflows in just one day.

Analysts believe that this is the largest inflow of funds since mid-March, and Bitcoin has seen a slight pullback, which may indicate that buyers are waiting for the price of Bitcoin to fall.

After the price of Bitcoin plummeted to $55,000 on April 8, it quickly rose again. In just 48 hours, the price of Bitcoin not only recovered the price of the previous day, but also approached $60,000 again. Market insiders pointed out that this was largely related to institutional funds buying at the bottom and increasing their positions.

The $1 billion of institutional capital also includes $10 million from Hong Kong-listed Meitu. On April 9, Meitu announced that its wholly-owned subsidiary Meitu Hong Kong further purchased 175.67798279 units of Bitcoin in open market transactions on April 8, 2021 in accordance with the cryptocurrency investment plan, with a total consideration of approximately $10 million.

As of the date of this announcement, Meitu has accumulated a net purchase of approximately US$100 million worth of cryptocurrencies, including Bitcoin and Ethereum.

According to calculations by Securities China reporters, based on the prices on the evening of April 12, Meitu's profit from investing in Bitcoin and Ethereum may be approximately RMB 130 million to RMB 140 million, which has significantly exceeded Meitu's annual net profit in 2020.

Miners earn an average of 300 million yuan a day

It is worth mentioning that Tesla, Meitu and the funds purchased in the secondary market are not actually the beneficiaries who benefit the most from digital currency.

According to FinanceMagnates, Bitcoin has risen nearly 100% in the past 13 weeks, and Bitcoin mining revenue has also soared.

According to the latest data released by crypto analytics and on-chain market analysis company Glassnode, in 2020, Bitcoin miners only earned nearly $12 million a day. As institutional funds continue to pour into the market, the demand for purchasing Bitcoin has increased significantly, which makes Bitcoin miners very happy. Bitcoin miners have earned an average of about $50 million (about 300 million yuan) a day in the past 30 days, which is about four times that of last year.

Some large funds and institutions hope to become miners that "produce" Bitcoin rather than just using money to buy Bitcoin provided by miners.

China Securities Journal reporters noticed that the share price of 500 Lottery Network, a Chinese lottery company listed on the US stock market, has doubled this year. The reason is that the company gave up the lottery business and began to increase its layout in the cryptocurrency business:

On January 28, 500 Lottery Network announced that it would increase its holdings in its subsidiary Lotto Interactive Entertainment, which owns three digital currency mines;

On February 2, it spent $8.5 million to purchase 5,900 Bitcoin mining machines;

On February 16, it acquired all mining pool businesses of BTC.com under Bitdeer;

On February 23, a private placement of $23 million was made, which resulted in approximately 356 bitcoins and $11.5 million in cash.

On February 26, 1,923 S17 spot Bitcoin mining machines were purchased, and 2,000 Ethereum mining machines were purchased;

In early April, it acquired Bee Computing, a 7nm mining machine manufacturer.

Game company's stock price increased 6.5 times in three months after mining

The impact of mining on the stock prices of listed companies is also astonishing.

The 9th City, a Chinese gaming company listed on the US stock market, is one of the companies that benefited the most in terms of stock price. On April 10, the company announced that it would purchase another 2,000 Bitcoin mining machines. The 9th City announced that it had signed a legally binding memorandum of understanding on the purchase of Bitcoin mining machines. It will purchase 2,000 Avalon digital currency mining machines from it by issuing Class A common shares.

In early January this year, The 9 City announced that it had signed a memorandum of understanding with five Bitcoin miners, and the company will purchase Bitcoin mining machines by issuing Class A common shares. After the transaction is completed, the company expects to have 26,000 Bitcoin mining machines, most of which have been deployed in Xinjiang, Sichuan and Gansu, China.

At the end of March this year, The9 revealed in its 2020 financial report submitted to the SEC that it will spend more than US$100 million to purchase Bitcoin and Filecoin mining machines in 2021.

Among them, a deposit of US$1.4 million has been paid to Bit Microelectronics Technology Co., Ltd. to obtain the right of first refusal for 5,000 Whatsminer mining machines within one year. 922 units have been purchased so far; 24,000 S19j Antminers have been ordered from Bitmain for a total consideration of US$82.8 million, and the mining machines will be delivered starting in November 2021; a total of 44,748 Bitcoin mining machines have been purchased from 14 individuals by issuing 36,554,940 Class A common shares.

Due to The9's active transformation from a gaming company to a major Bitcoin miner in China, The9's share price in the U.S. has risen 6.5 times in just three months as of April 10 this year.

It is worth mentioning that Internet cafes are also becoming mining farms. As the virtual currency market continues to rise, according to media reports, some Korean Internet cafes have recently turned to "mining", that is, using computers equipped with high-performance graphics cards in Internet cafes to calculate and obtain a certain amount of virtual currency according to specific algorithm programs.

Take a Korean Internet cafe with 200 computers as an example. Mining for 15 hours a day can make a profit of at least 1 million won, about 5,800 yuan, which is much higher than the normal operating income of many Internet cafes. According to industry sources, about 20% of Internet cafes in South Korea have switched to mining.

As more and more big money enters the Bitcoin and Ethereum mining industry, the Xianyu Index on April 9 shows that the average price of graphics cards has risen by nearly 1,060 yuan recently, nearly doubling compared to the same period last year. At the same time, the transaction volume of graphics cards on Xianyu has been rising for five consecutive months, with a surge in March.

In response, Xianyu will set up a "cooling-off period" to cool down the market and call on users to make rational purchases. Earlier this month, the Hong Kong Customs also cracked a graphics card smuggling case and seized nearly 300 graphics cards.