Understanding the surge in Bitcoin stocks in one article

Source: China Blockchain News (ID: ChinaBlockchainNews)

Author: Feng Ming

According to data from BitcoinTreasuries on March 2, 42 companies currently hold 1.35 million bitcoins, accounting for 6.43% of the 21 million bitcoin supply, worth about $65 billion. The largest holder is Grayscale, which owns 649,130 ​​bitcoins, accounting for 3.09% of the 21 million supply cap.

A foreign research institute said that "Bitcoin will become part of the balance sheets of many institutions and listed companies in the future". Correspondingly, Bitcoin concept stocks are also highly sought after in the capital market, and their share prices are rising. Take MicroStrategy as an example. The lowest share price in March 2020 was US$90, and recently it hit a record high of US$1,315, an increase of 14.61 times in one year, exceeding the increase of Bitcoin.

Bitcoin concept stocks amaze the capital market

During the Spring Festival, the price of Bitcoin broke through the $50,000 mark, hitting a record high of $58,318, and its total market value also successfully exceeded $1 trillion. To achieve this goal, it took Apple 42 years, Google 21 years, and Bitcoin only 12 years.

After smelling the scent of huge profits, more and more listed companies have begun to flock to the crypto market. Participation methods include direct or indirect holding of coins, mining in mines, production and sales of Bitcoin mining machines, etc.

According to Guosheng Securities' research and analysis, the business models and investment rhythms of different mining and coin-buying concept stocks are slightly different. At present, stocks related to the industrial chain such as Bitcoin mining machine production, mine operation, and computing power services are particularly popular in the capital market.

U.S. stocks are represented by Canaan Technology (CAN), Ebang International (EBON), The9 (NCTY), Riot Blockchain Inc. (RIOT), etc. As of February 21, 2021, the year-to-date increases have exceeded 318%, 2241%, 82%, and 319%, respectively; Hong Kong stocks are represented by Huobi Technology (01611), OKEx (01499), and Xiong'an Technology (01647), which have risen by 271%, 229%, and 209%, respectively.

Among them, Canaan Technology and Ebang International are the first two companies to list their bitcoin mining machines. Due to the current surge in bitcoin prices and limited mining machine chip foundry capacity, it is difficult to find a mining machine in the market. In January this year, The 9 announced the establishment of a wholly-owned subsidiary to focus on blockchain digital currency-related businesses and to establish a digital currency mining machine group. Influenced by this news, the stock price rose by more than 320% in 4 trading days.

According to Guosheng Securities research and analysis, the core of these types of stocks lies in the price of Bitcoin, and how to balance the fluctuations in Bitcoin prices with the operating production cycle is the key.

Holding coins requires facing issues such as financial audits and private key custody; sharp fluctuations in coin prices can bring risks of asset impairment. Participating in Bitcoin mining activities requires finding cheap and stable electricity. Due to the sharp fluctuations in Bitcoin prices, there is a risk that mining output will not be able to cover electricity bills for a certain period of time.

Participating in the production and sales of Bitcoin mining machines requires a strong R&D team on the one hand, and on the other hand, the production capacity reserves of chip foundry manufacturers are also an important issue. The price of Bitcoin fluctuates greatly and frequently. If mining machine companies coordinate production capacity and sales cycles and try to ship more during the rising cycle of currency prices, it will test the company's operating level.

Inventory of Bitcoin concept stocks bull market layout

1. Marathon Patent Group

Marathon Patent Group is an American patent acquisition company registered in Nevada in February 2010 under the name Verve Ventures, Inc.

In December 2011, the company changed its name to American Strategic Minerals Corporation and engaged in uranium and vanadium minerals.

The company started its exploration and potential development business in 2012. In 2012, the company terminated its mining business and started its IP licensing business, changing its name to Marathon Patent Group. In November 2017, the company entered into a merger agreement with Global Bit Ventures to focus on mining digital assets in the future. The company purchased mining machines and established a data center in Canada to mine digital assets. In February 2018, it purchased 1,400 S9 Antminers for the first time.

In December 2020, Marathon announced that it had signed a contract with Bitmain to purchase 70,000 Ant S19 ASIC miners for US$170 million. Combined with the 20,000 Bitcoin mining machines ordered in September and October as reported by the media, Marathon's total computing power is expected to reach 10.36ETH/s.

As Bitcoin has continued to rise this year, Marathon began to buy Bitcoin directly from the secondary market. On January 25, Marathon announced that it had purchased approximately 4,813 Bitcoins, worth nearly $150 million.

2. Riot Blockchain

Riot Blockchain was formerly a biotechnology company, founded in Colorado, USA in July 2000. After several failed attempts in the biological field, Riot Blockchain began to enter the crypto market. In November 2017, it acquired Kairos and obtained 1,200 mining machines; in February 2018, it acquired Prive and BMSS and obtained 6,800 mining machines.

In February 2018, Kairos signed a lease agreement to build a mining facility in Oklahoma City. Riot Blockchain

Began to merge all miners into data centers. As of the end of 2018, there were approximately 7,731 miners in operation. In 2019, Riot increased its confidence and attention to Bitcoin by upgrading its mining facility in Oklahoma City.

In August 2020, Riot Blockchain disclosed documents showing that the company would pre-order 8,000 Antminer S19 Pros from Bitmain. The clear delivery time of this agreement will start from January 2021 and will last until April 2021, with 2,000 units delivered per month. In December, Riot Blockchain announced again that it would purchase and deploy 15,000 S19 series miners from Bitmain, and expected the company's mining computing power to increase by another 65%, this time at a cost of approximately US$35 million.

3. The Ninth City

The 9 was once one of the largest online game developers and operators in China, founded in Shanghai in 1998. In 2002, it became known in the industry for being the exclusive agent of the online game "Miracle" in mainland China. In 2004, it became popular again for being the agent of "World of Warcraft" and was listed on NASDAQ in the same year.

In January 2021, The 9 announced the establishment of a wholly-owned subsidiary, NBTC Limited, which focuses on blockchain digital currency-related businesses. The company will establish a digital currency mining machine group, with the goal of contributing 8-10% of Bitcoin's global computing power, 10% of Ethereum's computing power, and 10% of Grin's computing power.

Subsequently, The9 announced that it had signed a legally binding memorandum with several mining machine manufacturers, and purchased a batch of Bitcoin mining machines twice by issuing new shares. After the two purchases are completed, The9 will have deployed a total of 36,496 Bitcoin mining machines, with a total computing power upgraded to about 800PH/S.

After purchasing Bitcoin mining machines in succession, The9 began to develop Filecoin network-related businesses. On February 16, The9 announced that it had signed a framework agreement worth $10 million with a Filecoin mining machine service provider to purchase Filecoin mining machine server clusters and technical services in cash.

4. 500.com

500.com is an online sports lottery service provider in China. It started operating in the online lottery service industry through affiliated entities in 2001. In 2015, the Chinese government launched a rectification campaign against the lottery industry, and 500.com took the initiative to suspend its Internet lottery sales business for transformation.

In January 2021, 500.com began to enter the field of Bitcoin mining. On January 11, 500.com announced that it would issue additional shares worth 14.4 million US dollars to purchase Bitcoin mining machines; on January 28, 500.com announced that it would hold Ganzizhou Changhe Hydropower Consumption Service Co., Ltd. for more than 13.5 million US dollars in cash. The company claims to be the largest, most qualified, and highest construction standard hydropower blockchain data center project in China.

On February 2, 500.com purchased 5,900 Bitcoin mining machines for $8.5 million, which are expected to be delivered in the second quarter. It also announced that it had signed a framework agreement under which the company agreed in principle to purchase up to 10,000 more Bitcoin mining machines in 2021.

On February 16, 500.com announced that it had reached a share swap agreement with Blockchain Alliance, a subsidiary of BitDeer, to acquire BTC.com’s mining pool business (including mining pools, domain names and wallets). BTC.com has long been the number one in Bitcoin’s computing power in the 2017-2019 period when Bitmain frightened the crypto industry.

5. MicroStrategy

Founded in Delaware in 1989, MicroStrategy is a US business intelligence software giant. Currently, MicroStrategy is also the listed company with the largest number of Bitcoins in the world.

In August 2020, MicroStrategy first publicly announced that it would use Bitcoin as the company's main treasury reserve asset, and has been steadily increasing Bitcoin since then.

On February 24, 2021, MicroStrategy officially announced that it had purchased approximately 19,452 bitcoins again, worth $1.026 billion, with an average purchase cost of approximately $52,765 per bitcoin. According to previous purchase data, MicroStrategy currently holds 90,531 bitcoins, with a total price of $2.171 billion and an average unit price of $23,985.

In addition, in December 2020 and February 2021, MicroStrategy announced plans to issue $690 million and $900 million of priority convertible bonds, respectively, and the funds raised will be used to purchase more Bitcoin.

MicroStrategy's high-profile layout has also attracted the attention of Wall Street. More and more companies, institutions, and banks are indirectly increasing their investment in Bitcoin by holding MicroStrategy shares. Among them, global investment bank Morgan Stanley holds 10.9% of MicroStrategy's shares.

6. Canaan Technology

Canaan Technology was founded in 2013 and has become the world's leading supercomputer chip design company, blockchain computing equipment manufacturer, and digital blockchain computing software and hardware overall solution provider. The company's main business is the design and sales of AvalonMiner brand mining machine chips, providing chip design and system products and solutions for the global Bitcoin network "mining". On November 21, 2019, Canaan Technology successfully landed on the Nasdaq in the United States, becoming the world's first blockchain listed company.

As the only mining machine manufacturer that cooperates with three mainstream mining machine wafer foundries, Canaan Technology has won many large orders in 2021. Recently, Canaan Technology announced that it has signed a purchase order for Avalon mining machine A1246 with North American mining giant HIVE BlockChain, commercial credit institution Arctos Capital, mining company BitFury, and North American mining giant Core Scientific. In addition, Canaan Technology and mining company Drone Energy have initially reached a cooperation intention to purchase Avalon A1246 in bulk.

Canaan Inc. recently announced that it will launch its own overseas mining business at the end of the first quarter or the beginning of the second quarter of 2021. These measures are expected to smooth the company's revenue and release early performance.

7. Ebang International

Ebang International was founded in 2010 and started developing mining equipment in 2014. It launched its own brand of mining machine, Wingbit, in 2016.

Since 2020, Ebang International has made a lot of moves. In June 2020, Ebang International successfully listed in the United States, becoming the second listed mining machine company in China. In August, Ebang International established a wholly-owned subsidiary in Singapore to establish a cryptocurrency exchange. In September, Ebang International established a wholly-owned subsidiary in Canada to establish a digital asset financial service platform. In October, Ebang International announced that it would acquire a licensed financial company in New Zealand to establish a digital asset financial service platform.

On February 26 this year, Ebang International announced plans to launch Litecoin (LTC) and Dogecoin (DOGE) mining business. Ebang International said that this move will accelerate the company's transformation from a simple hardware manufacturer to a diversified and vertically integrated blockchain company, and fully participate in the blockchain industry value chain.

According to a previous report on February 18, Ebang International announced the completion of its securities offering, the establishment and operation of a cryptocurrency mining farm and the launch of its Bitcoin mining business.

8. Xiong'an Technology

In recent years, Xiong'an Technology has been making rapid progress in emerging fields such as blockchain and industrial control, and has become well-known in the market. In the past month, the company has frequently increased its investment to promote the upgrade of its blockchain business layout.

On January 4, 2021, Xiong'an Technology announced that its wholly-owned subsidiary Hangzhou Xiong'an Weicheng Technology Co., Ltd. and Hangzhou Tunlan Investment Management Co., Ltd. entered into an equity transfer agreement regarding the acquisition of a 51% stake in Hangzhou Xiong'an Investment Management Co., Ltd. The target company is mainly engaged in blockchain-related investments and blockchain investment consulting services, and as of the date of this announcement, Tunlan Investment and Li Xiaolai own 51% and 49% of the equity, respectively.

On January 11, Xiong'an Technology announced that it had signed a strategic cooperation agreement with Roma Group (8072.HK). According to the agreement, the two parties intend to establish a joint venture company to invest in blockchain and cryptocurrency projects and to set up related funds, with a scale of no more than HK$2 billion.

In February, Xiong'an Technology announced that the company had signed a strategic cooperation agreement with Lion Group Holdings Limited. The contracting parties will leverage their respective capital, platform and resource advantages to jointly promote the development of blockchain technology and the industry.

9. OKEx

Founded in 2013, OKEx Group is one of the earliest blockchain companies in China. In January 2019, OKEx Group announced that it had completed the acquisition of the controlling stake of Qianjin Holdings Group. In February 2020, Qianjin Holdings was officially renamed "OKEx". OKEx Group has businesses such as blockchain big data, blockchain technology research and development and application, blockchain industry investment, blockchain incubator, US dollar compliant stablecoin, and licensed digital asset trading.

OKLink, the blockchain browser independently developed by OKEx, is the only blockchain browser product on the market that integrates blockchain, big data, and artificial intelligence. In June 2020, OKLink added the address tag function to ensure the security of user assets. In September, OKLink officially launched the "Eye on the Chain" function, which can provide users with transaction maps, address analysis, and on-chain monitoring functions.

With the development of decentralized finance DeFi, Ethereum's on-chain security has increasingly become a focus that the entire industry cannot ignore.

On November 9, OKLink officially launched two currencies: Ethereum (ETH) and stablecoin (USDT).

10. Huobi Technology

Huobi.com is a long-established Chinese trading platform, currently headquartered in Singapore. Since its establishment in 2013, Huobi Group has successively received investments from ZhenFund and Sequoia Capital, and once became the world's largest digital asset trading platform.

In 2018, Huobi acquired a Hong Kong-listed company and changed its name from Tongcheng Holdings to Huobi Technology in October 2019. After several equity changes, it finally achieved a backdoor listing.

Legal licenses and compliant operations are the core competitiveness of exchanges. Huobi Technology has also applied for a number of virtual asset and financial-related licenses in major global markets, as well as incubating and expanding emerging businesses.

In August 2020, Huobi Technology announced that its wholly-owned asset management subsidiary Huobi Asset Management (Hong Kong) Co., Ltd. has obtained Type 4 (providing advice on securities) and Type 9 (asset management) licenses issued by the Hong Kong Securities and Futures Commission. Its indirect wholly-owned subsidiary Huobi Wallet Hong Kong Limited has obtained a Hong Kong license to operate a trust or company services business.

On December 22, Huobi Technology released an announcement that its indirect wholly-owned subsidiary Huobi Trust Company has recently obtained a trust company license granted by the Financial Institutions Division of the Nevada Department of Commerce and Industry.