500.com surges 75% before the market opens; plans to acquire BTC.COM mining pool to enter Bitcoin business

Cailian Press (Shanghai, editor Zhou Ling) reported that on Tuesday (16th), 500.COM's US stock price soared 75% before the market opened. Previously, 500.COM announced that it would acquire the BTC.COM mining pool that Wu Jihan split from Bitmain with about 10% of the shares, including all BTC.COM mining pool businesses, BTC.COM domain names and BTC.COM cryptocurrency wallets.

500.COM was originally a lottery website, but recently transformed into Bitcoin mining, adding a large amount of Sichuan mining resources. Its current market value is US$860 million.

Currently, BTC.COM mining pool ranks third in Bitcoin computing power. It is the world's leading multi-currency comprehensive mining pool established in 2016, providing users with a one-stop mining experience. Its hash rate is about 17EH/s and supports various cryptocurrencies, including BTC, BCH, ETH, LTC, etc.

Users can search and browse real-time information on encrypted digital currencies through the BTC.COM website, manage encrypted digital currencies through the BTC.COM mining pool website or APP to conduct mining business, and deposit the encrypted digital currencies obtained from mining into the BTC.com wallet.

500.COM announced today that the company will issue 44,353,435 Class A common shares with a par value of US$0.00005 per share to Blockchain Alliance at the time of the first delivery, accounting for approximately 10% of the company's outstanding shares as of January 31, 2021, in exchange for all the issued and outstanding shares of Blockchain Alliance Technologies Limited held by Blockchain Alliance after the completion of the reorganization.

The transactions proposed under the share swap agreement include the transfer of all mining pool businesses of Bitdeer Technologies Holding Company ("Bitdeer") under BTC.com, the BTC.com domain name and the BTC.com cryptocurrency wallet (collectively referred to as the "BTC.com mining pool business") to 500.COM.

Bitdeer is the parent company of Blockchain Alliance, whose actual beneficiaries include Bitdeer’s chairman of the board and Bitmain’s co-founder Mr. Jihan Wu, Sequoia China, IDG Group, Coature and other investors.

According to its announcement, the first delivery transaction is expected to be completed before April 15, 2021.

Wager Clauses

The agreement also includes a bet clause that if the BTC.com mining pool business can achieve net operating profit in fiscal year 2021, 500.COM will issue additional Class A common shares to Blockchain Alliance at par value per share. When the net operating profit exceeds US$20 million, 500.COM may issue up to 22,176,718 Class A common shares, accounting for approximately 5% of the company's outstanding shares on January 31, 2021.

If the BTC.com mining pool business incurs a net operating loss in fiscal year 2021, 500.COM has the right to repurchase some of the Class A common shares held by Blockchain Alliance at par value per share. If the net operating loss is greater than $10 million, 500.COM may repurchase up to 4,435,344 Class A common shares, representing approximately 1% of the company's outstanding shares as of January 31, 2021.

Under the agreement, Blockchain Alliance has agreed to lock up the Class A common shares acquired in this transaction as agreed.

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