This Hong Kong-listed company is going to mine, it is Nvidia's shadow stock

Such excellent data performance could not stop the decline of the share price of Beineng Group. In August 2018, the opening price of Beineng Group was HK$6.22, and in December, the closing price of Beineng shares was HK$1.74, a decrease of 72%.

If nothing unexpected happens, the Beineng Group will release its 2018 annual report in late April, when its performance over the past year will be made public.

A Hong Kong-listed company called Beineng Group is going to engage in mining.

Before the opening of the Hong Kong stock market on January 14, the Beijing Energy Group issued an announcement stating that its wholly-owned subsidiary Beijing Energy Wealth and its joint venture partners have established a joint venture in China, mainly engaged in server leasing, and have involved cloud computing, container cloud and deep learning projects, investments and operations.

Odaily Planet Daily learned that this cloud computing joint venture company is engaged in mining business.

The announcement caused a stir. On the day the announcement was released, the share price of the Beijing Energy Group suddenly rose, from HK$1.70 to HK$2.23, a 31% increase. The share price continued to rise in the following days. On January 25, the share price of the Beijing Energy Group once reached HK$3.65, a 114% increase compared to the opening price on January 14.

It is reported that the PCI Express Group is an electronics manufacturer founded in 1988. Its main business is the design, development and manufacture of graphics cards. It is one of the top five global brand partners of NVIDIA video display adapters. The graphics cards of the Zotac brand under the PCI Express Group are well-known for being widely used for mining.

Why can a Hong Kong-listed company engaged in the graphics card business make such a big splash in the market by entering into mining, a business that is seen as the twilight of blockchain?

Odaily Planet Daily verified with the official of Beineng Group regarding its investment in mining, but no response was received as of press time.

Hong Kong-listed companies enter mining

At 8 a.m. on January 14, a dull Monday morning, with still an hour and a half before the opening of the Hong Kong stock market, Beineng Group suddenly posted an announcement online.

The announcement is titled "Discloseable Transaction Proposed Formation of a Joint Venture Based on Letter of Intent". The announcement stated that on January 12, 2019, Beineng Wealth, a wholly-owned subsidiary of Beineng Group, and its joint venture partners prepared to establish a joint venture in China, which will mainly engage in (among other things) server leasing, as well as investment and operation of projects involving cloud computing, container cloud and deep learning.

According to the announcement, the registered capital of the joint venture is US$35 million, "Beineng Wealth will inject capital in kind by providing GPU computing cards to inject US$16.8 million, while the joint venture partner will inject capital in kind by providing computer servers and accessories to inject US$18.2 million."

The joint venture partner is a limited company established in China, which is mainly engaged in computer system integration and other businesses, and provides "technical services and technical consulting for cloud computing, blockchain, and high-performance computing."

Odaily Planet Daily found that the "joint venture partner" that Beineng Group did not clearly state should be Fuzhou Xinghe Cloud Technology Co., Ltd. (hereinafter referred to as "Fuzhou Xinghe").

According to industrial and commercial information, on January 18, 2019, Fuzhou Xinghe and Baineng Wealth Investment Co., Ltd. jointly established a company named Fuzhou Baineng Cloud Technology Co., Ltd. (hereinafter referred to as "Fuzhou Baineng") with a registered capital of US$35 million and the legal representative is Xu Zhijie.

Fuzhou Xinghe subscribed USD 18.2 million, accounting for 52% of the shares, while Beineng Wealth subscribed USD 16.9 million, accounting for 48% of the shares.

The registration time, registered capital, shareholder background and shareholding ratio are all revealed, and Fuzhou Baineng is very likely the joint venture company disclosed by Baineng Group.

Multiple sources of information show that Xu Zhijie is also the legal representative of Fuzhou Xinghe, and his subsidiary Genesis is engaged in mining business. Therefore, Fuzhou Baineng is not only engaged in cloud computing, but also graphics card mining.

After the announcement of the investment in cloud computing power by the BP Group, its stock price suddenly rose, from HK$1.70 to HK$2.23 on the same day, and then reached a high of HK$3.65, more than doubling. Ten days later, its deputy executive president and executive director Wang Fangbai sold 1 million shares, cashing in HK$2.52 million.

Some media believe that the reason for the surge in BP Group’s stock price is “leveraging the concept of cloud computing.”

The real bleak situation of GPU mining

If the goal of the Beineng Group is to enter the mining industry, then facts will tell it that the current graphics card mining market is not good.

"I can't make any money anymore." Miner Gu Cheng told Odaily Planet Daily that since the Ethereum crash in October last year, Gu Cheng has cleared out all of his more than 1,000 graphics card mining machines because they were difficult to maintain and profits were growing more and more slowly.

"The number of graphics card maintenance personnel is 10 times that of BTC." Gu Cheng said that the performance of graphics cards is very unstable, and the failure rate is 10 times that of professional mining machines such as AISC. The average purchase price of his graphics cards is 12,000 yuan, and he sold them to computer malls at a loss of more than 2,000 yuan, and re-invested in the graphics card market such as e-sports.

At the same time, many graphics card miners withdrew from the graphics card mining market together with Gu Cheng.

It is undeniable that the number of GPU mining machines is shrinking. According to a previous report by Odaily Planet Daily, the decline in coin prices and network upgrades have reduced miners' income, and the mechanism of switching from PoW to PoS will eventually lead to Ethereum miners having "no mines to mine". Currently, small currencies are unable to carry the excess computing power of Ethereum.

According to Tokenview data, on October 8 last year, Ethereum's computing power was 266 TH/s, and on March 8, the computing power was 151 TH/s, a decrease of 43.2%.

On October 8 last year, the Ethereum mining revenue was 0.0187 US dollars/day/M hash per second, but now the number has become 0.0143, a decrease of 23.5%.

"Most of the mining machines on the market are second-hand. It is basically impossible to get back the investment with a first-hand mining machine." Fang Ge, a graphics card miner, told Odaily Planet Daily that graphics card miners have withdrawn one after another. The miners who are still persisting are using the mining machines that have already paid back the investment, and each mining machine earns about 10 yuan a day.

Fang Ge revealed that currently the biggest cost of graphics card mining is the cost of the machine, because the electricity cost is almost the same, whoever can get a cheaper machine can get their money back as soon as possible or even make money.

What is the prospect of the Beineng Group’s foray into the mining industry?

The Company is principally engaged in the design, development and manufacture of graphics display adapters for desktop computers, as well as the manufacture and promotion of its own graphics card brands: ZOTAC, Inno3D and Manli.

The Beineng Group has entered the mining industry and has its own means of production: Zotac graphics cards. In addition, a person close to the matter revealed that the Beineng Group can cooperate with the government to obtain cheap electricity.

Bear market slow sales

Founded in 1988, the NVIDIA Corporation is an electronics manufacturer and one of the top five global brand partners for NVIDIA video display adapters. Its main business is the design, development and manufacture of graphics display cards.

The PCI Group has been called the shadow stock of NVIDIA. In 2015, 52% of the PCI Group's chip purchases came from NVIDIA. On the other hand, because of its identity as a graphics card manufacturer, the PCI Group is known as the "purest blockchain concept stock" in Hong Kong stocks.

Miners generally use two types of graphics cards for mining, A cards (AMD graphics cards) and N cards (NVIDIA graphics cards). As one of NVIDIA's top five global brand partners, what is the prospect of the Beineng Group?

Zotac graphics cards under the Pernone Group are considered by miners to be the second-tier of gaming graphics cards. "The first-tier ones are Asus and MSI, and the second-tier ones are Gigabyte, Zotac, Colorful, etc." Fang Ge said, "The majority of Zotac miners use N cards."

"But I have used Zotac's 1070Ti graphics card, and the overall workmanship and price/performance ratio are mediocre." Fang Ge said that due to the withdrawal of miners in the bear market, Zotac graphics cards have been in a slump, and there have been a lot of discount promotions in the past year.

On the other hand, due to the impact of the bear market, "graphics cards were not doing well in mining last year," said Dai Yuanren, a mining machine seller.

Last August, the Beineng Group released its 2018 semi-annual report. The report showed that Beineng Group's revenue in the first half of 2018 increased by 86.4% compared with the same period in 2017, and its net profit margin increased by 306.7%.

Such excellent data performance could not stop the decline of the share price of the Beijing Energy Group. In August, the opening price of the Beijing Energy Group was HK$6.22, and in December, the closing price of the Beijing Energy Group was HK$1.74, a decrease of 72%.

If nothing unexpected happens, the BOE Group will release its 2018 annual report in late April, when its performance over the past year will be made public.

(Text: Dave; Produced by: Odaily Planet Daily)