UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2023
Commission File Number: 001-36206
428 South Seiberling Street,
Akron, Ohio 44306,
United States of America
+1 (346) 204-8537
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ⌧ Form 40-F ☐
EXPLANATORY NOTE
This report on Form 6-K is hereby incorporated by reference into the Company’s Registration Statement on Form F-3, as amended, initially filed with the U.S. Securities and Exchange Commission on July 30, 2021 (Registration No. 333-258329), and shall be a part thereof from the date on which this current report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BIT MINING LIMITED | ||
By: | /s/ Xianfeng Yang | |
Name: | Xianfeng Yang | |
Title: | Chief Executive Officer | |
Date: September 28, 2023 | ||
Exhibit 99.1
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIT MINING LIMITED
As of December 31, 2022 and June 30, 2023
and for the six months ended June 30, 2022 and 2023
BIT MINING LIMITED
CONTENTS
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
(Unaudited)
As of December | As of June | |||||
| Notes |
| 31, 2022 |
| 30, 2023 | |
US$ | US$ | |||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Restricted cash |
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Short-term investment | | — | ||||
Accounts receivable | | | ||||
Prepayments and other current assets |
| 7 |
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Cryptocurrency assets | 6 | | | |||
Total current assets |
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Non-current assets: |
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Property and equipment, net |
| 8 |
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Intangible assets, net |
| 9 |
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Deposits |
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Long-term investments |
| 5 |
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Right-of-use assets | 10 | | | |||
Long-term prepayments and other non-current assets |
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Total non-current assets |
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TOTAL ASSETS |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable | 11 | | | |||
Accrued payroll and welfare payable | | | ||||
Accrued expenses and other current liabilities | 12 | | | |||
Income tax payable | | | ||||
Operating lease liabilities – current | 10 | | | |||
Total current liabilities |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
1
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
(Unaudited)
As of December | As of June | |||||
| Notes |
| 31, 2022 |
| 30, 2023 | |
US$ | US$ | |||||
Non-current liabilities: |
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Operating lease liabilities - non-current | 10 | | | |||
Total non-current liabilities |
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TOTAL LIABILITIES |
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Commitments and contingencies |
| 16 |
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Shareholders’ equity: |
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Class A ordinary shares, par value US$ |
| 18 |
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Class A preference shares, par value US$ | 18 | |||||
Class B ordinary shares, par value US$ |
| 18 |
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Additional paid-in capital |
| 18 |
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Treasury shares |
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| ( |
| ( |
Accumulated deficit and statutory reserve |
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| ( |
| ( | |
Accumulated other comprehensive loss | ( | ( | ||||
Total shareholders’ equity |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
2
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares and per share (or ADS) data)
(Unaudited)
For the six months ended June 30, | ||||||
| Notes |
| 2022 |
| 2023 | |
US$ | US$ | |||||
Revenues |
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Operating costs and expenses: |
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Cost of revenue |
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| ( |
| ( |
Sales and marketing expenses |
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| ( |
| ( |
General and administrative expenses |
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| ( |
| ( |
Service development expenses |
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| ( |
| ( |
Total operating costs and expenses |
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| ( |
| ( |
Other operating income |
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Other operating expenses |
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| ( |
| ( |
Net (loss) gain on disposal of cryptocurrency assets | ( | | ||||
Impairment of cryptocurrency assets | ( | ( | ||||
Changes in fair value of contingent considerations | | — | ||||
Impairment of property and equipment | ( | — | ||||
Government grant | | — | ||||
Operating loss |
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| ( |
| ( |
Other income, net |
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Interest income |
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Interest expense | ( | — | ||||
Gain from equity method investments | 5 | | | |||
Changes in fair value of derivative instruments |
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| — |
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Loss before income tax |
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| ( |
| ( |
Income taxes benefits |
| 13 |
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Net loss |
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| ( |
| ( |
Less: Net loss attributable to noncontrolling interests | ( | — | ||||
Net loss attributable to BIT Mining Limited | ( | ( | ||||
Other comprehensive loss: | ||||||
Foreign currency translation loss | ( | ( | ||||
Other comprehensive loss, net of tax | ( | ( | ||||
Comprehensive loss |
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| ( |
| ( |
Less: Comprehensive loss attributable to non-controlling interests |
|
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| ( |
| — |
Comprehensive loss attributable to BIT Mining Limited |
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| ( |
| ( |
Losses per share attributable to BIT Mining Limited-Basic and Diluted |
| 17 |
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Net loss | ( | ( | ||||
Losses per ADS* attributable to BIT Mining Limited-Basic and Diluted |
| 17 |
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Net loss | ( | ( | ||||
Weighted average number of Class A and Class B ordinary shares outstanding: |
| 17 |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
* American Depositary Shares, which are traded on the NYSE. Each ADS represents one hundred Class A ordinary shares of the Company.
Losses per ADS have been retrospectively adjusted for the ADS Ratio Change from the former ADS Ratio of 1 ADS to 10 Class A ordinary shares, to the current ADS Ratio of 1 ADS to 100 Class A ordinary shares, effective on December 23, 2022.
3
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of U.S. dollars (“US$”))
(Unaudited)
For the six months ended June 30, | ||||
| 2022 |
| 2023 | |
US$ | US$ | |||
Cash flow from operating activities | ||||
Net loss |
| ( |
| ( |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of right-of-use assets | | | ||
Depreciation of property and equipment |
| |
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Amortization of intangible assets |
| |
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Share-based compensation |
| |
| |
Gain from equity method investments | ( | ( | ||
Impairment of property and equipment |
| |
| — |
Net loss (gain) on disposal of cryptocurrency assets | | ( | ||
Impairment of cryptocurrency assets | | | ||
Changes in fair value of derivative instruments | — | ( | ||
Changes in fair value of contingent considerations |
| ( |
| — |
Changes in operating assets and liabilities: | ||||
Accounts receivable |
| ( |
| ( |
Prepayments and other current assets |
| |
| ( |
Cryptocurrency assets | ( | ( | ||
Accounts payable | ( | | ||
Operating lease liabilities | ( | ( | ||
Accrued expenses and other current liabilities |
| ( |
| |
Amounts due to related party | ( | — | ||
Accrued payroll and welfare payable |
| |
| ( |
Income tax payable |
| ( |
| |
Deposits | ( | ( | ||
Net cash used in operating activities |
| ( |
| ( |
Cash flows from investing activities |
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Acquisition of property and equipment |
| ( |
| — |
Cash received from return of long-term investments | | — | ||
Cash received from disposal of cryptocurrency assets | | | ||
Redemption of short-term investment | — | | ||
Proceeds from disposal of long-term investments | — | | ||
Cash received from asset acquisition | | — | ||
Net cash provided by investing activities |
| |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands of U.S. dollars (“US$”)
(Unaudited)
For the six months ended June 30, | ||||
| 2022 |
| 2023 | |
US$ | US$ | |||
Cash flows from financing activities | ||||
Proceeds from short-term borrowings |
| |
| — |
Proceeds from issuance of ordinary shares for private placements | | — | ||
Net cash provided by financing activities |
| |
| — |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| ( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
| |
| ( |
Cash, cash equivalents and restricted cash at beginning of the period |
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Cash, cash equivalents and restricted cash at end of the period |
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Balances included in the Unaudited Interim Condensed Consolidated Balance Sheets: | ||||
Cash, cash equivalents and restricted cash | | | ||
Cash, cash equivalents and restricted cash included in current assets held for sale | | — | ||
Cash, cash equivalents and restricted cash at end of period | | | ||
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Supplemental disclosures of cash flow information: | ||||
Income tax paid |
| — |
| — |
Interest received | | | ||
Interest paid |
| ( |
| — |
Supplemental disclosures of non-cash investing and financing activities: | ||||
Payment of expense and non-current assets in the form of cryptocurrencies | | | ||
Loan to a third party in the form of cryptocurrencies | — | | ||
Short-term loan settled by surrendering the cryptocurrencies collateral | | — | ||
Issuance of ordinary shares in connection with asset acquisition | | — | ||
Deposits received from customers of mining data center in the form of cryptocurrencies | | — | ||
Consideration paid to purchase the non-controlling interest in subsidiary | | — | ||
Property, plant and equipment transferred from long-term prepayment | | | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
5
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands of U.S. dollars (“US$”) except for number of shares)
(Unaudited)
Number of | Number of | Number of | Accumulated | Accumulated | ||||||||||||||||||
Class A | Class A | Class B | Additional | other | deficit and | Total | ||||||||||||||||
ordinary | preference | ordinary | Ordinary | Preference | paid-in | Treasury | comprehensive | statutory | Non-controlling | shareholders’ | ||||||||||||
| shares |
| shares |
| shares |
| shares |
| shares |
| capital |
| shares |
| loss |
| reserve |
| interests |
| equity | |
Balance as of December 31, 2021 |
| |
| | |
| |
| — | |
| ( |
| ( |
| ( |
| |
| | ||
Net loss |
| — |
| — | — |
| — |
| — | — |
| — |
| — |
| ( |
| ( |
| ( | ||
Foreign currency translation loss |
| — |
| — | — |
| — |
| — | — |
| — |
| ( |
| — |
| ( |
| ( | ||
Issuance of Class A ordinary shares and pre-funded warrants in private placement, net of issuance costs | | — | — | | — | | — | — | — | — | | |||||||||||
Issuance of ordinary shares for asset acquisition | | — | — | | — | | — | — | — | — | | |||||||||||
Purchase of non-controlling interests | — | — | — | — | — | ( | — | — | — | ( | ( | |||||||||||
Share-based compensation |
| |
| — | — |
| |
| — | |
| — |
| — |
| — |
| — |
| | ||
Balance as of June 30, 2022 |
| |
| | |
| |
| — | |
| ( |
| ( |
| ( |
| |
| |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
6
BIT MINING LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
(Amounts in U.S. dollars (“US$”) except for number of shares)
(Unaudited)
| Number of |
| Number of | Number of |
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|
| Accumulated |
| Accumulated |
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| |||||||||
Class A | Class A | Class B | Additional | other | deficit and | Total | ||||||||||||||||
ordinary | preference | ordinary | Ordinary | Preference | paid-in | Treasury | comprehensive | statutory | Non-controlling | shareholders’ | ||||||||||||
| shares |
| shares |
| shares |
| shares |
| shares |
| capital |
| shares |
| loss |
| reserve |
| interests |
| equity | |
Balance as of December 31, 2022 |
| |
| | |
| |
| — | |
| ( |
| ( |
| ( |
| — |
| | ||
Net loss | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||
Foreign currency translation loss |
| — |
| — | — |
| — |
| — | — |
| — |
| ( |
| — |
| — |
| ( | ||
Share-based compensation |
| |
| — | — |
| — |
| — | |
| — |
| — |
| — |
| — |
| | ||
Balance as of June 30, 2023 |
| |
| | |
| |
| — | |
| ( |
| ( |
| ( |
| — |
| |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
7
1. ORGANIZATION
BIT Mining Limited (the “Company”) was incorporated under the laws of the Cayman Islands on April 20, 2007 under the original name of “Fine Success Limited”, which was changed to “500wan.com” on May 9, 2011, and changed to “500.com Limited” on October 9, 2013. The Company changed to the new name of “BIT Mining Limited” and the new ticker symbol “BTCM” effective April 20, 2021.
The Company has completed the transformation of its business and become an enterprise that primarily engages in cryptocurrency mining, data center operation and mining pool operation in 2021.
As of June 30, 2023, the Company has subsidiaries incorporated in countries and jurisdictions including British Virgin Islands, Cayman Islands, Hong Kong, the United States of America (“USA”), Kazakhstan, Canada, mainland China, Malta, Cyprus and Curacao.
As of June 30, 2023, the Company’s major subsidiaries are listed below:
Percentage of | ||||||||
Date of | Place of | ownership by | ||||||
Entity |
| establishment |
| establishment |
| the Company |
| Principal activities |
Subsidiaries |
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Fine Brand Limited (“BVI”) | | % | ||||||
BT Mining Limited (“BT Mining”) | | % | ||||||
500wan HK Limited (“500wan HK”) | | % | ||||||
Bee Computing (HK) Limited (“Bee Computing”) | | % | ||||||
E-Sun Sky Computer (Shenzhen) Co., Ltd. (“E-Sun Sky Computer”) | | % | ||||||
Star Light Inc. (“Star Light”) | | % | ||||||
Skill Esport Limited (“ Skill Esport”) | | % | ||||||
Summit Bend US Corporation (“Summit Bend”) | | % | ||||||
Star Light Ohio I Corporation (“Ohio I”) | | % | ||||||
Star Light Ohio II Corporation (“Ohio II”) | | % | ||||||
Asgard Data Centers LLC (“Asgard”) | | % | ||||||
Alliance International Technologies Limited (“Alliance International Technologies”) | | % | ||||||
Hong Kong Sunstar Technology Co., Limited (“Sunstar Technology”) | | % | ||||||
Beijing Guixinyanghang Technology Limited (“Guixinyanghang”) | | % | ||||||
E-Sun Kazakhstan Limited | | % | ||||||
1324492 B.C.Ltd | | % | ||||||
The Multi Group Ltd (“The Multi Group” or “TMG”) | | % | ||||||
Multi Warehouse Ltd* | | % | ||||||
Multi Brand Gaming Ltd* | | % | ||||||
Multilotto UK Ltd* | | % | ||||||
Lotto Warehouse Ltd* | | % | ||||||
Wasp Media Ltd* | | % | ||||||
Round Spot Services Ltd* | | % | ||||||
Multi Pay N.V.* | | % | ||||||
Oddson Europe Ltd* | | % |
* A subsidiary of the Multi Group
8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and use of estimates
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s most recent consolidated annual financial statements filed with the SEC on Form 20-F.
The accompanying unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for the consolidated financial statements. Certain information and note disclosures normally included in the Group’s annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with such rules and regulations. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair statement of the Group’s financial position as of June 30, 2023 and results of operation and cash flows for the six months ended June 30, 2022 and 2023. Results for the six months ended June 30, 2023 are not necessarily indicative of the results expected for the full fiscal year or for any future period.
The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s unaudited interim condensed consolidated financial statements include, but are not limited to, allowance for credit losses, useful lives of property and equipment and intangible assets, impairment of long-lived assets, the valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation, valuation of derivative instruments and valuation of contingent consideration from business combination and purchase price allocation for assets acquisition. Actual results could materially differ from those estimates.
Principles of consolidation
The unaudited interim condensed consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. The results of the subsidiaries are consolidated from the date on which the Company obtains control and continue to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. All significant intercompany balances and transactions among the Company and its subsidiaries have been eliminated on consolidation.
Revision of Prior Period Financial Statements
During the review of the Company’s financial statements for the six months ended June 30, 2023, the Company identified an error in the presentation of property and equipment, net, cost of revenues and losses per ADS attributable to BIT Mining Limited - basic and diluted in the financial statements for the six months ended June 30, 2022 due to the overstatement of depreciation expense from a calculation error. The property and equipment, net should have been US$
9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
The functional currency of the Company, BVI, 500wan HK, Bee Computing, Alliance Technologies, Sunstar Technology, Skill Esport, Summit Bend, Ohio I, Ohio II and Asgard is the US$. The functional currency of the Multi Group and its subsidiaries is EUR. The functional currency of Crypto Flow Limited (formerly named “Loto Interactive Limited”) and its subsidiaries is HKD. E-Sun Sky Computer and Beijing Guixinyanghang determined their functional currencies to be RMB, which is their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. The Group uses the monthly average exchange rate for the period and the spot exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss as a component of shareholders’ equity.
Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Exchange gains and losses resulting from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive loss.
Business combinations, asset acquisitions and non-controlling interests
The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), “Business Combinations”. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair value are recognized in earnings. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over, (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
If investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of relative fair values.
The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period.
In a business combination or asset acquisition, the Company may recognize identifiable intangibles that meet either or both the contractual legal criterion or the separability criterion. Identifiable intangible assets recognized in the Company’s acquisitions generally include brand name, strategic contract and unpatented technology.
For the Company’s majority-owned subsidiaries, non-controlling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. “Net loss” on the unaudited interim condensed consolidated statements of comprehensive loss include the “net loss attributable to non-controlling interests”. The Company has purchased all of the non-controlling interests in its subsidiary in June 2022. Therefore there were
10
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Group recognized changes in fair value of contingent consideration in the amount of a gain of US$
Cryptocurrency assets
Cryptocurrency assets are included in current assets in the accompanying unaudited interim condensed consolidated balance sheets. Cryptocurrency assets generated from the cryptocurrency mining business and the mining pool business are accounted for in connection with the Group’s revenue recognition policy disclosed below.
Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, or more frequently, when events or changes in circumstances occur, principally decreases in the quoted prices of the cryptocurrencies, indicating that it is more likely than not that the indefinite-lived asset is impaired. In determining if an impairment has occurred, the Company considers the intraday lowest quoted price of one unit of cryptocurrency asset since acquiring the cryptocurrency asset. If the then current carrying value of the unit of cryptocurrency exceeds the fair value so determined, an impairment loss has occurred with respect to those units of cryptocurrencies in the amount equal to the difference between their carrying values and the fair value determined. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses if not permitted. For the six months ended June 30, 2022 and 2023, the Group recognized impairment loss of US$
Cryptocurrencies generated from the cryptocurrency mining business and the mining pool business as well as the cryptocurrencies distributed to mining pool participants are included within operating activities in the accompanying unaudited interim condensed consolidated statements of cash flows. The sales of cryptocurrencies are included within investing activities in the accompanying unaudited interim condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in gain or loss of disposal of cryptocurrencies in the unaudited interim condensed consolidated statements of comprehensive loss. The Group accounts for its gains or losses in accordance with the first-in-first-out (FIFO) method of accounting.
The Company also enters into transactions to transfer cryptocurrencies to pay for operating expenses and acquire certain assets. Such transactions are accounted for in accordance with ASC 610-20, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets”. Under ASC 610-20, if the Group does not have a controlling financial interest in the entity that holds the cryptocurrency and the arrangement meets the criteria to be accounted for as a contract, the Group would de-recognize the cryptocurrency and recognize a gain or loss on the transfer of the cryptocurrency when control of the cryptocurrency transfers to the counterparty. The gain or loss is measured as the difference between the amount of consideration allocated to the cryptocurrency and its carrying amount. For the six months ended June 30, 2022 and 2023, the gain or loss recorded on such transactions was nil.
Derivative contracts
Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. Derivative contracts are recognized as either assets or liabilities on the unaudited interim condensed consolidated balance sheets at fair value, with changes in fair value recognized as changes in fair value of derivative instruments.
In June 2023, the Company entered into two collar arrangements with a third party with
11
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of long-lived assets other than goodwill
The Group evaluates its long-lived assets or asset group, including property and equipment, intangible assets and right-of-use assets, with finite lives for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of a group of long-lived assets may not be fully recoverable. When these events occur, the Group evaluates the impairment by comparing the carrying amount of the assets to future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the asset group over its fair value. For the six months ended June 30, 2022, the Group recorded an impairment loss of US$
Fair value measurements
Financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable, prepayments and other current assets, equity investments without readily determinable fair values, equity method investments, accounts payable and accrued expenses and other current liabilities. The Group carries the investment under the measurement alternative basis and equity method investment on other-than-temporary basis. Derivative assets related to the collar arrangement is measured at fair value on a recurring basis. The carrying values of other financial instruments approximate their fair values due to their short-term maturities.
The Group’s non-financial assets, including cryptocurrency assets, intangible assets, goodwill and property and equipment are measured at fair value when an impairment charge is recognized. Fair value of cryptocurrencies is based on quoted prices in active markets.
The Group applies ASC 820 (“ASC 820”), “Fair Value Measurements and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2— Include other inputs that are directly or indirectly observable in the marketplace.
Level 3— Unobservable inputs which are supported by little or no market activity.
ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
Related party transactions
A related party is generally defined as (i) any person holds 10% or more of the Company’s securities and their immediate families (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
12
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
The Group’s revenues were derived principally from cryptocurrency mining, data center services and mining pool services. The Group also provided online gaming services through TMG and its subsidiaries and had fully terminated such business in January 2022. The Group accounts for revenues under ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”).
Revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which the Group expects to be entitled to in exchange for those goods or services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies a performance obligation.
The primary sources of the Group’s revenues are as follows:
Cryptocurrency mining
The Group has entered into a cryptocurrency mining pool, BTC.com, by executing contracts with the mining pool operator to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the mining pool operator. In exchange for providing computing power, the Group is entitled to considerations in the form of cryptocurrencies from the mining pool operator (less pool operator fees to the mining pool operator which are recorded net with revenues), which is calculated based on a predetermined formula agreed by the Group and the mining pool operator as a part of the contracts. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the pool operator. The Group is entitled to consideration even if a block is not successfully placed by the mining pool operator. The transaction consideration the Group receives is noncash consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. All considerations are variable and revenue is recognized when the computing power is provided to the mining pool and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions.
Cryptocurrency mining revenue generated from providing computing power to the Group's affiliated consolidated subsidiary, BTC.com, is eliminated in consolidation, along with corresponding intercompany cost of mining pool services.
Data center services
The Group provides data center services such as providing its customers with rack space, power and equipment, and cloud services such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month.
Mining pool services
The Group operates its mining pool, BTC.com, to enable providers of computing power (“pool participants”) to participate in crypto-mining activities in an efficient manner in the blockchain network. It receives all the mining rewards, and then allocates mining rewards to each pool participant net of the pool operator fees based on the sharing mechanism predetermined. Using computing power provided by the pool participants, the Group provides transaction verification services to the blockchain networks and transaction requesters (the “primary mining pool services" or the Company as the “primary mining pool operator”). During the year ended December 31, 2022, the Company entered into arrangements with certain third-party mining pool operators to contribute a portion of the computing power it obtained from BTC.com pool participants to the third-party mining pool operators. In exchange, the Company is entitled to considerations in the form of cryptocurrencies from the third-party mining pools operators calculated based on a predetermined formula regardless of whether the third-party mining pool operators successfully validate the blocks (the “sub mining pool services" or the Company as the “sub mining pool operator”) (primary mining pool services and sub mining pool services collectively referred as the “mining pool services”).
13
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Primary mining pool services
As the primary mining pool operator, the Group provides transaction verification services. Transaction verification services are an output of the Group’s ordinary activities. The mining rewards the Group receives from the blockchain network include the block rewards and the transaction verification fees related to the transactions included in the block. For block rewards, the customer is the blockchain as the Group attempts to be the first vendor to solve an algorithm that it will then place as a successful block on the blockchain in exchange for cryptocurrency block rewards awarded by the blockchain protocols. For transaction verification fees, the requester for each blockchain transaction request is the customer.
A contract with the blockchain for the block rewards or with the transaction requester for the transaction verification fees exists upon the transfer of a verified block to the blockchain. The performance obligation is to validate each block. Revenue is recognized at the point when the block validation is successfully completed, which is also when the Group receives the rewards. Revenue, which is noncash consideration, is measured at the fair value of block rewards and transaction verification fees earned at contract inception. The Group considers itself the principal in transactions with the blockchain networks as it coordinates all the computing power within the mining pool, utilizes such aggregated computing power to validate blocks, collects centrally all mining rewards and distributes them in accordance with the predetermined sharing mechanisms. The Group has control over the pool participants’ computing power. Although the pool participants can enter and exit the pool at will and deploy the qualifying types of mining machines at the choices of the pool participants, during the mining process, the Group dictates the tasks and the participants’ mining machines merely follow the allocation prescribed by the Group. As a result, the Group is primarily responsible for fulfilling the promise to provide the specified service, which is to transfer a verified block to the blockchain. Further, under existing sharing mechanisms, the Group is exposed to the risk that actual block rewards may differ from expected rewards, therefore, bears the inventory risk before the specified service has been transferred to the blockchain network. Therefore, the Group recognizes the mining pool revenue on a gross basis by recording all of the transaction fees and block rewards earned under the primary mining pool services as revenue, and the portion of the transaction fees and block rewards remitted to pool participants as cost of revenue.
Sub mining pool services
As the sub mining pool operator, using computing power obtained from pool participants, the Group provides computing power to certain third-party mining pool operators in exchange for considerations in the form of cryptocurrencies from the third-party mining pool operators. As the Group is entitled to consideration, which is calculated based on a predetermined formula agreed by the Group and the mining pool operators as a part of the contracts, even if a block is not successfully placed by the third-party mining pool operators, the Group entered into such arrangements to stabilize the mining rewards it is entitled to. Same to cryptocurrency mining arrangements, the contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the third-party mining pool operators. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the third-party pool operators. The transaction consideration the Group receives is noncash variable consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. The revenue is recognized when the computing power is provided to the third-party mining pool operators and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions.
The Group considers itself the principal in sub mining pool service transactions as the pool participants of BTC.com do not directly enter into contracts with the third-party mining pool operators and the Group is primarily responsible for fulfilling the promise to provide the computing power and to remit a portion of the mining rewards to the pool participants. In case of the non-performance of the third-party mining pool operators, the Group is obligated to compensate the pool participants for considerations they are entitled to. As a result, the Group determined that it controls the computing power before it is provided to the third-party mining pool operators. The Group recognizes the mining pool revenue on a gross basis by recording all of the mining rewards earned under the sub mining pool services as revenue, and the portion of mining rewards remitted to pool participants as cost of revenue.
14
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Contract balances
The Group does not have any contract assets. The Group’s contract liabilities include advance from customers, which is recorded when consideration is received from a customer prior to providing services to the customer under the terms of a contract. As of December 31, 2022 and June 30, 2023, the Group recorded advance from customers balance of US$
Refer to Note 20 regarding the discussion of the Group’s disaggregate revenue data.
Cost of services
Cost of mining pool services
Cost of mining pool services which was offered under BTC.com consists primarily of the mining rewards allocated to each pool participant in exchange for their computing power contributed to the mining pool. The mining rewards allocated to the pool participants include both the block rewards as well as the transaction verification fees related to the transactions included in the block, depending on the sharing mechanism chosen by individual pool participants. Cost of mining pool services also consists of other direct costs related to providing the mining pool service such as server fees and labor for maintaining the mining pool service. Cost of mining pool services before inter-segment elimination were US$
Cost of data center services
The cost of data center services consists primarily of direct production costs related to data center service, including the direct service charges for operations. The amounts were US$
Cost of cryptocurrency mining
The cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges. The amounts before inter-segment elimination were US$
Depreciation fees
Depreciation fees, which consist primarily of depreciation of machinery and equipment related to cryptocurrency mining and data center services, were US$
15
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization fees
Amortization fees, which consist primarily of amortization of intangible assets arising from business combination and assets acquisitions, were US$
Cost of services also comprised lottery insurance expenses, regulatory and compliance fees, platform fees, employee costs, account handling expense, business tax and surcharges and other direct costs incurred in providing services. These costs are expensed as incurred.
Recent accounting pronouncements
The Group has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its unaudited interim condensed consolidated financial statements, based on current information.
3. CONCENTRATION OF RISKS
Concentration of credit risk
Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, and accounts receivable. As of June 30, 2023, substantially all of the Group’s cash and cash equivalents were deposited in financial institutions located in mainland China, Hong Kong, United States and Malta, which management believes are of high credit quality.
Concentration of customers
For the six months ended June 30, 2022 and 2023, the customers accounted for 10% of more of the Group’s revenues were as follows:
| For the six months ended June 30, | ||||
| 2022 |
| 2023 |
| |
US$ |
| US$ | |||
A | — | % | | % | |
B | — | % | | % | |
Concentration of suppliers
For the six months ended June 30, 2022 and 2023, the supplier accounted for 10% of more of the Group’s costs was as follows:
For the six months ended June 30, |
| ||||
2022 | 2023 |
| |||
US$ | US$ |
| |||
A |
| | % | | % |
16
3. CONCENTRATION OF RISKS (continued)
Vulnerability due to change of regulations or policies
The blockchain and cryptocurrency mining business could be significantly affected by, among other things, the regulatory and policy developments in international markets where the Company operates, such as the United States and Kazakhstan. Governmental authorities are likely to continue to issue new laws, rules and regulations governing the blockchain and cryptocurrency industry in and enhance enforcement of existing laws, rules and regulations. For example, the People’s Bank of China (the “PBOC”), Ministry of Industry and Information Technology, State Administration for Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission issued “Announcement on Preventing Token Fundraising Risks” on September 4, 2017, prohibiting all organizations and individual from engaging in initial coin offering transactions. On May 21, 2021, the Financial Stability and Development Committee of the State Council in mainland China called for the need to resolutely control financial risks and crack down on cryptocurrency mining and trading activities. On June 18, 2021, the “Notice of the Sichuan Provincial Development and Reform Commission and the Sichuan Provincial Energy Administration on the Cleanup and Shutdown of Virtual Currency Mining Projects” required electricity companies within Sichuan Province to close down power supply to businesses involved in cryptocurrency mining. On June 21, 2021, the Company terminated the operations of the two data centers in Sichuan according to the written notice from the Local Power Supplier.
As of June 30, 2023, the mining pool subsidiary of the Company has completely exited the mainland China market, ceased registering new users from mainland China and retired accounts of existing users from mainland China.
4. ASSET ACQUISITION
On May 31, 2022, the Company completed the first closing of its previously announced share exchange agreement dated April 5, 2021 (as amended and restated in April 2022, the “Amended and Restated Share Exchange Agreement”) entered into by the Company and the shareholders (the “Selling Shareholders”) of the acquisition of Bee Computing (HK) Limited (“Bee Computing”). At the first closing of the Amended and Restated Share Exchange Agreement, the Company issued
The following table presents the calculation of the purchase consideration of the acquisition date.
| Amount | |
| US$ | |
Fair value of |
| |
Effective settlement of preexisting loans |
| |
Total purchase consideration |
| |
The following is a summary of the estimated fair value of the assets acquired as of the acquisition date.
| Amount |
| Amortization Years | |
US$ | ||||
Cash |
| | ||
Prepayments and other receivables |
| | ||
Acquired intangible asset |
| | ||
Total identifiable assets acquired |
| | ||
Total purchase consideration |
| |
The acquired intangible asset was the unpatented technology for the Litecoin ASIC mining machines, which has estimated useful life of
17
5. INVESTMENTS
Long-term Investments
| As of |
| As of | |
December 31, | June 30, | |||
2022 | 2023 | |||
US$ | US$ | |||
Carrying amount of equity investments without readily determinable fair value |
| |
| |
Carrying amount of equity method investments |
| |
| |
Carrying amount of long-term investments |
| |
| |
Equity investments without readily determinable fair value
In accordance with ASC 321, the Group elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The carrying amount of the Group’s equity investments measured using the measurement alternative was US$
Equity method investments
Investments were classified as equity method investments as the Group have significant influence over the entities. During six months ended June 30, 2023, the Company derecognized US$
6. CRYPTOCURRENCY ASSETS
The amounts represented the cryptocurrencies held by the Group as of December 31, 2022 and June 30, 2023. For the year ended December 31, 2022 and six month ended June 30, 2023, the Group generated cryptocurrencies through cryptocurrency mining business and the mining pool business. The movement of cryptocurrencies was as follows:
| For the year ended | For the six months | ||
December 31, 2022 | ended June 30, 2023 | |||
US$ | US$ | |||
Beginning balance |
| |
| |
Cryptocurrencies mined from mining pool business |
| |
| |
Cryptocurrencies mined from mining business |
| |
| |
Deposits received from customers of mining data center | | | ||
Distribution to pool participants |
| ( |
| ( |
Payment of service expense and long-lived assets |
| ( |
| ( |
Disposal of cryptocurrency assets* |
| ( |
| ( |
Utility fee received from customers of mining data center | | | ||
Cyberattack loss | ( | | ||
Loan to a third party in the form of cryptocurrencies | — | ( | ||
Others |
| |
| |
Impairment of cryptocurrency assets | ( | ( | ||
Ending balance of cryptocurrency assets, net |
| |
| |
* In January 2022, the Company entered into a loan agreement and a pledge agreement for
18
6. CRYPTOCURRENCY ASSETS (continued)
In June 2023, the Company entered into two collar arrangements with a third party with
7. PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of the following:
| As of |
| As of | |
December 31, | June 30, | |||
| 2022 |
| 2023 | |
US$ | US$ | |||
Receivables from third party payment service providers |
| |
| |
Utility and service deposits | | | ||
Deferred expense* |
| |
| |
Loans to third parties | | | ||
Deductible value-added input tax |
| |
| |
Derivative assets | — | | ||
Others |
| |
| |
Prepayments and other current assets |
| |
| |
* Deferred expense represents cash paid in advance to vendors, such as consultant expense and compliance expense, which would be amortized according to their respective service periods.
19
8. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following:
| As of |
| As of | |
December 31, | June 30, | |||
| 2022 |
| 2023 | |
US$ | US$ | |||
Machinery and equipment | | | ||
Electronics and office equipment | |
| | |
Motor vehicles | |
| | |
Leasehold improvements | |
| | |
Construction in progress | ||||
Property and equipment, cost | |
| | |
Less: Accumulated depreciation | ( |
| ( | |
Less: Provision for impairment | ( | ( | ||
Property and equipment, net | |
| |
Depreciation expenses for the six months ended June 30, 2022 and 2023 were approximately US$
The impairment as of December 31, 2022 and June 30, 2023 was mainly due to the impairment of mining machines in Kazakhstan and the USA. Impairment for the six months ended June 30, 2022 and 2023 were approximately US$
20
9. INTANGIBLE ASSETS, NET
Intangible assets consist of the following:
| As of |
| As of | |
December 31, | June 30, | |||
| 2022 |
| 2023 | |
US$ | US$ | |||
Cost: |
|
|
|
|
Computer software |
| |
| |
License agreement |
| |
| |
Internet domain name |
| |
| |
Brand name |
| |
| |
Strategic contract | | | ||
Unpatented technology | | | ||
| |
| | |
Accumulated amortization: |
|
| ||
Computer software |
| ( |
| ( |
License agreement |
| ( |
| ( |
Internet domain name |
| ( |
| ( |
Brand name |
| ( |
| ( |
Strategic contract | ( | ( | ||
Unpatented technology | ( | ( | ||
| ( |
| ( | |
Impairment *: |
| |||
Computer software | ( | ( | ||
License agreement | ( | ( | ||
Brand name | ( | ( | ||
Strategic Contract | ( | ( | ||
( | ( | |||
Intangible assets, net |
| |
| |
* The impairment as of December 31, 2022 and June 30, 2023 include impairment of US$
Amortization expense for the six months ended June 30, 2022 and 2023 were approximately US$
| US$ | |
2023 remaining |
| |
2024 |
| |
2025 |
| |
2026 |
| |
2027 | | |
2028 and thereafter |
| |
Total |
| |
21
10. OPERATING LEASES
The Group entered into various operating lease agreements for offices space. The remaining lease terms range from
The following table presents the operating lease related assets and liabilities recorded on the Group’s unaudited interim condensed consolidated balance sheet.
As of |
| As of | ||
December 31, | June 30, | |||
| 2022 |
| 2023 | |
US$ |
| US$ | ||
Right-of-use assets | |
| | |
Operating lease liabilities - current | |
| | |
Operating lease liabilities – non-current | |
| | |
Total operating lease liabilities | |
| |
For the six months ended June 30, 2022, the Group had operating lease costs of approximately US$
As of June 30, 2023, the weighted average remaining lease term was
The following table summarizes the maturity of operating lease liabilities as of June 30, 2023:
Operating leases | ||
US$ | ||
2023 remaining |
| |
2024 |
| |
2025 |
| |
2026 | | |
Total |
| |
Less: imputed interest |
| ( |
Present value of lease liabilities |
| |
11. ACCOUNTS PAYABLES
Accounts payables consist of the following:
| As of |
| As of | |
December 31, | June 30, | |||
2022 | 2023 | |||
US$ | US$ | |||
Pool participants payable* | | |||
Utility and service cost payable | | |||
Others | | |||
| |
| |
* Pool participants payable represents payments to pool participants in the mining pool business which are settled in cryptocurrencies.
22
12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
| As of |
| As of | |
December 31, | June 30, | |||
| 2022 |
| 2023 | |
US$ | US$ | |||
Advance from end users* |
| |
| |
Deposit from customer** | | | ||
Business tax and other taxes payable |
| |
| |
Professional fees and services payable |
| |
| |
Promotional events payables |
| |
| |
Decoration and construction cost payable |
| |
| |
Others |
| |
| |
Total |
| |
| |
* Advance from end users represents payments received by the Group in advance from the end users prior to the services to be provided.
** Deposit from customers represents payments received by the Group in advance from customers in the data center business.
13. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.
USA
Summit Bend, Ohio I, Ohio II and Asgard are incorporated in the USA. Under the current laws, profits tax in USA is generally assessed at the rate
23
13. INCOME TAXES (continued)
British Virgin Islands
Under the current laws of the British Virgin Islands, subsidiaries incorporated in British Virgin Islands are not subject to tax on income or capital gains.
Curacao
Multi Pay N.V. is incorporated in the Curacao, Under the current laws, profits tax in Curacao is generally assessed at the rate of
Malta
Under the current laws, profits tax in Malta is generally assessed at the rate of
Cyprus
Round Spot Services Ltd is incorporated in Cyprus and does not conduct any substantive operations of its own.
Hong Kong
500wan HK, Sunstar Technology, Skill Esport and Bee Computing are incorporated in Hong Kong, under the current laws, profits tax in Hong Kong is generally assessed at the rate of
Mainland China
A new enterprise income tax law (the “EIT Law”) in mainland China was enacted and became effective on January 1, 2008. The EIT Law applies a uniform
The Group records a valuation allowance on its deferred tax assets that is sufficient to reduce the deferred tax assets to an amount that is more likely than not to be realized. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit in future earnings will be realized.
As of June 30, 2023, the Group had net operating losses (“NOLs”) of approximately US$
The Group accounted for uncertainties in income taxes in accordance with ASC 740. The management evaluated the Group’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of June 30, 2022 and 2023.
24
14. SHARE-BASED PAYMENT
On March 28, 2021, the shareholders and board of directors of the Company approved the 2021 Share Incentive Plan (the “Plan”). The Plan provides for the grant of options, restricted shares and other share-based awards. These options were granted with exercise prices denominated in US$, which is the functional currency of the Company. The board of directors has authorized under the Plan the issuance of up to
A summary of share option and restricted shares activity and related information for the year ended December 31, 2022 and for the six months ended June 30, 2023 are as follows:
Share options granted to employees and directors
|
|
| Weighted |
| Weighted |
| ||||
Weighted | average | average | ||||||||
average | grant date | remaining | Aggregated | |||||||
Number of | exercise | fair value per | contractual | intrinsic | ||||||
options | price | share | year | value | ||||||
US$ | US$ | (Years) | US$ | |||||||
Outstanding, January 1, 2022 | | | | |||||||
Granted | | | | — | | |||||
Forfeited | | | | — | | |||||
Exercised | | | | — | | |||||
Outstanding, December 31, 2022 | | | | | ||||||
Granted | | | | — | | |||||
Forfeited | | | | — | | |||||
Exercised | | | | — | | |||||
Outstanding, June 30, 2023 (unaudited) | | | | | ||||||
Vested and expected to vest at June 30, 2023 (unaudited) | | | | | ||||||
Exercisable at June 30, 2023 (unaudited) | | | | |
25
14. SHARE-BASED PAYMENT (continued)
Restricted shares granted to employees and directors
|
| Weighted |
| Weighted |
| |||
average | average | |||||||
grant date | remaining | Aggregated | ||||||
Number of | fair value per | contractual | intrinsic | |||||
options | share | year | value | |||||
US$ | (Years) | US$ | ||||||
Outstanding, January 1, 2022 | |
| |
|
| | ||
Granted | — |
| — |
| — |
| — | |
Forfeited | — |
| — |
| — |
| — | |
Exercised | ( |
| ( |
| — |
| | |
Outstanding, December 31, 2022 |
| — |
| — |
| — |
| — |
Granted |
| |
| |
|
| | |
Forfeited |
| |
| |
| — |
| — |
Exercised |
| ( |
| ( |
| — |
| |
Outstanding, June 30, 2023 (unaudited) | — | — | — | — | ||||
Vested and expected to vest at June 30, 2023 (unaudited) |
| — |
| — |
| — |
| — |
Exercisable at June 30, 2023 (unaudited) |
| — |
| — |
| — |
| — |
The aggregate intrinsic value in the table above represents the difference between the fair value of Company’s ordinary share and the exercise price.
As of June 30, 2023, there was
26
14. SHARE-BASED PAYMENT (continued)
Total share-based compensation expenses relating to options and restricted shares granted to employees and directors for the six months ended June 30, 2022 and 2023 are included in:
For the six months ended June 30, 2022 | ||||||
Employees | Directors | Total | ||||
| US$ |
| US$ |
| US$ | |
Cost of revenue |
| |
| |
| |
General and administrative |
| |
| |
| |
Service development |
| |
| |
| |
| |
| |
| | |
For the six months ended June 30, 2023 | ||||||
Employees | Directors | Total | ||||
| US$ |
| US$ |
| US$ | |
Cost of revenue |
| |
| — |
| |
General and administrative |
| |
| |
| |
Service development |
| |
| — |
| |
| |
| |
| | |
On June 27, 2022, the Company completed a private placement, in which it issued certain pre-funded warrants to purchase
On August 16, 2022, the Company completed a private placement, in which it issued Series A warrants to purchase
27
14. SHARE-BASED PAYMENT (continued)
A summary of warrants and pre-funded warrant activity and related information for the year ended December 31, 2022 and for the six months ended June 30, 2023 are as follows:
Weighted | ||||||||
Average | ||||||||
Class A | Weighted Average | Remaining | Aggregate | |||||
Ordinary Shares | Exercise Price | Contractual Life | Intrinsic Value | |||||
|
| US$ |
| (Years) |
| US$ | ||
Outstanding, January 1, 2022 |
| |
| |
|
| — | |
Granted |
| |
| |
|
| — | |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| ( |
| |
| — |
| — |
Outstanding, December 31, 2022 |
| |
| |
|
| — | |
Granted |
| — |
| — |
| — |
| — |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| — |
| — |
| — |
| — |
Outstanding, June 30, 2023 (unaudited) |
| |
| |
|
| — | |
Vested and expected to vest at June 30, 2023 (unaudited) |
| |
| |
|
| — | |
Exercisable at June 30, 2023 (unaudited) |
| |
| |
|
| — |
15. RELATED PARTY TRANSACTIONS
In June 2022, the Company purchased all remaining equity interest of the subsidiary from Viking Data Centers and it ceased to be a related party of the Company. See Note 19 for detail discussion.
Related party transaction
For the six months ended June 30, | ||||
| 2022 |
| 2023 | |
| US$ |
| US$ | |
Data center operation costs for services provided by a minority interest shareholder of a subsidiary | | | ||
| |
| | |
16. COMMITMENTS AND CONTINGENCIES
Contractual arrangements among the Company and the former VIEs
Under applicable tax laws and regulations in mainland China, arrangements and transactions among related parties may be subject to audit or scrutiny by the tax authorities in mainland China within ten years after the taxable year when the arrangements or transactions are conducted. The Company could face material and adverse tax consequences if the tax authorities in mainland China were to determine that the Contractual Arrangements among the Company and the respective VIEs were not entered into on an arm’s-length basis and therefore constituted unfavorable transfer pricing arrangements. Unfavorable transfer pricing arrangements could, among other things, result in an upward adjustment on taxation. In addition, the tax authorities in mainland China may impose interest on late payments on the Company and the respective VIEs for the adjusted but unpaid taxes. In the opinion of management, the likelihood of such an upward adjustment on taxation and related interest is remote based on current facts and circumstances.
28
16. COMMITMENTS AND CONTINGENCIES (continued)
Guarantees
The Group accounts for guarantees in accordance with ASC topic 460 (“ASC 460”), “Guarantees”. Accordingly, the Group evaluates its guarantees to determine whether (a) the guarantee is specifically excluded from the scope of ASC 460, (b) the guarantee is subject to ASC 460 disclosure requirements only, but not subject to the initial recognition and measurement provisions, or (c) the guarantee is required to be recorded in the financial statements at fair value.
The memorandum and articles of association of the Company require that the Company indemnify its officers and directors, as well as those who act as directors and officers of other entities at the Company’s request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedings arising out of their services to the Company. The indemnification obligations are more fully described in the memorandum and articles of association. The Company purchases standard directors and officers’ insurance to cover claims or a portion of the claims made against its directors and officers. Since a maximum obligation is not explicitly stated in the Company’s memorandum and articles of association and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.
Historically, the Group has not been required to make payments related to these obligations, and the fair value for these obligations is zero as of December 31, 2022 and June 30, 2023.
Indemnity cost
There was
Legal proceedings
From time to time, the Group is subject to legal proceedings and claims in the ordinary course of business. The Group records a liability when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis and has not recorded any material liabilities in this regard during 2022 and for the six months ended June 30, 2023.
Operating lease commitments
The information of lease commitments is provided in Note 10.
29
17. LOSSES PER SHARE
Basic and diluted losses per share for each of the six months ended June 30, 2022 and 2023 presented is calculated as follows:
For the six months ended June 30, | ||||||||
2022 | 2023 | |||||||
| US$ |
| US$ |
| US$ |
| US$ | |
| Class A |
| Class B |
| Class A |
| Class B | |
Losses per share —basic: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share—basic |
| ( |
| — |
| ( |
| |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| |
| |
| |
| |
Denominator used for losses per share |
| |
| |
| |
| |
Losses per share — basic |
| ( |
| — |
| ( |
| |
Losses per share —diluted: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share— diluted |
| ( |
| — |
| ( |
| |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| |
| |
| |
| |
Conversion of Class B to Class A ordinary shares |
| |
| — |
| |
| |
Denominator used for losses per share |
| |
| |
| |
| |
Losses per share —diluted |
| ( |
| — |
| ( |
| |
Losses per ADS*: |
|
|
|
|
|
|
|
|
Denominator used for losses per ADS - basic |
| |
| — |
| |
| |
Denominator used for losses per ADS - diluted |
| |
| — |
| |
| |
Losses per ADS – basic |
| ( |
| — |
| ( |
| |
Losses per ADS – diluted |
| ( |
| — |
| ( |
| |
| * | American Depositary Shares, which are traded on the NYSE. Each ADS represents one hundred Class A ordinary shares of the Company. |
Losses per ADS have been retrospectively adjusted for the ADS Ratio Change from the former ADS Ratio of
30
18. EQUITY TRANSACTIONS
For the six months ended June 30, 2022,
On May 31, 2022,
On June 27, 2022, the Company completed a private placement, in which it has offered (1)
On August 19, 2022, the Company completed a private placement, in which it has offered (1)
Effective on December 23, 2022, the ratio of the ADS to its ordinary shares changed from
For the six months ended June 30, 2023,
As of June 30, 2023,
19. PURCHASE OF NON-CONTROLLING INTEREST
In September 2021, the Company entered into a Membership Interest Purchase Agreement and certain other auxiliary agreements with Viking Data Centers, LLC (“Viking Data Centers”) to acquire the
In June 2022, the Company entered into an agreement with Viking Data Centers that the Company agreed to purchase all remaining equity interest from Viking Data Centers for approximately US$
31
19. PURCHASE OF NON-CONTROLLING INTEREST (continued)
The following table summarizes the assets transferred:
| Amount | |
US$ | ||
Construction in progress | | |
Other non-current assets |
| |
Intangible assets, net |
| |
Total |
| |
Net book value of the non-controlling interest purchased was approximately US$
32
20. SEGMENT REPORTING
The Group continually monitors the reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In December 2020, the Group announced the entrance into the cryptocurrency industry. As of December 31, 2021, the Group have completed the transformation of its business to become a cryptocurrency mining enterprise. In accordance with ASC topic 280, “Segment Reporting”, the Group’s chief operating decision maker has been identified as the Board of Directors and the chief executive officer, who makes resource allocation decisions and assesses performance based on the different business operating results. As a result, the Group has
The following table presents summary information by segment for the six months ended June 30, 2022 and 2023, respectively.
For the six months ended June 30, | ||||
2022 | 2023 | |||
US$ |
| US$ | ||
Reportable segment revenue: |
|
|
|
|
Mining pool1 |
| |
| |
Data center |
| |
| |
Cryptocurrency mining |
| |
| |
Others |
| |
| — |
Inter-segment2 |
| ( |
| ( |
Total segment and consolidated revenue |
| |
| |
Reportable segment cost of revenue-exclusive depreciation and amortization: |
|
| ||
Mining pool1 |
| ( |
| ( |
Data center |
| ( |
| ( |
Cryptocurrency mining |
| ( |
| ( |
Others | ( | ( | ||
Inter-segment2 |
| |
| |
Total segment and consolidated cost of revenue-exclusive depreciation and amortization |
| ( |
| ( |
Reportable segment cost of revenue-depreciation and amortization: |
|
| ||
Mining pool |
| ( |
| ( |
Data center |
| ( |
| ( |
Cryptocurrency mining | ( | ( | ||
Total segment and consolidated cost of revenue-depreciation and amortization |
| ( |
| ( |
Total segment and consolidated cost |
| ( |
| ( |
Reconciling items: |
|
|
|
|
Operating expenses |
| ( |
| ( |
Other operating income |
| |
| |
Government grant |
| |
| — |
Other operating expenses |
| ( |
| ( |
Net (loss) gain on disposal of cryptocurrencies |
| ( |
| |
Impairment of cryptocurrency assets |
| ( |
| ( |
Impairment of property and equipment | ( | — | ||
Changes in fair value of contingent considerations | | — | ||
Operating loss |
| ( |
| ( |
Other income, net |
| |
| |
Interest income |
| |
| |
Interest expense |
| ( |
| — |
Gain from equity method investments |
| |
| |
Changes in fair value of derivative instruments |
| — |
| |
Net loss |
| ( |
| ( |
33
20. SEGMENT REPORTING (continued)
1 | The mining pool revenues for the six months ended June 30, 2022 include US$ |
2 | The inter-segment eliminations mainly consist of (a) cryptocurrency mining revenue of US$ |
The following table presents the revenue by the geographical locations of the customers for the six months ended June 30, 2022 and 2023, respectively. The customers for the revenues from primary mining pool services are blockchains for each type of cryptocurrencies, which are decentralized and not associated with specific locations.
For the six months ended June 30, | ||||
Revenues |
| 2022 |
| 2023 |
US$ | US$ | |||
Hong Kong |
| |
| — |
USA |
| |
| |
Kazakhstan |
| |
| — |
Europe |
| |
| — |
Blockchain | | | ||
British Virgin Islands | — | | ||
Cayman Islands |
| — |
| |
Inter-segment |
| ( |
| ( |
| |
| | |
The following table presents the long-lived assets (including property and equipment, net and right-of-use assets) by geographical locations as of December 31, 2022 and June 30, 2023, respectively.
Long-lived assets |
| As of December 31, 2022 |
| As of June 30, 2023 |
US$ | US$ | |||
USA |
| |
| |
Hong Kong |
| |
| |
Mainland China |
| |
| |
Kazakhstan |
| |
| — |
| |
| |
34
21. SUBSEQUENT EVENTS
The Company entered into two collar arrangements per month with a third party with
35
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations for the six months ended June 30, 2022 and 2023. This section should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes included elsewhere in this interim report. See “Exhibit 99.1— Unaudited Interim Condensed Consolidated Financial Statements of BIT Mining Limited as of December 31, 2022 and June 30, 2023 and for the six months ended June 30, 2022 and 2023.” We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements for fiscal year 2022, and the notes thereto, which appear in our annual report on Form 20-F for the year ended December 31, 2022, or the Annual Report, filed with the U.S. Securities and Exchange Commission, or the SEC, on April 17, 2023.
Unless otherwise indicated or the context otherwise requires, all references to “our company,” “we,” “our,” “ours,” “us” or similar terms refer to BIT Mining Limited, its predecessor entities, its subsidiaries and consolidated affiliated subsidiaries. “VIE” refers to variable interest entity.
All such financial statements were prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. We have made rounding adjustments to some of the figures included in this management’s discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors.
Overview
We have four primary business segments covering self-mining, mining pool, data center operation and mining machine manufacturing and we are pursuing a development strategy to focus on cryptocurrency mining operations globally.
Cryptocurrency mining business
We operated cryptocurrency mining machines for the sole purpose of mining cryptocurrencies (primarily Bitcoin, Litecoin and Dogecoin), which we may sell for fiat currency for our own account from time to time depending on market condition and management's determination of our cash flow needs. We have deployed our Bitcoin mining machines in data centers in Kazakhstan and the U.S. since 2021, and our Ethereum mining machines in data centers in the U.S., respectively before the Ethereum Merge (The Ethereum Merge, namely, of the Ethereum Mainnet and the Beacon Chain Proof-of-Stake system, occurred on September 15, 2022.). After the Ethereum Merge, we changed our strategy to Ethereum-Classic cryptocurrency mining operations. In March 2023, we have deployed all of our Dogecoin/Litecoin mining machines at our data center in the U.S. for use in our self-mining business after mass-production.
As of the date of this report, the total hash rate capacity of our Dogecoin/Litecoin mining machines and Bitcoin mining machines in operation are approximately 31,625.3 GH/s and 57.8 PH/s. For the six months ended June 30, 2023, we produced 61 million Dogecoin and 33,196 Litecoin from our Dogecoin/Litecoin cryptocurrency mining operations and recognized revenue of approximately US$7.7 million (for the six months ended June 30, 2022: nil) and 122 Bitcoin from our Bitcoin cryptocurrency mining operations and recognized revenue of approximately US$2.7 million (for the six months ended June 30, 2022: US$10.4 million).
Data center business
Revenues of US$9.4 million were generated from our data center business for the six months ended June 30, 2023 (for the six months ended June 30, 2022: US$3.4 million).
1
During the second quarter of 2023, our cryptocurrency mining data centers in Akron, Ohio (the “Ohio Mining Site”), including our 82.5 megawatt space at the site, experienced a continuous power outage from April 24, 2023, to May 26, 2023. The outage from April 24, 2023, to April 28, 2023, was caused by the utility company serving the Ohio Mining Site (the “Utility Company”) temporarily suspending electricity supply to the Ohio Mining Site for maintenance purposes. The outage after the completion of maintenance was caused by our service provider, Viking Data Centers LLC (“VDC”), failing to timely settle charges with the Utility Company. VDC was responsible for settling such charges on a regular basis, per our relevant agreements. VDC failed to pay the Utility Company in a timely manner despite our paying VDC on time for our portion of the electricity bills. After being made aware of this incident, we worked closely with VDC and the Utility Company to resolve this problem. On May 26, 2023, the electricity supply to the Ohio Mining Site was restored.
We continue to monitor this situation with VDC and urge them to rectify the management of the electricity supply. Furthermore, we reserve all of our rights under our Restructuring and Spin-Off Agreement with VDC, as well as our claims under other relevant agreements.
In the wake of the negative impact of the power outage at the Ohio Mining Site, we are also actively seeking potential alternative locations other than Akron, Ohio. On June 26, 2023, we entered into a hosting services agreement with Texas-based Lonestar Dream Inc. for 13 megawatts of power capacity (the “Texas Mining Site”). Currently, we have about 3,600 DOGE/LTC mining machines operating at the Texas Mining Site.
Mining pool business
On April 15, 2021, we completed the acquisition of the entire mining pool business under BTC.com, including the domain name BTC.com and the cryptocurrency wallet of BTC.com. Our mining pool business generated a significant majority of our total revenue of US$450.8 million and US$125.9 million for the six months ended June 30, 2022 and June 30, 2023, respectively.
Mining machine manufacturing
On May 31, 2022, we completed the first closing of its previously announced share exchange agreement dated April 5, 2021 (as amended and restated in April 2022, the “Amended and Restated Share Exchange Agreement”) entered into by us and the shareholders (the “Selling Shareholders”) of the acquisition of Bee Computing (HK) Limited (“Bee Computing”). At the first closing of the Amended and Restated Share Exchange Agreement, we issued 16,038,930 of its Class A ordinary shares to the Selling Shareholders.
We have successfully produced more than 7,926 DOGE/LTC mining machines with a total theoretical hash rate capacity of approximately 37,742 GH/s. We have deployed all of the DOGE/LTC mining machines at the Ohio Mining Site for use in our self-mining business. We continue to invest in the research and development of the next generation of 7nm BTC mining machines. Together with our strategic ally, Chain Reaction, a semiconductor company focused on disruptive blockchain and privacy hardware, we are producing next-generation BTC mining systems. Our system design team continues to work on ASIC validation while completing the hash board to increase hash rates. We expect to optimize the hardware and software design as well as have the mining machine’s first engineering prototype sample by September 2023.
Our total revenues were US$146.9 million for the six months ended June 30, 2023, representing a significant decrease of US$345.3 million from US$492.2 million for the six months ended June 30, 2022. The decreases were mainly due to continuous declines in cryptocurrency prices since the second quarter of 2022.
Net loss attributable to BIT Mining Limited was US$5.9 million and US$18.5 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Net loss attributable to BIT Mining Limited for the six months ended June 30, 2022 was mainly due to US$12.6 million in impairment of cryptocurrency assets and US$2.1 million in net loss on disposal of cryptocurrency assets, which were related to the declines in prices of cryptocurrencies since the second quarter of 2022. Net loss attributable to BIT Mining Limited for the six months ended June 30, 2023 was mainly due to US$3.3 million in impairment of cryptocurrency assets.
2
Description of Key Statement of Operations Items
Revenues
The table below sets forth our net revenues by service types for the six months ended 2022 and 2023:
| | For the six months ended June 30, | ||
| | 2022 | | 2023 |
| | US$ | | US$ |
| | (in thousands) | ||
Revenues: |
| |
| |
Mining pool |
| 450,778 |
| 125,882 |
Cryptocurrency mining |
| 37,823 |
| 11,590 |
Data center |
| 3,396 |
| 9,465 |
Others |
| 200 |
| — |
Total revenues |
| 492,197 |
| 146,937 |
Our total revenues decreased from US$492.2 million in the six months ended June 30, 2022 to US$146.9 million in the six months ended June 30, 2023, primarily due to continuous declines in cryptocurrency prices since the second quarter of 2022. Our mining pool business accounted for approximately 85.7% of the total revenues for the six months ended June 30, 2023. Our cryptocurrency mining business and data center business accounted for approximately 14.3% of our total revenues for the six months ended June 30, 2023.
Operating Costs and Expenses
The table below sets forth our operating costs and expenses for the six months ended June 30, 2022 and 2023:
| | For the six months ended June 30, | ||
| | 2022 | | 2023 |
| | US$ | | US$ |
| | (in thousands) | ||
Operating Costs and Expenses: |
| |
| |
Cost of revenue |
| 483,852 |
| 144,651 |
Sales and marketing |
| 339 |
| 266 |
General and administrative |
| 12,364 |
| 11,108 |
Service development |
| 2,184 |
| 884 |
Total operating costs and expenses |
| 498,739 |
| 156,909 |
Our operating costs and expenses consist primarily of cost of revenue, sales and marketing expenses, general and administrative expenses and service development expenses.
Cost of revenue
Our cost of revenue is directly related to the services we provide, and generally fluctuates in line with our revenues. Our cost of revenue primarily consists of: (i) mining rewards allocated to each providers of computing power (“pool participant”) in exchange for their computing power contributed to the mining pool; (ii) other direct costs related to providing the mining pool service such as server fees and labor for maintaining the mining pool service; (iii) direct production costs related to data center service for operation, leasing expense of servers hosting and other equipment used in providing cryptocurrency mining business; (iv) depreciation of machinery and equipment related to cryptocurrency mining and data center services; (v) amortization fees, which consist primarily of amortization of intangible assets arising from business combination; and (vi) cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges.
Sales and marketing expenses
Our sales and marketing expenses consist primarily of (i) promotional and marketing expenses, which primarily consist of expenses associated with various promotional events, (ii) salary and benefit expenses for sales and marketing employees, (iii) share-based compensation expenses, and (iv) advertising expenses.
3
General and administrative expenses
Our general and administrative expenses consist primarily of: (i) share-based compensation expenses; (ii) salary and benefit expenses for our management and general administrative employees; (iii) third-party professional service fees, which consist primarily of professional service fees paid to third-party professionals; (iv) depreciation expenses mainly for improvement of leasehold; (v) office expenses, which consist primarily of office rental and other office administrative expenses; (vi) travel, communication and other business expenses, which consist primarily of expenses associated with business travels; and (vii) bad debt provisions of other receivables, which consist primarily of bad debt provision of other receivables aging more than three years.
Service development expenses
Our service development expenses consist primarily of salary and benefit expenses for our research and development employees, share-based compensation expenses and rental expenses.
Other operating income
Our other operating income consists primarily of technical services fees received from third parties and related parties.
Government grant
For the six months ended June 30, 2023, we did not recognize grants. For the six months ended June 30, 2022, we recognized grants from the Hong Kong government. We might recognize similar grants from time to time in the future, but there is no assurance that we will continue to obtain such grants on a regular basis.
Net (loss) gain on disposal of cryptocurrency assets
Net (loss) gain on disposal of cryptocurrency assets was mainly due to fluctuating market prices for cryptocurrency assets balance and account payables by using first-in-first-out (“FIFO”) to calculate the cost of disposition.
Impairment of cryptocurrency assets
Impairment is provided for cryptocurrency assets held in self-mining and mining pool business, including cryptocurrencies payable to pool participants as a result of the price fluctuation of cryptocurrencies.
Changes in fair value of contingent considerations
Changes in fair value of contingent considerations was due to the re-measurement on the fair value of the contingent considerations related to the combination of BTC.com. The contingent considerations were settled as of June 30, 2022.
Impairment of property and equipment
Impairment of property and equipment was due to a provision for impairment of mining machines in Kazakhstan in 2022.
Results of Operations
The following summary of the unaudited consolidated financial data for the periods and as of the dates indicated is qualified by reference to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes.
4
Our historical results do not necessarily indicate our results to be expected for any future period.
| | For the six months ended June 30, | ||
| | 2022 | | 2023 |
| | US$ | | US$ |
| | (in thousands, except for per share data) | ||
Consolidated Statement of Comprehensive Loss Data: |
|
|
|
|
Revenues |
| 492,197 |
| 146,937 |
Operating costs and expenses: |
|
|
|
|
Cost of revenue |
| (483,852) |
| (144,651) |
Sales and marketing expenses |
| (339) |
| (266) |
General and administrative expenses |
| (12,364) |
| (11,108) |
Service development expenses |
| (2,184) |
| (884) |
Total operating costs and expenses |
| (498,739) |
| (156,909) |
Other operating income |
| 276 |
| 210 |
Other operating expenses |
| (1,515) |
| (302) |
Net (loss) gain on disposal of cryptocurrency assets |
| (2,057) |
| 5,804 |
Impairment of cryptocurrency assets |
| (12,620) |
| (3,254) |
Changes in fair value of contingent considerations |
| 1,247 |
| — |
Impairment of property and equipment |
| (836) |
| — |
Government grant | | 9 | | — |
Operating loss |
| (22,038) |
| (7,514) |
Other income, net |
| 554 |
| 407 |
Interest income |
| 106 |
| 42 |
Interest expense |
| (218) |
| — |
Gain from equity method investments |
| 151 |
| 939 |
Changes in fair value of derivative instruments |
| — |
| 275 |
Loss before income taxes |
| (21,445) |
| (5,851) |
Income tax benefits |
| — |
| — |
Net loss |
| (21,445) |
| (5,851) |
Less: Net loss attributable to noncontrolling interests |
| (2,955) |
| — |
Net loss attributable to BIT Mining Limited |
| (18,490) |
| (5,851) |
Other comprehensive loss |
|
|
|
|
Foreign currency translation loss |
| (902) |
| (440) |
Other comprehensive loss, net of tax |
| (902) |
| (440) |
Comprehensive loss |
| (22,347) |
| (6,291) |
Less: Comprehensive loss attributable to noncontrolling interests |
| (3,056) |
| — |
Comprehensive loss attributable to BIT Mining Limited |
| (19,291) |
| (6,291) |
Losses per share attributable to BIT Mining Limited – Basic and Diluted: |
|
|
|
|
Net loss |
| (0.03) |
| (0.01) |
Weighted average number of Class A and Class B ordinary shares outstanding: |
|
|
|
|
Basic |
| 717,955,865 |
| 1,093,318,465 |
Diluted |
| 717,955,865 |
| 1,093,318,465 |
5
About Non-GAAP Financial Measures
As a supplement to net loss, we use the non-GAAP financial measure of adjusted net loss which is U.S. GAAP net loss as adjusted to exclude the impact of share-based compensation expenses, impairment of property and equipment, changes in fair value of contingent considerations, and changes in fair value of derivative instruments. All adjustments are non-cash and we believe they are not reflective of our general business performance. This non-GAAP financial measure is provided as additional information to help our investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of our current financial performance and prospects for the future. This non-GAAP financial measure should not be considered in addition to or as a substitute for or superior to U.S. GAAP net loss. In addition, our definition of adjusted net loss may be different from the definition of such term used by other companies, and therefore comparability may be limited.
Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in the following table：
| | For the six months ended June 30, | ||
| | 2022 | | 2023 |
| | US$ | | US$ |
Operating loss |
| (22,038) |
| (7,514) |
| | | | |
Adjustment for share-based compensation expenses |
| 4,474 |
| 754 |
Adjustment for impairment of property and equipment |
| 836 |
| — |
Adjustment for changes in fair value of contingent considerations |
| (1,247) |
| — |
Adjusted operating loss (non-GAAP) |
| (17,975) |
| (6,760) |
| | | | |
Net loss attributable to BIT Mining Limited |
| (18,490) |
| (5,851) |
Adjustment for share-based compensation expenses |
| 4,474 |
| 754 |
Adjustment for impairment of property and equipment |
| 836 |
| — |
Adjustment for changes in fair value of derivative instrument |
| — |
| (275) |
Adjustment for changes in fair value of contingent considerations |
| (1,247) |
| — |
Adjusted net loss attributable to BIT Mining Limited (non-GAAP) |
| (14,427) |
| (5,372) |
| | | | |
| | | | |
Weighted average number of Class A and Class B ordinary shares outstanding: |
|
|
|
|
Basic |
| 717,955,865 |
| 1,093,318,465 |
Diluted |
| 717,955,865 |
| 1,093,318,465 |
| | | | |
Losses per share attributable to BIT Mining Limited (non-GAAP)-Basic |
|
|
|
|
Net loss (non-GAAP) |
| (0.02) |
| (0.00) |
Losses per share attributable to BIT Mining Limited (non-GAAP)-Diluted |
|
|
|
|
Net loss (non-GAAP) |
| (0.02) |
| (0.00) |
The six months ended June 30, 2023 compared with the six months ended June 30, 2022
Revenues
For the six months ended June 30, 2023, revenues were mainly comprised of revenues after inter-segment elimination from the mining pool business of US$125.9 million, the cryptocurrency mining business of US$11.6 million and the data center business of US$9.4 million. For the six months ended June 30, 2022, revenues were mainly comprised of revenues after inter-segment elimination from the mining pool business of US$450.8 million, the cryptocurrency mining business of US$37.8 million, and the data center business of US$3.4 million. The revenues from mining pool business for the six months ended June 30, 2023 included US$5.6 million from primary mining pool services and US$120.3 million from sub mining pool services, while the revenues from mining pool business for the six months ended June 30, 2022 were all from primary mining pool services.
Operating costs and expenses
Our operating costs and expenses decreased significantly from US$483.9 million for the six months ended June 30, 2022 to US$144.7 million for the six months ended June 30, 2023, primarily due to the following:
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Cost of revenue. For the six months ended June 30, 2023, cost of revenue was mainly comprised of cost of revenue after inter-segment elimination from the mining pool business of US$125.3 million, the cryptocurrency mining business of US$2.3 million and the data center business of US$11.5 million. For the six months ended June 30, 2022, cost of revenue was mainly comprised of cost of revenue after inter-segment elimination from the mining pool business of US$448.0 million, the cryptocurrency mining business of US$13.7 million, and the data center business of US$4.3 million. The cost of revenues from mining pool business for the six month ended June 30, 2023 included US$5.3 million from primary mining pool services and US$120.0 million from sub mining pool services, while the cost of revenues from mining pool business for the six months ended June 30, 2022 were all from primary mining pool services.
The gross profit for the six months ended June 30, 2023 and 2022 were US$0.5 million and US$2.8 million for the mining pool business, and US$9.3 million and US$24.1 million for the cryptocurrency mining business. The gross losses for the six months ended June 30, 2023 and 2022 were US$2.0 million and US$0.9 million for the data center business. The gross profit from mining pool business for the six months ended June 30, 2023 included gross profit of US$0.1 million from primary mining pool services and gross profit US$0.5 million from sub mining pool services, while the gross profits from mining pool business for the six months ended June 30, 2022 were all from primary mining pool services.
With respect to the mining pool business, the gross profits are mainly due to the continuous declines in cryptocurrency prices, which has drove down the whole computing power since the first half of 2022 and remained lower prices in the first half of 2023 as compared to the corresponding period of 2022. And for safety elements, the Company has also ceased registering new users from Russia and started to retire accounts of existing users from Russia since March 2022, which could also be a negative impact on mining pool business.
With regards to the cryptocurrency mining business, the gross profits are largely driven by the cryptocurrency prices. The decreased gross profit was primarily attributable to lower cryptocurrency asset prices in first half of 2023 as compared with the overall prices in the first half of 2022, which led to our suspension of the operation of certain types of BTC mining machines. And after the Ethereum Merge (The Ethereum Merge, namely, of the Ethereum Mainnet and the Beacon Chain Proof-of-Stake system, occurred on September 15, 2022.), the Company changed its strategy to ETC cryptocurrency mining operations, which also led to an obvious declines of gross profits.
For the data center business, revenues are generated from providing its customers with rack space, utility, and cloud services such as virtual services, virtual storage, and data backup services. Cost of revenue is primarily comprised of direct production cost related to data center service as well as depreciation and amortization of the data centers. The increased gross losses of data center business for the six months ended June 30, 2023 were mainly attributable to the continuous declines in cryptocurrency prices since the second quarter of 2022, which led its customers to suspend their cryptocurrency mining operations.
Sales and marketing expenses. Sales and marketing expenses decreased of US$0.1 million from US$0.3 million for the six months ended June 30, 2022 to US$0.2 million for the six months ended June 30, 2023.
General and administrative expenses. General and administrative expenses decreased from US$12.4 million for the six months ended June 30, 2022 to US$11.1 million for the six months ended June 30, 2023. The decrease was mainly due to (i) a decrease of US$2.5 million in share-based compensation expenses associated with share options granted to our directors and employees mainly expensed in 2022, (ii) a decrease of US$1.1 million in third-party professional service fees, which was less acquisition activities occurred in 2023, and (iii) a decrease of US$0.7 million in depreciation and amortization expense, which was partially offset by (iv) an increase of US$3.0 million in consulting expenses related to the production of the Company’s LD4 DOGE/LTC mining machine.
Service development expenses. Service development expenses decreased from US$2.2 million for the six months ended June 30, 2022 to US$0.1 million for the six months ended June 30, 2023. The decrease was primarily due to a decrease of US$1.3 million in salary and benefit expenses for employees primarily due to a decrease in staff costs and benefits as a result of a decrease in headcount.
Other operating income
Other operating income remain unchanged of US$0.2 million for the six months ended June 30, 2022 and 2023.
Net (loss) gain on disposal of cryptocurrency assets
Net loss on disposal of cryptocurrencies decreased from US$2.1 million for the six months ended June 30, 2022 to net gain of US$5.8 million for the six months ended June 30, 2023, which was related to decreasing market prices for cryptocurrencies by using first-in-first-out (“FIFO”) to calculate the cost of disposition.
7
Impairment of cryptocurrency assets
Impairment of cryptocurrency assets decreased from US$12.6 million for the six months ended June 30, 2022 to US$3.3 million for the six months ended June 30, 2022, mainly due to the provisions for impairment of cryptocurrency assets held as a result of fluctuations in cryptocurrency prices.
Changes in fair value of contingent considerations
Changes in fair value of contingent consideration was US$1.2 million for the six months ended June 30, 2022, which was mainly due to re-measurement of the fair value of the contingent considerations related to the combination with BTC.com in April 2021.
Impairment of property and equipment
Impairment of property and equipment was US$0.8 million for the six months ended June 30, 2022, which was mainly due to a provision for impairment of mining machines in Kazakhstan.
Operating loss
As a result of the foregoing factors, we recorded operating loss of US$7.5 million for six months ended June 30, 2023, representing a decrease of US$14.5 million, compared with operating loss of US$22.0 million for the six months ended June 30, 2022.
Loss before income taxes
Loss before income taxes was US$5.9 million for the six months ended June 30, 2023, a decrease of US$15.5 million compared with loss before income taxes of US$21.4 million for the six months ended June 30, 2022.
Income tax expense
We recorded income tax expense of nil for the six months ended June 30, 2022 and 2023.
Net loss
As a result of the foregoing factors, we recorded net loss of US$ US$5.9 million for the six months ended June 30, 2023, as compared to net loss of US$21.4 million for the six months ended June 30, 2022.
Net loss attributable to BIT Mining Limited
We recorded net loss attributable to BIT Mining Limited of US$5.9 million for the six months ended June 30, 2023, as compared to net loss attributable to BIT Mining Limited of US$18.5 million for the six months ended June 30, 2022. We also recorded non-GAAP net loss attributable to BIT Mining Limited of US$5.4 million for the six months ended June 30, 2023, as compared to non-GAAP net loss attributable to BIT Mining Limited of US$14.4 million for the six months ended June 30, 2022.
Liquidity and Capital Resources
Our principal sources of liquidity have been cash received from disposal of cryptocurrency assets. As of June 30, 2023, we had US$4.6 million in cash and cash equivalents.
As a holding company with no material operations of our own, we conduct our operations primarily through our wholly- and majority-owned subsidiaries outside mainland China.
We believe that our current cash on hand will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months from the date of this interim report. We also have reduced our expenditures, such as overhead or administrative expenditures and marketing expenses since 2019 and started to mine cryptocurrency assets from our cryptocurrency mining business in February 2021. Cumulatively, all of these factors will have a positive impact on our cash flows for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our existing cash is insufficient to meet our requirements, we may seek to sell additional equity securities or debt securities or borrow from lending institutions. Financing may be unavailable in the amounts we need or on terms acceptable to us, if at all. The sale of additional equity securities, including convertible
8
debt securities, would dilute our earnings per share. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.
The following table sets forth a summary of our cash flows for the six months ended June 30, 2022 and 2023 indicated.
| | Periods ended June 30, | ||
| | 2022 | | 2023 |
| | US$ | | US$ |
Net cash used in operating activities |
| (46,756) |
| (17,070) |
Net cash provided by investing activities |
| 35,058 |
| 15,889 |
Net cash provided by financing activities |
| 20,785 |
| — |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| (394) |
| 297 |
Cash, cash equivalents and restricted cash at the beginning of the period |
| 17,804 |
| 5,574 |
Cash, cash equivalents and restricted cash at the end of the period |
| 26,497 |
| 4,690 |
Net cash used in operating activities
Net cash used in operating activities for the six months ended June 30, 2023 was US$17.1 million, which was primarily attributable to (i) net loss of US$5.9 million adjusted by subtracting depreciation of property and equipment of US$4.9 million, (ii) impairment of cryptocurrency assets of US$3.3 million, (iii) an increase in accrued expenses and other current liabilities of US$11.3 million, and (iv) an increase in accounts payable of US$3.5 million, which was partially offset by (v) an increase in cryptocurrency assets of US$24.2 million; (vi) net gain on disposal of cryptocurrency assets of US$5.8 million; and (vii) an increase in prepayments and other current assets of US$4.0 million.
Net cash used in operating activities for the six months ended June 30, 2022 was US$46.8 million, which was primarily attributable to (i) net loss of US$21.4 million adjusted by subtracting depreciation of property and equipment of US$11.8 million, (ii) impairment of cryptocurrency assets of US$12.6 million, (iii) amortization of intangible assets of US$4.8 million, (iv) share-based compensation of US$4.5 million, (v) net loss on disposal of cryptocurrency assets of US$2.1 million, (vi) amortization of right-of-use assets of US$1.2 million, (vii) impairment of property and equipment of US$0.8 million, and (viii) a decrease in prepayments and other current assets of US$8.6 million. Net cash used in operating activities for the six months ended June 30, 2022 was partially offset by (i) gain from equity method investments of US$0.2 million, (ii) changes in fair value of contingent considerations of US$1.2 million, (iii) a decrease in accounts payable of US$4.8 million, (iv) an increase in cryptocurrency assets of US$38.5 million, (v) a decrease in amounts due to related parties of US$7.6 million, (vi) a decrease in operating lease labilities of US$1.7 million, (vii) a decrease in accrued expenses and other current liabilities of US$14.9 million, and (viii) an increase in deposits of US$2.3 million.
Net cash provided by investing activities
Net cash provided by investing activities for the six months ended June 30, 2023 was US$15.9 million, which was primarily attributable to (i) cash received from disposal of cryptocurrency assets of US$10.9 million, (ii) cash received from redemption of short-term investment of US$2.4 million, and (iii) cash received from disposal of long-term investments of US$2.6 million.
Net cash provided by investing activities for the six months ended June 30, 2022 was US$35.1 million, which was primarily attributable to (i) cash received from disposal of cryptocurrency assets of US$34.4 million, and (ii) cash received from return on long-term investments of US$1.5 million. Net cash provided by investing activities for the six months ended June 30, 2022 was partially offset by cash paid for acquisition of property and equipment of US$0.8 million.
Net cash provided by financing activities
Net cash provided by financing activities for the six months ended June 30, 2023 was nil.
Net cash provided by financing activities for the six months ended June 30, 2022 was US$20.8 million, which was primarily attributable to (i) proceeds from issuance of ordinary shares for private placement of US$14.5 million, and (ii) proceeds from short-term borrowings of US$6.3 million.
9
Cash and Cash Equivalents, Restricted Cash and Short-term Investment
As of June 30, 2023, the Company had cash and cash equivalents of US$4.6 million and restricted cash of US$0.1 million, compared with cash and cash equivalents of US$5.4 million, restricted cash of US$0.1 million and short-term investment of US$2.4 million as of December 31, 2022.
Cryptocurrency Assets
As of June 30, 2023, the Company had cryptocurrency assets of US$14.7 million in aggregate, which is the U.S. dollar equivalent of 210 BTC, 90.3 million DOGE, 10,030 LTC, and various other cryptocurrency assets, including those generated from its mining pool and cryptocurrency mining businesses.
Capital Expenditures
We made capital expenditures, including for property and equipment and intangible assets, of US$0.8 million and nil for the six months ended June 30, 2023 and 2022, respectively. We expect that our capital expenditures will increase in the future, as we plan to expand our cryptocurrency mining operation and data center business internationally.
Off-balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Cautionary Statement Regarding Forward Looking Statements
We have made statements in this report that constitute forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “could” and similar expressions. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.
These forward-looking statements include statements about:
· | our business and operating strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected time; |
· | developments in, or changes to, laws, regulations, governmental policies, incentives, taxation and regulatory and policy environment affecting our operations and the cryptocurrency and blockchain industry; |
· | our future business development, financial condition and results of operations; |
· | expected changes in our revenues, costs or expenditures; |
· | general business, political, social and economic conditions in mainland China and the international markets we have operations; and |
The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except as required by law; we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
10
In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update this forward-looking information. Nonetheless, we reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this interim report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
11
Document and Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Entity Information | |
| Document Type | 6-K |
| Amendment Flag | false |
| Document Period End Date | Jun. 30, 2023 |
| Document Fiscal Year Focus | 2023 |
| Document Fiscal Period Focus | Q2 |
| Entity Registrant Name | BIT Mining Limited |
| Entity Central Index Key | 0001517496 |
| Current Fiscal Year End Date | --12-31 |
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Class A Ordinary shares | ||
| Ordinary shares, par value | $ 0.00005 | $ 0.00005 |
| Ordinary shares, shares authorized | 1,599,935,000 | 1,599,935,000 |
| Ordinary shares, shares issued | 1,111,232,210 | 1,063,813,210 |
| Ordinary shares, shares outstanding | 1,111,232,210 | 1,063,813,210 |
| Class B Ordinary shares | ||
| Ordinary shares, par value | $ 0.00005 | $ 0.00005 |
| Ordinary shares, shares authorized | 400,000,000 | 400,000,000 |
| Ordinary shares, shares issued | 99 | 99 |
| Ordinary shares, shares outstanding | 99 | 99 |
| Class A preference shares | ||
| Preference Shares, Par Value | $ 0.00005 | $ 0.00005 |
| Preference Shares, Shares Authorized | 65,000 | 65,000 |
| Preference Shares, Shares Issued | 65,000 | 65,000 |
| Preference Shares, Shares Outstanding | 65,000 | 65,000 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Class A ordinary shares |
Class A preference shares |
Class B ordinary shares |
Ordinary shares |
Additional paid-in capital |
Treasury shares |
Accumulated other comprehensive loss |
Accumulated deficit and statutory reserve |
Noncontrolling interests |
Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 36 | $ 590,567 | $ (21,604) | $ (2,355) | $ (386,754) | $ 25,373 | $ 205,263 | |||
| Balance, shares at Dec. 31, 2021 | 710,078,070 | 65,000 | 99 | |||||||
| Net loss | (18,490) | (2,955) | (21,445) | |||||||
| Foreign currency translation loss | (801) | (101) | (902) | |||||||
| Issuance of Class A ordinary shares and pre-funded warrants in private placement, net of issuance costs | 6 | 14,473 | 14,479 | |||||||
| Issuance of Class A ordinary shares and pre-funded warrants in private placement, net of issuance costs, shares | 112,000,000 | |||||||||
| Issuance of ordinary shares for asset acquisition | 1 | 3,415 | 3,416 | |||||||
| Issuance of ordinary shares for asset acquisition, shares | 16,038,930 | |||||||||
| Purchase of non-controlling interests | (1,096) | (16,689) | (17,785) | |||||||
| Share-based compensation | 1 | 4,473 | 4,474 | |||||||
| Share-based compensation, shares | 15,752,320 | |||||||||
| Balance at Jun. 30, 2022 | 44 | 611,832 | (21,604) | (3,156) | (405,244) | 5,628 | 187,500 | |||
| Balance, shares at Jun. 30, 2022 | 853,869,320 | 65,000 | 99 | |||||||
| Balance at Dec. 31, 2021 | 36 | 590,567 | (21,604) | (2,355) | (386,754) | $ 25,373 | 205,263 | |||
| Balance, shares at Dec. 31, 2021 | 710,078,070 | 65,000 | 99 | |||||||
| Balance at Dec. 31, 2022 | 54 | 620,807 | (21,604) | (3,960) | (542,169) | 53,128 | ||||
| Balance, shares at Dec. 31, 2022 | 1,063,813,210 | 65,000 | 99 | |||||||
| Net loss | (5,851) | (5,851) | ||||||||
| Foreign currency translation loss | (440) | $ (440) | ||||||||
| Issuance of ordinary shares from exercise of share-based awards, shares | 15,752,320 | |||||||||
| Share-based compensation | 754 | $ 754 | ||||||||
| Share-based compensation, shares | 47,419,000 | |||||||||
| Balance at Jun. 30, 2023 | $ 54 | $ 621,561 | $ (21,604) | $ (4,400) | $ (548,020) | $ 47,591 | ||||
| Balance, shares at Jun. 30, 2023 | 1,111,232,210 | 65,000 | 99 |
ORGANIZATION |
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| ORGANIZATION | 1. ORGANIZATION BIT Mining Limited (the “Company”) was incorporated under the laws of the Cayman Islands on April 20, 2007 under the original name of “Fine Success Limited”, which was changed to “500wan.com” on May 9, 2011, and changed to “500.com Limited” on October 9, 2013. The Company changed to the new name of “BIT Mining Limited” and the new ticker symbol “BTCM” effective April 20, 2021. The Company has completed the transformation of its business and become an enterprise that primarily engages in cryptocurrency mining, data center operation and mining pool operation in 2021. As of June 30, 2023, the Company has subsidiaries incorporated in countries and jurisdictions including British Virgin Islands, Cayman Islands, Hong Kong, the United States of America (“USA”), Kazakhstan, Canada, mainland China, Malta, Cyprus and Curacao. As of June 30, 2023, the Company’s major subsidiaries are listed below:
* A subsidiary of the Multi Group |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and use of estimates The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s most recent consolidated annual financial statements filed with the SEC on Form 20-F. The accompanying unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for the consolidated financial statements. Certain information and note disclosures normally included in the Group’s annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with such rules and regulations. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair statement of the Group’s financial position as of June 30, 2023 and results of operation and cash flows for the six months ended June 30, 2022 and 2023. Results for the six months ended June 30, 2023 are not necessarily indicative of the results expected for the full fiscal year or for any future period. The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s unaudited interim condensed consolidated financial statements include, but are not limited to, allowance for credit losses, useful lives of property and equipment and intangible assets, impairment of long-lived assets, the valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation, valuation of derivative instruments and valuation of contingent consideration from business combination and purchase price allocation for assets acquisition. Actual results could materially differ from those estimates. Principles of consolidation The unaudited interim condensed consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. The results of the subsidiaries are consolidated from the date on which the Company obtains control and continue to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. All significant intercompany balances and transactions among the Company and its subsidiaries have been eliminated on consolidation. Revision of Prior Period Financial Statements During the review of the Company’s financial statements for the six months ended June 30, 2023, the Company identified an error in the presentation of property and equipment, net, cost of revenues and losses per ADS attributable to BIT Mining Limited - basic and diluted in the financial statements for the six months ended June 30, 2022 due to the overstatement of depreciation expense from a calculation error. The property and equipment, net should have been US$52,697 but was stated as US$47,151 as of June 30, 2022, cost of revenue should have been US$483,852 but was stated as US$489,398 for the six months ended , and losses per ADS attributable to BIT Mining Limited - basic and diluted should have been US$2.58 but was stated as US$3.30 for the ended June 30, 2022, resulting in adjustments to the previous reported financial statements of the Company for the six months ended June 30, 2022. In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on analysis of quantitative and qualitative factors, determined that the error was immaterial to the prior reporting period. Correcting prior period financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior period financial statements. Therefore, as permitted by SAB108, the Company corrected, in the current filing, the previously reported results for the six months ended June 30, 2022. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign currency translation The functional currency of the Company, BVI, 500wan HK, Bee Computing, Alliance Technologies, Sunstar Technology, Skill Esport, Summit Bend, Ohio I, Ohio II and Asgard is the US$. The functional currency of the Multi Group and its subsidiaries is EUR. The functional currency of Crypto Flow Limited (formerly named “Loto Interactive Limited”) and its subsidiaries is HKD. E-Sun Sky Computer and Beijing Guixinyanghang determined their functional currencies to be RMB, which is their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. The Group uses the monthly average exchange rate for the period and the spot exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss as a component of shareholders’ equity. Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Exchange gains and losses resulting from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive loss. Business combinations, asset acquisitions and non-controlling interests The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), “Business Combinations”. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair value are recognized in earnings. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over, (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings. If investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of relative fair values. The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. In a business combination or asset acquisition, the Company may recognize identifiable intangibles that meet either or both the contractual legal criterion or the separability criterion. Identifiable intangible assets recognized in the Company’s acquisitions generally include brand name, strategic contract and unpatented technology. For the Company’s majority-owned subsidiaries, non-controlling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. “Net loss” on the unaudited interim condensed consolidated statements of comprehensive loss include the “net loss attributable to non-controlling interests”. The Company has purchased all of the non-controlling interests in its subsidiary in June 2022. Therefore there were no non-controlling interests in the Company’s consolidated balance sheets as of December 31, 2022 and June 30, 2023. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Group recognized changes in fair value of contingent consideration in the amount of a gain of US$1,247 during the six months ended June 30, 2022, which was related to the remeasurement of the contingent consideration from the acquisition of Alliance International Technologies Limited (formerly, Blockchain Alliance Technologies Limited), which operates the mining pool under the brand of BTC.com. The contingent consideration is settled as of June 30, 2022. There was no such balance during the six months ended June 30, 2023. Cryptocurrency assets Cryptocurrency assets are included in current assets in the accompanying unaudited interim condensed consolidated balance sheets. Cryptocurrency assets generated from the cryptocurrency mining business and the mining pool business are accounted for in connection with the Group’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, or more frequently, when events or changes in circumstances occur, principally decreases in the quoted prices of the cryptocurrencies, indicating that it is more likely than not that the indefinite-lived asset is impaired. In determining if an impairment has occurred, the Company considers the intraday lowest quoted price of one unit of cryptocurrency asset since acquiring the cryptocurrency asset. If the then current carrying value of the unit of cryptocurrency exceeds the fair value so determined, an impairment loss has occurred with respect to those units of cryptocurrencies in the amount equal to the difference between their carrying values and the fair value determined. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses if not permitted. For the six months ended June 30, 2022 and 2023, the Group recognized impairment loss of US$12,620 and US$3,254, respectively. Cryptocurrencies generated from the cryptocurrency mining business and the mining pool business as well as the cryptocurrencies distributed to mining pool participants are included within operating activities in the accompanying unaudited interim condensed consolidated statements of cash flows. The sales of cryptocurrencies are included within investing activities in the accompanying unaudited interim condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in gain or loss of disposal of cryptocurrencies in the unaudited interim condensed consolidated statements of comprehensive loss. The Group accounts for its gains or losses in accordance with the first-in-first-out (FIFO) method of accounting. The Company also enters into transactions to transfer cryptocurrencies to pay for operating expenses and acquire certain assets. Such transactions are accounted for in accordance with ASC 610-20, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets”. Under ASC 610-20, if the Group does not have a controlling financial interest in the entity that holds the cryptocurrency and the arrangement meets the criteria to be accounted for as a contract, the Group would de-recognize the cryptocurrency and recognize a gain or loss on the transfer of the cryptocurrency when control of the cryptocurrency transfers to the counterparty. The gain or loss is measured as the difference between the amount of consideration allocated to the cryptocurrency and its carrying amount. For the six months ended June 30, 2022 and 2023, the gain or loss recorded on such transactions was nil. Derivative contracts Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. Derivative contracts are recognized as either assets or liabilities on the unaudited interim condensed consolidated balance sheets at fair value, with changes in fair value recognized as changes in fair value of derivative instruments. In June 2023, the Company entered into two collar arrangements with a third party with one-month term to hedge the effect of future price fluctuations on Ethereum. The arrangements result in the Company settling a certain amount of Ethereum at prices within a range. The arrangements are accounted for as derivative instruments and recorded at fair value. The Company measured the fair value of the derivative instruments using Black-Scholes valuation model, based on various assumptions including quoted Ethereum prices, time value and volatility factors, as well as other relevant economic measures. Such valuations are classified within level 3 of the fair value hierarchy. As of June 30, 2023, the Company recognized an asset of US$2,039 which was included in prepayment and other current assets in the unaudited interim condensed consolidated balance sheet. For the six months ended June 30, 2023, the Company recognized changes in fair value of derivative instruments of a gain of US$275 in the unaudited interim condensed consolidated statements of comprehensive loss. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of long-lived assets other than goodwill The Group evaluates its long-lived assets or asset group, including property and equipment, intangible assets and right-of-use assets, with finite lives for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of a group of long-lived assets may not be fully recoverable. When these events occur, the Group evaluates the impairment by comparing the carrying amount of the assets to future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the asset group over its fair value. For the six months ended June 30, 2022, the Group recorded an impairment loss of US$836 for the mining machines in Kazakhstan. No impairment of long-lived assets other than goodwill was recorded during the six months ended June 30, 2023. Fair value measurements Financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable, prepayments and other current assets, equity investments without readily determinable fair values, equity method investments, accounts payable and accrued expenses and other current liabilities. The Group carries the investment under the measurement alternative basis and equity method investment on other-than-temporary basis. Derivative assets related to the collar arrangement is measured at fair value on a recurring basis. The carrying values of other financial instruments approximate their fair values due to their short-term maturities. The Group’s non-financial assets, including cryptocurrency assets, intangible assets, goodwill and property and equipment are measured at fair value when an impairment charge is recognized. Fair value of cryptocurrencies is based on quoted prices in active markets. The Group applies ASC 820 (“ASC 820”), “Fair Value Measurements and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2— Include other inputs that are directly or indirectly observable in the marketplace. Level 3— Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. Related party transactions A related party is generally defined as (i) any person holds 10% or more of the Company’s securities and their immediate families (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition The Group’s revenues were derived principally from cryptocurrency mining, data center services and mining pool services. The Group also provided online gaming services through TMG and its subsidiaries and had fully terminated such business in January 2022. The Group accounts for revenues under ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”). Revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which the Group expects to be entitled to in exchange for those goods or services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies a performance obligation. The primary sources of the Group’s revenues are as follows: Cryptocurrency mining The Group has entered into a cryptocurrency mining pool, BTC.com, by executing contracts with the mining pool operator to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the mining pool operator. In exchange for providing computing power, the Group is entitled to considerations in the form of cryptocurrencies from the mining pool operator (less pool operator fees to the mining pool operator which are recorded net with revenues), which is calculated based on a predetermined formula agreed by the Group and the mining pool operator as a part of the contracts. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the pool operator. The Group is entitled to consideration even if a block is not successfully placed by the mining pool operator. The transaction consideration the Group receives is noncash consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. All considerations are variable and revenue is recognized when the computing power is provided to the mining pool and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions. Cryptocurrency mining revenue generated from providing computing power to the Group's affiliated consolidated subsidiary, BTC.com, is eliminated in consolidation, along with corresponding intercompany cost of mining pool services. Data center services The Group provides data center services such as providing its customers with rack space, power and equipment, and cloud services such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month. Mining pool services The Group operates its mining pool, BTC.com, to enable providers of computing power (“pool participants”) to participate in crypto-mining activities in an efficient manner in the blockchain network. It receives all the mining rewards, and then allocates mining rewards to each pool participant net of the pool operator fees based on the sharing mechanism predetermined. Using computing power provided by the pool participants, the Group provides transaction verification services to the blockchain networks and transaction requesters (the “primary mining pool services" or the Company as the “primary mining pool operator”). During the year ended December 31, 2022, the Company entered into arrangements with certain third-party mining pool operators to contribute a portion of the computing power it obtained from BTC.com pool participants to the third-party mining pool operators. In exchange, the Company is entitled to considerations in the form of cryptocurrencies from the third-party mining pools operators calculated based on a predetermined formula regardless of whether the third-party mining pool operators successfully validate the blocks (the “sub mining pool services" or the Company as the “sub mining pool operator”) (primary mining pool services and sub mining pool services collectively referred as the “mining pool services”). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Primary mining pool services As the primary mining pool operator, the Group provides transaction verification services. Transaction verification services are an output of the Group’s ordinary activities. The mining rewards the Group receives from the blockchain network include the block rewards and the transaction verification fees related to the transactions included in the block. For block rewards, the customer is the blockchain as the Group attempts to be the first vendor to solve an algorithm that it will then place as a successful block on the blockchain in exchange for cryptocurrency block rewards awarded by the blockchain protocols. For transaction verification fees, the requester for each blockchain transaction request is the customer. A contract with the blockchain for the block rewards or with the transaction requester for the transaction verification fees exists upon the transfer of a verified block to the blockchain. The performance obligation is to validate each block. Revenue is recognized at the point when the block validation is successfully completed, which is also when the Group receives the rewards. Revenue, which is noncash consideration, is measured at the fair value of block rewards and transaction verification fees earned at contract inception. The Group considers itself the principal in transactions with the blockchain networks as it coordinates all the computing power within the mining pool, utilizes such aggregated computing power to validate blocks, collects centrally all mining rewards and distributes them in accordance with the predetermined sharing mechanisms. The Group has control over the pool participants’ computing power. Although the pool participants can enter and exit the pool at will and deploy the qualifying types of mining machines at the choices of the pool participants, during the mining process, the Group dictates the tasks and the participants’ mining machines merely follow the allocation prescribed by the Group. As a result, the Group is primarily responsible for fulfilling the promise to provide the specified service, which is to transfer a verified block to the blockchain. Further, under existing sharing mechanisms, the Group is exposed to the risk that actual block rewards may differ from expected rewards, therefore, bears the inventory risk before the specified service has been transferred to the blockchain network. Therefore, the Group recognizes the mining pool revenue on a gross basis by recording all of the transaction fees and block rewards earned under the primary mining pool services as revenue, and the portion of the transaction fees and block rewards remitted to pool participants as cost of revenue. Sub mining pool services As the sub mining pool operator, using computing power obtained from pool participants, the Group provides computing power to certain third-party mining pool operators in exchange for considerations in the form of cryptocurrencies from the third-party mining pool operators. As the Group is entitled to consideration, which is calculated based on a predetermined formula agreed by the Group and the mining pool operators as a part of the contracts, even if a block is not successfully placed by the third-party mining pool operators, the Group entered into such arrangements to stabilize the mining rewards it is entitled to. Same to cryptocurrency mining arrangements, the contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the third-party mining pool operators. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the third-party pool operators. The transaction consideration the Group receives is noncash variable consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. The revenue is recognized when the computing power is provided to the third-party mining pool operators and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions. The Group considers itself the principal in sub mining pool service transactions as the pool participants of BTC.com do not directly enter into contracts with the third-party mining pool operators and the Group is primarily responsible for fulfilling the promise to provide the computing power and to remit a portion of the mining rewards to the pool participants. In case of the non-performance of the third-party mining pool operators, the Group is obligated to compensate the pool participants for considerations they are entitled to. As a result, the Group determined that it controls the computing power before it is provided to the third-party mining pool operators. The Group recognizes the mining pool revenue on a gross basis by recording all of the mining rewards earned under the sub mining pool services as revenue, and the portion of mining rewards remitted to pool participants as cost of revenue. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Contract balances The Group does not have any contract assets. The Group’s contract liabilities include advance from customers, which is recorded when consideration is received from a customer prior to providing services to the customer under the terms of a contract. As of December 31, 2022 and June 30, 2023, the Group recorded advance from customers balance of US$384 and US$393 respectively, which was included in “accrued expenses and other current liabilities” in the accompanying unaudited interim condensed consolidated balance sheets. US$277 and US$76 of deferred revenue included in the opening balances of advance from customers was recognized during the six months ended June 30, 2022 and 2023, respectively. The amounts were included in revenues on the accompanying unaudited interim consolidated statements of comprehensive loss. Refer to Note 20 regarding the discussion of the Group’s disaggregate revenue data. Cost of services Cost of mining pool services Cost of mining pool services which was offered under BTC.com consists primarily of the mining rewards allocated to each pool participant in exchange for their computing power contributed to the mining pool. The mining rewards allocated to the pool participants include both the block rewards as well as the transaction verification fees related to the transactions included in the block, depending on the sharing mechanism chosen by individual pool participants. Cost of mining pool services also consists of other direct costs related to providing the mining pool service such as server fees and labor for maintaining the mining pool service. Cost of mining pool services before inter-segment elimination were US$482,775 and US$136,910 for the six months ended June 30, 2022 and 2023, respectively. Cost of mining pool services after inter-segment elimination were US$447,997 and US$125,352 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Cost of data center services The cost of data center services consists primarily of direct production costs related to data center service, including the direct service charges for operations. The amounts were US$4,319 and US$11,491 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Cost of cryptocurrency mining The cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges. The amounts before inter-segment elimination were US$19,871 and US$8,131 for the six months ended June 30, 2022 and 2023, respectively. The amounts after inter-segment elimination were US$13,700 and US$2,302 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Depreciation fees Depreciation fees, which consist primarily of depreciation of machinery and equipment related to cryptocurrency mining and data center services, were US$11,038 and US$4,619 for the six months ended June 30, 2022 and 2023, respectively. These costs are recorded in unaudited interim condensed consolidated statements of comprehensive loss on a straight-line basis over the useful life of the machinery and equipment. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Amortization fees Amortization fees, which consist primarily of amortization of intangible assets arising from business combination and assets acquisitions, were US$4,748 and US$606 for the six months ended June 30, 2022 and 2023, respectively. These costs are recorded in unaudited interim condensed consolidated statements of comprehensive loss on a straight-line basis over the useful life of the intangible assets. Cost of services also comprised lottery insurance expenses, regulatory and compliance fees, platform fees, employee costs, account handling expense, business tax and surcharges and other direct costs incurred in providing services. These costs are expensed as incurred. Recent accounting pronouncements The Group has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its unaudited interim condensed consolidated financial statements, based on current information.
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CONCENTRATION OF RISKS |
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| CONCENTRATION OF RISKS | 3. CONCENTRATION OF RISKS Concentration of credit risk Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, and accounts receivable. As of June 30, 2023, substantially all of the Group’s cash and cash equivalents were deposited in financial institutions located in mainland China, Hong Kong, United States and Malta, which management believes are of high credit quality. Concentration of customers For the six months ended June 30, 2022 and 2023, the customers accounted for 10% of more of the Group’s revenues were as follows:
Concentration of suppliers For the six months ended June 30, 2022 and 2023, the supplier accounted for 10% of more of the Group’s costs was as follows:
3. CONCENTRATION OF RISKS (continued) Vulnerability due to change of regulations or policies The blockchain and cryptocurrency mining business could be significantly affected by, among other things, the regulatory and policy developments in international markets where the Company operates, such as the United States and Kazakhstan. Governmental authorities are likely to continue to issue new laws, rules and regulations governing the blockchain and cryptocurrency industry in and enhance enforcement of existing laws, rules and regulations. For example, the People’s Bank of China (the “PBOC”), Ministry of Industry and Information Technology, State Administration for Industry and Commerce, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission issued “Announcement on Preventing Token Fundraising Risks” on September 4, 2017, prohibiting all organizations and individual from engaging in initial coin offering transactions. On May 21, 2021, the Financial Stability and Development Committee of the State Council in mainland China called for the need to resolutely control financial risks and crack down on cryptocurrency mining and trading activities. On June 18, 2021, the “Notice of the Sichuan Provincial Development and Reform Commission and the Sichuan Provincial Energy Administration on the Cleanup and Shutdown of Virtual Currency Mining Projects” required electricity companies within Sichuan Province to close down power supply to businesses involved in cryptocurrency mining. On June 21, 2021, the Company terminated the operations of the two data centers in Sichuan according to the written notice from the Local Power Supplier. As of June 30, 2023, the mining pool subsidiary of the Company has completely exited the mainland China market, ceased registering new users from mainland China and retired accounts of existing users from mainland China. |
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ASSET ACQUISITION |
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| ASSET ACQUISITION | 4. ASSET ACQUISITION On May 31, 2022, the Company completed the first closing of its previously announced share exchange agreement dated April 5, 2021 (as amended and restated in April 2022, the “Amended and Restated Share Exchange Agreement”) entered into by the Company and the shareholders (the “Selling Shareholders”) of the acquisition of Bee Computing (HK) Limited (“Bee Computing”). At the first closing of the Amended and Restated Share Exchange Agreement, the Company issued 16,038,930 of its Class A ordinary shares to the Selling Shareholders. Meanwhile, the Company’s preexisting loans to Bee Computing was considered effectively settled upon the acquisition. The settlement amount was included in the total purchase consideration. The transaction was accounted for as an asset acquisition as Bee Computing did not meet the definition of a business upon acquisition. The following table presents the calculation of the purchase consideration of the acquisition date.
The following is a summary of the estimated fair value of the assets acquired as of the acquisition date.
The acquired intangible asset was the unpatented technology for the Litecoin ASIC mining machines, which has estimated useful life of 3 years from the date of acquisition. |
INVESTMENTS |
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| INVESTMENTS | 5. INVESTMENTS Long-term Investments
Equity investments without readily determinable fair value In accordance with ASC 321, the Group elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The carrying amount of the Group’s equity investments measured using the measurement alternative was US$9,181, net of US$4,123 in accumulated impairment and US$8,952, net of US$4,123 in accumulated impairment as of December 31, 2022 and June 30, 2023, respectively. There was no impairment recognized for the six months ended June 30, 2022 and 2023. Equity method investments Investments were classified as equity method investments as the Group have significant influence over the entities. During six months ended June 30, 2023, the Company derecognized US$1,791 from disposition of an equity method investment. The net operating income from equity method investments for the six months ended June 30, 2022 and 2023 were US$151 and US$382, respectively. |
CRYPTOCURRENCY ASSETS |
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| CRYPTOCURRENCY ASSETS | 6. CRYPTOCURRENCY ASSETS The amounts represented the cryptocurrencies held by the Group as of December 31, 2022 and June 30, 2023. For the year ended December 31, 2022 and six month ended June 30, 2023, the Group generated cryptocurrencies through cryptocurrency mining business and the mining pool business. The movement of cryptocurrencies was as follows:
* In January 2022, the Company entered into a loan agreement and a pledge agreement for one year, pursuant to which the lender agreed to lend to the Company funds equal to approximately US$6,306, which was 65% of the current fair market value of 4,000 Ethereum, with a fixed interest rate of 3.25% per annum. In June 2022, the loan has been fully settled by rendering the pledged Ethereum to the lender. Disposal of cryptocurrency assets for the six months ended June 30, 2022 included the carrying amount of the pledged Ethereum of US$9,628 rendered to the lender and the Group recorded a loss on disposal of cryptocurrencies in the amount of approximately US$3,322. 6. CRYPTOCURRENCY ASSETS (continued) In June 2023, the Company entered into two collar arrangements with a third party with one-month term to hedge the effect of future price fluctuation on Ethereum. Pursuant to the arrangements, the Company transferred in total of 3,200 Ethereum to the counterparty and received USDT and USDC equal to 70% of the initial notional amount of the Ethereum at the agreement date. Disposal of cryptocurrency assets for the six months ended June 30, 2023 included the net effect of the carrying amount of the Ethereum transferred to the counterparty of US$3,519 and the fair value of the USDC and USDC received of US$4,061. The Group also recorded a gain on disposal of cryptocurrencies related to the transfer of the Ethereum in the amount of US$2,306. |
PREPAYMENTS AND OTHER RECEIVABLES |
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| PREPAYMENTS AND OTHER CURRENT ASSETS | 7. PREPAYMENTS AND OTHER CURRENT ASSETS Prepayments and other current assets consist of the following:
* Deferred expense represents cash paid in advance to vendors, such as consultant expense and compliance expense, which would be amortized according to their respective service periods. |
PROPERTY AND EQUIPMENT, NET |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT, NET | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT, NET | 8. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following:
Depreciation expenses for the six months ended June 30, 2022 and 2023 were approximately US$11,842 and US$4,868, respectively. The impairment as of December 31, 2022 and June 30, 2023 was mainly due to the impairment of mining machines in Kazakhstan and the USA. Impairment for the six months ended June 30, 2022 and 2023 were approximately US$836 and nil, respectively. |
INTANGIBLE ASSETS, NET |
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| INTANGIBLE ASSETS, NET | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS, NET | 9. INTANGIBLE ASSETS, NET Intangible assets consist of the following:
* The impairment as of December 31, 2022 and June 30, 2023 include impairment of US$26,909 related to the acquired intangible assets of the Multi Group that were recognized during the year ended December 31, 2019, impairment of US$48,555 related to the brand name and domain name of Alliance International Technologies and impairment of US$7,539 for the strategy contract of Asgard that were recognized during the year ended December 31, 2022. Amortization expense for the six months ended June 30, 2022 and 2023 were approximately US$4,776 and US$642, respectively. Annual estimated amortization expense for each of the five succeeding years is as follows:
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OPERATING LEASES |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPERATING LEASES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPERATING LEASES | 10. OPERATING LEASES The Group entered into various operating lease agreements for offices space. The remaining lease terms range from 0.17 to 3.25 years. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following table presents the operating lease related assets and liabilities recorded on the Group’s unaudited interim condensed consolidated balance sheet.
For the six months ended June 30, 2022, the Group had operating lease costs of approximately US$925 and recorded short-term lease costs of US$359. For the six months ended June 30, 2023, the Group had operating lease costs of approximately US$664 and recorded short-term lease costs of US$246. Cash paid for amounts included in the measurement of operating lease liabilities were US$1,085 and US$678 for the six months ended June 30, 2022 and 2023, respectively. As of June 30, 2023, the weighted average remaining lease term was 3.22 years and the weighted average discount rate was 3.28%. The following table summarizes the maturity of operating lease liabilities as of June 30, 2023:
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ACCOUNTS PAYABLES |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLES | |||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLES | 11. ACCOUNTS PAYABLES Accounts payables consist of the following:
* Pool participants payable represents payments to pool participants in the mining pool business which are settled in cryptocurrencies. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
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| ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following:
* Advance from end users represents payments received by the Group in advance from the end users prior to the services to be provided. ** Deposit from customers represents payments received by the Group in advance from customers in the data center business. |
INCOME TAXES |
6 Months Ended |
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Jun. 30, 2023 | |
| INCOME TAXES | |
| INCOME TAXES | 13. INCOME TAXES Cayman Islands Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains. In addition, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. USA Summit Bend, Ohio I, Ohio II and Asgard are incorporated in the USA. Under the current laws, profits tax in USA is generally assessed at the rate 21% of taxable income 13. INCOME TAXES (continued) British Virgin Islands Under the current laws of the British Virgin Islands, subsidiaries incorporated in British Virgin Islands are not subject to tax on income or capital gains. Curacao Multi Pay N.V. is incorporated in the Curacao, Under the current laws, profits tax in Curacao is generally assessed at the rate of 2% of taxable income. Malta Under the current laws, profits tax in Malta is generally assessed at the rate of 35% of taxable income. When dividend is paid or declared to the holding company, the paying entity is entitled to claim /7 of the profit tax paid as refund, which may effectively reduce income tax rate to 5%. Cyprus Round Spot Services Ltd is incorporated in Cyprus and does not conduct any substantive operations of its own. No provision for Cyprus income tax has been made in the financial statements as Round Spot Services Ltd had no assessable income for the six months ended June 30, 2022 and 2023. Hong Kong 500wan HK, Sunstar Technology, Skill Esport and Bee Computing are incorporated in Hong Kong, under the current laws, profits tax in Hong Kong is generally assessed at the rate of 8.25% of taxable income 8.25% of taxable income up to HKD2,000 and assessed at the rate of 16.5% of taxable income over HKD2,000. Mainland China A new enterprise income tax law (the “EIT Law”) in mainland China was enacted and became effective on January 1, 2008. The EIT Law applies a uniform 25% enterprise income tax (“EIT”) rate to both foreign invested enterprises and domestic enterprises. Accordingly, subsidiaries incorporate in mainland China are subject to the EIT rate of 25% in 2022 and 2023. No provision for the income tax has been made in the financial statements as the subsidiaries incorporated in mainland China had no assessable income for the six months ended June 30, 2022 and 2023. The Group records a valuation allowance on its deferred tax assets that is sufficient to reduce the deferred tax assets to an amount that is more likely than not to be realized. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit in future earnings will be realized. As of June 30, 2023, the Group had net operating losses (“NOLs”) of approximately US$18,758 from mainland China subsidiaries, and US$47,940 from Hong Kong subsidiaries, which can be carried forward to offset future net profit for income tax purposes. The NOLs from mainland China subsidiaries as of June 30, 2023 will expire in years 2024 to 2028 if not utilized. The Group recorded a full valuation allowance against the deferred tax assets as we have determined that it was more likely than not that all of our deferred tax assets will not be realized in the future due to our continuing pre-tax and taxable losses. The Group accounted for uncertainties in income taxes in accordance with ASC 740. The management evaluated the Group’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of June 30, 2022 and 2023.
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SHARE-BASED PAYMENT |
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| SHARE-BASED PAYMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHARE-BASED PAYMENT | 14. SHARE-BASED PAYMENT On March 28, 2021, the shareholders and board of directors of the Company approved the 2021 Share Incentive Plan (the “Plan”). The Plan provides for the grant of options, restricted shares and other share-based awards. These options were granted with exercise prices denominated in US$, which is the functional currency of the Company. The board of directors has authorized under the Plan the issuance of up to 12% of the Company’s issued and outstanding ordinary shares from time to time, on an as-exercised and fully diluted basis, upon exercise of awards granted under the Plan. The maximum term of any issued share option is ten years from the grant date. A summary of share option and restricted shares activity and related information for the year ended December 31, 2022 and for the six months ended June 30, 2023 are as follows: Share options granted to employees and directors
14. SHARE-BASED PAYMENT (continued) Restricted shares granted to employees and directors
The aggregate intrinsic value in the table above represents the difference between the fair value of Company’s ordinary share and the exercise price. As of June 30, 2023, there was no unrecognized share-based compensation costs related to equity awards granted to employees and directors that is expected to be recognized. 14. SHARE-BASED PAYMENT (continued) Total share-based compensation expenses relating to options and restricted shares granted to employees and directors for the six months ended June 30, 2022 and 2023 are included in:
On June 27, 2022, the Company completed a private placement, in which it issued certain pre-funded warrants to purchase 480,000 ADSs (given the effect of the ADS Ratio Change), Series A warrants to purchase 1,600,000 ADSs (given the effect of the ADS Ratio Change) and Series B warrants to purchase 1,600,000 ADSs (given the effect of the ADS Ratio Change). The pre-funded warrants are exercisable immediately at an exercise price of US$0.10 per ADS (given the effect of the ADS Ratio Change) and were exercised in full in August 2022. Each Series A warrant is exercisable for one ADS at an exercise price of US$11.00 per ADS (given the effect of the ADS Ratio Change). The Series A warrants are immediately exercisable and will expire on the fifth anniversary of the issuance date. Each Series B warrant is exercisable for one ADS at an exercise price of US$10.00 per ADS (given the effect of the ADS Ratio Change). The Series B warrants are immediately exercisable and will expire on the 2½th anniversary of the issuance date. Also see Note 18. On August 16, 2022, the Company completed a private placement, in which it issued Series A warrants to purchase 1,556,667 ADSs (given the effect of the ADS Ratio Change) and Series B warrants to purchase 1,556,667 ADS (given the effect of the ADS Ratio Change). The Series A Warrants have an exercise price of US$6.60 per ADS (given the effect of the ADS Ratio Change), are immediately exercisable and will expire on the fifth anniversary of the issuance date. The Series B Warrants have an exercise price of US$6.00 per ADS (given the effect of the ADS Ratio Change), are immediately exercisable and will expire on the 2½th anniversary of the issuance date. Also see Note 18. 14. SHARE-BASED PAYMENT (continued) A summary of warrants and pre-funded warrant activity and related information for the year ended December 31, 2022 and for the six months ended June 30, 2023 are as follows:
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RELATED PARTY TRANSACTIONS |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | |||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS In June 2022, the Company purchased all remaining equity interest of the subsidiary from Viking Data Centers and it ceased to be a related party of the Company. See Note 19 for detail discussion. Related party transaction
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2023 | |
| COMMITMENTS AND CONTINGENCIES. | |
| COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Contractual arrangements among the Company and the former VIEs Under applicable tax laws and regulations in mainland China, arrangements and transactions among related parties may be subject to audit or scrutiny by the tax authorities in mainland China within ten years after the taxable year when the arrangements or transactions are conducted. The Company could face material and adverse tax consequences if the tax authorities in mainland China were to determine that the Contractual Arrangements among the Company and the respective VIEs were not entered into on an arm’s-length basis and therefore constituted unfavorable transfer pricing arrangements. Unfavorable transfer pricing arrangements could, among other things, result in an upward adjustment on taxation. In addition, the tax authorities in mainland China may impose interest on late payments on the Company and the respective VIEs for the adjusted but unpaid taxes. In the opinion of management, the likelihood of such an upward adjustment on taxation and related interest is remote based on current facts and circumstances. 16. COMMITMENTS AND CONTINGENCIES (continued) Guarantees The Group accounts for guarantees in accordance with ASC topic 460 (“ASC 460”), “Guarantees”. Accordingly, the Group evaluates its guarantees to determine whether (a) the guarantee is specifically excluded from the scope of ASC 460, (b) the guarantee is subject to ASC 460 disclosure requirements only, but not subject to the initial recognition and measurement provisions, or (c) the guarantee is required to be recorded in the financial statements at fair value. The memorandum and articles of association of the Company require that the Company indemnify its officers and directors, as well as those who act as directors and officers of other entities at the Company’s request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedings arising out of their services to the Company. The indemnification obligations are more fully described in the memorandum and articles of association. The Company purchases standard directors and officers’ insurance to cover claims or a portion of the claims made against its directors and officers. Since a maximum obligation is not explicitly stated in the Company’s memorandum and articles of association and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Group has not been required to make payments related to these obligations, and the fair value for these obligations is zero as of December 31, 2022 and June 30, 2023. Indemnity cost There was no indemnity cost occurred as of December 31, 2022 and June 30, 2023. Legal proceedings From time to time, the Group is subject to legal proceedings and claims in the ordinary course of business. The Group records a liability when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. The Group reviews the need for any such liability on a regular basis and has not recorded any material liabilities in this regard during 2022 and for the six months ended June 30, 2023. Operating lease commitments The information of lease commitments is provided in Note 10. |
LOSSES PER SHARE |
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| LOSSES PER SHARE | 17. LOSSES PER SHARE Basic and diluted losses per share for each of the six months ended June 30, 2022 and 2023 presented is calculated as follows:
Losses per ADS have been retrospectively adjusted for the ADS Ratio Change from the former ADS Ratio of 1 ADS to 10 Class A ordinary shares, to the current ADS Ratio of 1 ADS to 100 Class A ordinary shares, effective on December 23, 2022. |
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EQUITY TRANSACTIONS |
6 Months Ended |
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Jun. 30, 2023 | |
| EQUITY TRANSACTIONS | |
| EQUITY TRANSACTIONS | 18. EQUITY TRANSACTIONS For the six months ended June 30, 2022, 15,752,320 restricted shares were vested and exercised without exercise price. On May 31, 2022, 16,038,930 Class A ordinary shares were issued for the asset acquisition. See Note 4 for detailed discussion. On June 27, 2022, the Company completed a private placement, in which it has offered (1) 1,120,000 ADSs (given the effect of the ADS Ratio Change), (2) certain pre-funded warrants to purchase 480,000 ADSs (given the effect of the ADS Ratio Change) (the “Pre-Funded Warrants”) in lieu of the ADSs being offered, and (3) certain warrants including (i) Series A warrants to purchase up to 1,600,000 ADSs (the “Series A Warrants”) (given the effect of the ADS Ratio Change) and (ii) Series B warrants to purchase up to 1,600,000 ADSs (the “Series B Warrants”) (the Series A Warrants and Series B Warrants are collectively referred as the “Warrants”) (given the effect of the ADS Ratio Change), to certain institutional investors. The Warrants are offered together with the ADSs or the Pre-Funded Warrants. The combined purchase price of each ADS and the accompanying Warrants is US$10.00 (given the effect of the ADS Ratio Change). The combined purchase price of each Pre-Funded Warrant and the accompanying Warrants is US$9.90. Each Pre-Funded Warrant is exercisable for one ADS at an exercise price of US$0.10 (given the effect of the ADS Ratio Change). The Pre-Funded Warrants have been exercised in full in August 2022. Each Series A Warrants and Series B warrants is exercisable for one ADS at an exercise price of US$11.00 (given the effect of the ADS Ratio Change) and US$10.00 (given the effect of the ADS Ratio Change), respectively. On August 19, 2022, the Company completed a private placement, in which it has offered (1) 1,556,667 ADSs (given the effect of the ADS Ratio Change), (2) certain warrants including (i) Series A warrants to purchase up to 1,556,667 ADSs (the “Series A Warrants”) (given the effect of the ADS Ratio Change) and (ii) Series B warrants to purchase up to 1,556,667 ADSs (the “Series B Warrants”) (the Series A Warrants and Series B Warrants are collectively referred as the “Warrants”) (given the effect of the ADS Ratio Change), to certain institutional investors. The combined purchase price of each Warrants is US$6.00 (given the effect of the ADS Ratio Change). Each Series A Warrants and Series B warrants is exercisable for one ADS at an exercise price of US$6.60 (given the effect of the ADS Ratio Change) and US$6.00 (given the effect of the ADS Ratio Change), respectively. Effective on December 23, 2022, the ratio of the ADS to its ordinary shares changed from 1 ADS representing 10 Class A ordinary shares to 1 ADS representing 100 Class A ordinary shares (“ADS Ratio Change”). The ADS Ratio Change affected all ADS holders uniformly and did not reduce any ADS holder’s percentage ownership interest. Proportionate voting rights and other rights and preferences of the ADS holders were not reduced by the ADS Ratio Change. All ADS and per ADS data have been retrospectively adjusted to give effect to the ADS Ratio Change. For the six months ended June 30, 2023, 47,419,000 restricted shares were granted, and without exercise price. As of June 30, 2023, 1,111,232,210 and 99 Class A and Class B ordinary shares were and , respectively. |
PURCHASE OF NONCONTROLLING INTEREST |
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| PURCHASE OF NONCONTROLLING INTEREST | 19. PURCHASE OF NON-CONTROLLING INTEREST In September 2021, the Company entered into a Membership Interest Purchase Agreement and certain other auxiliary agreements with Viking Data Centers, LLC (“Viking Data Centers”) to acquire the 51% equity interest in Asgard Data Centers LLC (“Asgard”), which intended to operate a cryptocurrency mining data center in Ohio (the “Ohio Mining Site”). In October 2021, the Company increased its equity interest ownership in the Ohio Mining Site to 55%. The Ohio mining site has a total planned power capacity up to 150 megawatts (“MW”). In June 2022, the Company entered into an agreement with Viking Data Centers that the Company agreed to purchase all remaining equity interest from Viking Data Centers for approximately US$17,785, by transferring certain assets that represent 67.5MW, or 45%, of total planned power capacity at the Ohio Mining Site. After completion of the transaction, the Company has exclusive access to 82.5MW of planned electrical power and Viking Data Centers has exclusive access to the remaining 67.5MW, in accordance to their respective equity ownership immediately prior to the transaction. 19. PURCHASE OF NON-CONTROLLING INTEREST (continued) The following table summarizes the assets transferred:
Net book value of the non-controlling interest purchased was approximately US$16,689 and the difference between the assets transferred and net book of the non-controlling interest purchased was recognized in additional paid-in capital. |
SEGMENT REPORTING |
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| SEGMENT REPORTING | 20. SEGMENT REPORTING The Group continually monitors the reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In December 2020, the Group announced the entrance into the cryptocurrency industry. As of December 31, 2021, the Group have completed the transformation of its business to become a cryptocurrency mining enterprise. In accordance with ASC topic 280, “Segment Reporting”, the Group’s chief operating decision maker has been identified as the Board of Directors and the chief executive officer, who makes resource allocation decisions and assesses performance based on the different business operating results. As a result, the Group has three reportable segments, including the mining pool business, the data center business and the cryptocurrency mining. The Group’s other business, mainly consisting of online gaming in Europe, was not material for the six months ended June 30, 2022 and 2023. The following table presents summary information by segment for the six months ended June 30, 2022 and 2023, respectively.
20. SEGMENT REPORTING (continued)
The following table presents the revenue by the geographical locations of the customers for the six months ended June 30, 2022 and 2023, respectively. The customers for the revenues from primary mining pool services are blockchains for each type of cryptocurrencies, which are decentralized and not associated with specific locations.
The following table presents the long-lived assets (including property and equipment, net and right-of-use assets) by geographical locations as of December 31, 2022 and June 30, 2023, respectively.
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SUBSEQUENT EVENTS |
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| SUBSEQUENT EVENTS | |
| SUBSEQUENT EVENTS | 21. SUBSEQUENT EVENTS The Company entered into two collar arrangements per month with a third party with one-month term to hedge the effect of future price fluctuations on Ethereum from July 2023 to September 2023. The arrangements will result in the Company settling a certain amount of Ethereum at prices within a range. Pursuant to the arrangements, the Company transferred Ethereum to the counterparty and received USDT and USDC equal to 70% of the initial notional amount of the Ethereum at the agreement date.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2023 | |
| Basis of presentation and use of estimates | Basis of presentation and use of estimates The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s most recent consolidated annual financial statements filed with the SEC on Form 20-F. The accompanying unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for the consolidated financial statements. Certain information and note disclosures normally included in the Group’s annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with such rules and regulations. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair statement of the Group’s financial position as of June 30, 2023 and results of operation and cash flows for the six months ended June 30, 2022 and 2023. Results for the six months ended June 30, 2023 are not necessarily indicative of the results expected for the full fiscal year or for any future period. The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s unaudited interim condensed consolidated financial statements include, but are not limited to, allowance for credit losses, useful lives of property and equipment and intangible assets, impairment of long-lived assets, the valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation, valuation of derivative instruments and valuation of contingent consideration from business combination and purchase price allocation for assets acquisition. Actual results could materially differ from those estimates. |
| Principles of consolidation | Principles of consolidation The unaudited interim condensed consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries. The results of the subsidiaries are consolidated from the date on which the Company obtains control and continue to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. All significant intercompany balances and transactions among the Company and its subsidiaries have been eliminated on consolidation. |
| Revision of Prior Period Financial Statements | Revision of Prior Period Financial Statements During the review of the Company’s financial statements for the six months ended June 30, 2023, the Company identified an error in the presentation of property and equipment, net, cost of revenues and losses per ADS attributable to BIT Mining Limited - basic and diluted in the financial statements for the six months ended June 30, 2022 due to the overstatement of depreciation expense from a calculation error. The property and equipment, net should have been US$52,697 but was stated as US$47,151 as of June 30, 2022, cost of revenue should have been US$483,852 but was stated as US$489,398 for the six months ended , and losses per ADS attributable to BIT Mining Limited - basic and diluted should have been US$2.58 but was stated as US$3.30 for the ended June 30, 2022, resulting in adjustments to the previous reported financial statements of the Company for the six months ended June 30, 2022. In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on analysis of quantitative and qualitative factors, determined that the error was immaterial to the prior reporting period. Correcting prior period financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior period financial statements. Therefore, as permitted by SAB108, the Company corrected, in the current filing, the previously reported results for the six months ended June 30, 2022. |
| Foreign currency translation | Foreign currency translation The functional currency of the Company, BVI, 500wan HK, Bee Computing, Alliance Technologies, Sunstar Technology, Skill Esport, Summit Bend, Ohio I, Ohio II and Asgard is the US$. The functional currency of the Multi Group and its subsidiaries is EUR. The functional currency of Crypto Flow Limited (formerly named “Loto Interactive Limited”) and its subsidiaries is HKD. E-Sun Sky Computer and Beijing Guixinyanghang determined their functional currencies to be RMB, which is their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. The Group uses the monthly average exchange rate for the period and the spot exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss as a component of shareholders’ equity. Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Exchange gains and losses resulting from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive loss. |
| Business combinations, asset acquisitions and non-controlling interests | Business combinations, asset acquisitions and non-controlling interests The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), “Business Combinations”. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair value are recognized in earnings. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over, (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings. If investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of relative fair values. The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of assets, forecasted life cycle and forecasted cash flows over that period. In a business combination or asset acquisition, the Company may recognize identifiable intangibles that meet either or both the contractual legal criterion or the separability criterion. Identifiable intangible assets recognized in the Company’s acquisitions generally include brand name, strategic contract and unpatented technology. For the Company’s majority-owned subsidiaries, non-controlling interests are recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group. “Net loss” on the unaudited interim condensed consolidated statements of comprehensive loss include the “net loss attributable to non-controlling interests”. The Company has purchased all of the non-controlling interests in its subsidiary in June 2022. Therefore there were no non-controlling interests in the Company’s consolidated balance sheets as of December 31, 2022 and June 30, 2023. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Group recognized changes in fair value of contingent consideration in the amount of a gain of US$1,247 during the six months ended June 30, 2022, which was related to the remeasurement of the contingent consideration from the acquisition of Alliance International Technologies Limited (formerly, Blockchain Alliance Technologies Limited), which operates the mining pool under the brand of BTC.com. The contingent consideration is settled as of June 30, 2022. There was no such balance during the six months ended June 30, 2023. |
| Cryptocurrency assets | Cryptocurrency assets Cryptocurrency assets are included in current assets in the accompanying unaudited interim condensed consolidated balance sheets. Cryptocurrency assets generated from the cryptocurrency mining business and the mining pool business are accounted for in connection with the Group’s revenue recognition policy disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment quarterly, or more frequently, when events or changes in circumstances occur, principally decreases in the quoted prices of the cryptocurrencies, indicating that it is more likely than not that the indefinite-lived asset is impaired. In determining if an impairment has occurred, the Company considers the intraday lowest quoted price of one unit of cryptocurrency asset since acquiring the cryptocurrency asset. If the then current carrying value of the unit of cryptocurrency exceeds the fair value so determined, an impairment loss has occurred with respect to those units of cryptocurrencies in the amount equal to the difference between their carrying values and the fair value determined. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses if not permitted. For the six months ended June 30, 2022 and 2023, the Group recognized impairment loss of US$12,620 and US$3,254, respectively. Cryptocurrencies generated from the cryptocurrency mining business and the mining pool business as well as the cryptocurrencies distributed to mining pool participants are included within operating activities in the accompanying unaudited interim condensed consolidated statements of cash flows. The sales of cryptocurrencies are included within investing activities in the accompanying unaudited interim condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in gain or loss of disposal of cryptocurrencies in the unaudited interim condensed consolidated statements of comprehensive loss. The Group accounts for its gains or losses in accordance with the first-in-first-out (FIFO) method of accounting. The Company also enters into transactions to transfer cryptocurrencies to pay for operating expenses and acquire certain assets. Such transactions are accounted for in accordance with ASC 610-20, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets”. Under ASC 610-20, if the Group does not have a controlling financial interest in the entity that holds the cryptocurrency and the arrangement meets the criteria to be accounted for as a contract, the Group would de-recognize the cryptocurrency and recognize a gain or loss on the transfer of the cryptocurrency when control of the cryptocurrency transfers to the counterparty. The gain or loss is measured as the difference between the amount of consideration allocated to the cryptocurrency and its carrying amount. For the six months ended June 30, 2022 and 2023, the gain or loss recorded on such transactions was nil. |
| Derivative contracts | Derivative contracts Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. Derivative contracts are recognized as either assets or liabilities on the unaudited interim condensed consolidated balance sheets at fair value, with changes in fair value recognized as changes in fair value of derivative instruments. In June 2023, the Company entered into two collar arrangements with a third party with one-month term to hedge the effect of future price fluctuations on Ethereum. The arrangements result in the Company settling a certain amount of Ethereum at prices within a range. The arrangements are accounted for as derivative instruments and recorded at fair value. The Company measured the fair value of the derivative instruments using Black-Scholes valuation model, based on various assumptions including quoted Ethereum prices, time value and volatility factors, as well as other relevant economic measures. Such valuations are classified within level 3 of the fair value hierarchy. As of June 30, 2023, the Company recognized an asset of US$2,039 which was included in prepayment and other current assets in the unaudited interim condensed consolidated balance sheet. For the six months ended June 30, 2023, the Company recognized changes in fair value of derivative instruments of a gain of US$275 in the unaudited interim condensed consolidated statements of comprehensive loss. |
| Impairment of long-lived assets other than goodwill | Impairment of long-lived assets other than goodwill The Group evaluates its long-lived assets or asset group, including property and equipment, intangible assets and right-of-use assets, with finite lives for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying amount of a group of long-lived assets may not be fully recoverable. When these events occur, the Group evaluates the impairment by comparing the carrying amount of the assets to future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the asset group over its fair value. For the six months ended June 30, 2022, the Group recorded an impairment loss of US$836 for the mining machines in Kazakhstan. No impairment of long-lived assets other than goodwill was recorded during the six months ended June 30, 2023. |
| Fair value measurements | Fair value measurements Financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivable, prepayments and other current assets, equity investments without readily determinable fair values, equity method investments, accounts payable and accrued expenses and other current liabilities. The Group carries the investment under the measurement alternative basis and equity method investment on other-than-temporary basis. Derivative assets related to the collar arrangement is measured at fair value on a recurring basis. The carrying values of other financial instruments approximate their fair values due to their short-term maturities. The Group’s non-financial assets, including cryptocurrency assets, intangible assets, goodwill and property and equipment are measured at fair value when an impairment charge is recognized. Fair value of cryptocurrencies is based on quoted prices in active markets. The Group applies ASC 820 (“ASC 820”), “Fair Value Measurements and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1— Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2— Include other inputs that are directly or indirectly observable in the marketplace. Level 3— Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. |
| Related party transactions | Related party transactions A related party is generally defined as (i) any person holds 10% or more of the Company’s securities and their immediate families (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
| Revenue recognition | Revenue recognition The Group’s revenues were derived principally from cryptocurrency mining, data center services and mining pool services. The Group also provided online gaming services through TMG and its subsidiaries and had fully terminated such business in January 2022. The Group accounts for revenues under ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”). Revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which the Group expects to be entitled to in exchange for those goods or services. The Group follows the five steps approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Group satisfies a performance obligation. The primary sources of the Group’s revenues are as follows: Cryptocurrency mining The Group has entered into a cryptocurrency mining pool, BTC.com, by executing contracts with the mining pool operator to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the mining pool operator. In exchange for providing computing power, the Group is entitled to considerations in the form of cryptocurrencies from the mining pool operator (less pool operator fees to the mining pool operator which are recorded net with revenues), which is calculated based on a predetermined formula agreed by the Group and the mining pool operator as a part of the contracts. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the pool operator. The Group is entitled to consideration even if a block is not successfully placed by the mining pool operator. The transaction consideration the Group receives is noncash consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. All considerations are variable and revenue is recognized when the computing power is provided to the mining pool and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions. Cryptocurrency mining revenue generated from providing computing power to the Group's affiliated consolidated subsidiary, BTC.com, is eliminated in consolidation, along with corresponding intercompany cost of mining pool services. Data center services The Group provides data center services such as providing its customers with rack space, power and equipment, and cloud services such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month. Mining pool services The Group operates its mining pool, BTC.com, to enable providers of computing power (“pool participants”) to participate in crypto-mining activities in an efficient manner in the blockchain network. It receives all the mining rewards, and then allocates mining rewards to each pool participant net of the pool operator fees based on the sharing mechanism predetermined. Using computing power provided by the pool participants, the Group provides transaction verification services to the blockchain networks and transaction requesters (the “primary mining pool services" or the Company as the “primary mining pool operator”). During the year ended December 31, 2022, the Company entered into arrangements with certain third-party mining pool operators to contribute a portion of the computing power it obtained from BTC.com pool participants to the third-party mining pool operators. In exchange, the Company is entitled to considerations in the form of cryptocurrencies from the third-party mining pools operators calculated based on a predetermined formula regardless of whether the third-party mining pool operators successfully validate the blocks (the “sub mining pool services" or the Company as the “sub mining pool operator”) (primary mining pool services and sub mining pool services collectively referred as the “mining pool services”). Primary mining pool services As the primary mining pool operator, the Group provides transaction verification services. Transaction verification services are an output of the Group’s ordinary activities. The mining rewards the Group receives from the blockchain network include the block rewards and the transaction verification fees related to the transactions included in the block. For block rewards, the customer is the blockchain as the Group attempts to be the first vendor to solve an algorithm that it will then place as a successful block on the blockchain in exchange for cryptocurrency block rewards awarded by the blockchain protocols. For transaction verification fees, the requester for each blockchain transaction request is the customer. A contract with the blockchain for the block rewards or with the transaction requester for the transaction verification fees exists upon the transfer of a verified block to the blockchain. The performance obligation is to validate each block. Revenue is recognized at the point when the block validation is successfully completed, which is also when the Group receives the rewards. Revenue, which is noncash consideration, is measured at the fair value of block rewards and transaction verification fees earned at contract inception. The Group considers itself the principal in transactions with the blockchain networks as it coordinates all the computing power within the mining pool, utilizes such aggregated computing power to validate blocks, collects centrally all mining rewards and distributes them in accordance with the predetermined sharing mechanisms. The Group has control over the pool participants’ computing power. Although the pool participants can enter and exit the pool at will and deploy the qualifying types of mining machines at the choices of the pool participants, during the mining process, the Group dictates the tasks and the participants’ mining machines merely follow the allocation prescribed by the Group. As a result, the Group is primarily responsible for fulfilling the promise to provide the specified service, which is to transfer a verified block to the blockchain. Further, under existing sharing mechanisms, the Group is exposed to the risk that actual block rewards may differ from expected rewards, therefore, bears the inventory risk before the specified service has been transferred to the blockchain network. Therefore, the Group recognizes the mining pool revenue on a gross basis by recording all of the transaction fees and block rewards earned under the primary mining pool services as revenue, and the portion of the transaction fees and block rewards remitted to pool participants as cost of revenue. Sub mining pool services As the sub mining pool operator, using computing power obtained from pool participants, the Group provides computing power to certain third-party mining pool operators in exchange for considerations in the form of cryptocurrencies from the third-party mining pool operators. As the Group is entitled to consideration, which is calculated based on a predetermined formula agreed by the Group and the mining pool operators as a part of the contracts, even if a block is not successfully placed by the third-party mining pool operators, the Group entered into such arrangements to stabilize the mining rewards it is entitled to. Same to cryptocurrency mining arrangements, the contracts are terminable at any time by either party and the Group’s enforceable right to compensation only begins when the Group provides computing power to the third-party mining pool operators. Providing computing power is an output of the Group’s ordinary activities and is the only performance obligation in the Group’s contract with the third-party pool operators. The transaction consideration the Group receives is noncash variable consideration in the form of cryptocurrencies. The Group measures the cryptocurrencies at fair value at contract inception. The revenue is recognized when the computing power is provided to the third-party mining pool operators and there is no uncertainty associated with the variable consideration. There is no significant financing component in these transactions. The Group considers itself the principal in sub mining pool service transactions as the pool participants of BTC.com do not directly enter into contracts with the third-party mining pool operators and the Group is primarily responsible for fulfilling the promise to provide the computing power and to remit a portion of the mining rewards to the pool participants. In case of the non-performance of the third-party mining pool operators, the Group is obligated to compensate the pool participants for considerations they are entitled to. As a result, the Group determined that it controls the computing power before it is provided to the third-party mining pool operators. The Group recognizes the mining pool revenue on a gross basis by recording all of the mining rewards earned under the sub mining pool services as revenue, and the portion of mining rewards remitted to pool participants as cost of revenue. Contract balances The Group does not have any contract assets. The Group’s contract liabilities include advance from customers, which is recorded when consideration is received from a customer prior to providing services to the customer under the terms of a contract. As of December 31, 2022 and June 30, 2023, the Group recorded advance from customers balance of US$384 and US$393 respectively, which was included in “accrued expenses and other current liabilities” in the accompanying unaudited interim condensed consolidated balance sheets. US$277 and US$76 of deferred revenue included in the opening balances of advance from customers was recognized during the six months ended June 30, 2022 and 2023, respectively. The amounts were included in revenues on the accompanying unaudited interim consolidated statements of comprehensive loss. Refer to Note 20 regarding the discussion of the Group’s disaggregate revenue data. |
| Cost of services | Cost of services Cost of mining pool services Cost of mining pool services which was offered under BTC.com consists primarily of the mining rewards allocated to each pool participant in exchange for their computing power contributed to the mining pool. The mining rewards allocated to the pool participants include both the block rewards as well as the transaction verification fees related to the transactions included in the block, depending on the sharing mechanism chosen by individual pool participants. Cost of mining pool services also consists of other direct costs related to providing the mining pool service such as server fees and labor for maintaining the mining pool service. Cost of mining pool services before inter-segment elimination were US$482,775 and US$136,910 for the six months ended June 30, 2022 and 2023, respectively. Cost of mining pool services after inter-segment elimination were US$447,997 and US$125,352 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Cost of data center services The cost of data center services consists primarily of direct production costs related to data center service, including the direct service charges for operations. The amounts were US$4,319 and US$11,491 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Cost of cryptocurrency mining The cost of cryptocurrency mining, which consist primarily of direct costs related to cryptocurrency mining machines, including the server leasing and maintenance charges. The amounts before inter-segment elimination were US$19,871 and US$8,131 for the six months ended June 30, 2022 and 2023, respectively. The amounts after inter-segment elimination were US$13,700 and US$2,302 for the six months ended June 30, 2022 and 2023, respectively. These costs are expensed as incurred. Depreciation fees Depreciation fees, which consist primarily of depreciation of machinery and equipment related to cryptocurrency mining and data center services, were US$11,038 and US$4,619 for the six months ended June 30, 2022 and 2023, respectively. These costs are recorded in unaudited interim condensed consolidated statements of comprehensive loss on a straight-line basis over the useful life of the machinery and equipment. Amortization fees Amortization fees, which consist primarily of amortization of intangible assets arising from business combination and assets acquisitions, were US$4,748 and US$606 for the six months ended June 30, 2022 and 2023, respectively. These costs are recorded in unaudited interim condensed consolidated statements of comprehensive loss on a straight-line basis over the useful life of the intangible assets. Cost of services also comprised lottery insurance expenses, regulatory and compliance fees, platform fees, employee costs, account handling expense, business tax and surcharges and other direct costs incurred in providing services. These costs are expensed as incurred. |
| Recent accounting pronouncements | Recent accounting pronouncements The Group has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its unaudited interim condensed consolidated financial statements, based on current information. |
ORGANIZATION (Tables) |
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| Schedule of variable interest entities | As of June 30, 2023, the Company’s major subsidiaries are listed below:
* A subsidiary of the Multi Group |
CONCENTRATION OF RISKS (Tables) |
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| Schedule of concentration of credit risk |
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ASSET ACQUISITION (Tables) |
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| Summary of calculation of the purchase consideration |
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| Summary of the estimated fair value of the assets acquired |
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INVESTMENTS (Tables) |
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| INVESTMENTS | |||||||||||||||||||||||||||||||||||||||||
| Schedule of long term investments |
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CRYPTOCURRENCY ASSETS (Tables) |
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| Summary of continuity of cryptocurrencies |
* In January 2022, the Company entered into a loan agreement and a pledge agreement for one year, pursuant to which the lender agreed to lend to the Company funds equal to approximately US$6,306, which was 65% of the current fair market value of 4,000 Ethereum, with a fixed interest rate of 3.25% per annum. In June 2022, the loan has been fully settled by rendering the pledged Ethereum to the lender. Disposal of cryptocurrency assets for the six months ended June 30, 2022 included the carrying amount of the pledged Ethereum of US$9,628 rendered to the lender and the Group recorded a loss on disposal of cryptocurrencies in the amount of approximately US$3,322. |
PREPAYMENTS AND OTHER RECEIVABLES (Tables) |
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| Summary of Prepayments and Other current assets |
* Deferred expense represents cash paid in advance to vendors, such as consultant expense and compliance expense, which would be amortized according to their respective service periods. |
PROPERTY AND EQUIPMENT, NET (Tables) |
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| Schedule of property and equipment |
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INTANGIBLE ASSETS, NET (Tables) |
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| Schedule of intangible assets |
* The impairment as of December 31, 2022 and June 30, 2023 include impairment of US$26,909 related to the acquired intangible assets of the Multi Group that were recognized during the year ended December 31, 2019, impairment of US$48,555 related to the brand name and domain name of Alliance International Technologies and impairment of US$7,539 for the strategy contract of Asgard that were recognized during the year ended December 31, 2022. |
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| Schedule of estimated amortization expense |
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OPERATING LEASES (Tables) |
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| Schedule of operating lease related assets and liabilities |
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| Summary of maturity of operating lease liabilities | The following table summarizes the maturity of operating lease liabilities as of June 30, 2023:
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ACCOUNTS PAYABLES (Tables) |
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| Schedule of accounts payables |
* Pool participants payable represents payments to pool participants in the mining pool business which are settled in cryptocurrencies. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) |
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| Schedule of accrued expenses and other liabilities |
* Advance from end users represents payments received by the Group in advance from the end users prior to the services to be provided. ** Deposit from customers represents payments received by the Group in advance from customers in the data center business. |
SHARE-BASED PAYMENT (Tables) |
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| Schedule of restricted shares granted to employees and directors | Restricted shares granted to employees and directors
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RELATED PARTY TRANSACTIONS (Tables) |
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LOSSES PER SHARE (Tables) |
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| Schedule of basic and diluted loses per share |
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PURCHASE OF NONCONTROLLING INTEREST (Tables) |
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| Summary of purchase price and accounting of the transaction |
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SEGMENT REPORTING (Tables) |
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| Schedule of information by Segment |
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| Schedule of revenue by the geographical locations of the customers |
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| Schedule of long-lived assets by geographical locations |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revision of Prior Period Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
| Property and equipment, net | $ 28,581 | $ 52,697 | $ 27,220 |
| Cost of revenue | $ 144,651 | $ 483,852 | |
| Losses per ADS attributable to BIT Mining Limited - basic | $ (2.58) | ||
| Losses per ADS attributable to BIT Mining Limited - diluted | $ (2.58) | ||
| Stated | |||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
| Property and equipment, net | $ 47,151 | ||
| Cost of revenue | $ 489,398 | ||
| Losses per ADS attributable to BIT Mining Limited - basic | $ (3.30) | ||
| Losses per ADS attributable to BIT Mining Limited - diluted | $ (3.30) | ||
CONCENTRATION OF RISKS (Details) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Supplier Concentration Risk | Costs | Supplier A | ||
| Concentration Risk [Line Items] | ||
| Concentration risk (as a percent) | 22.00% | 21.40% |
| Customer Concentration Risk | Revenue | Supplier A | ||
| Concentration Risk [Line Items] | ||
| Concentration risk (as a percent) | 53.30% | |
| Customer Concentration Risk | Revenue | Supplier B | ||
| Concentration Risk [Line Items] | ||
| Concentration risk (as a percent) | 27.80% | |
ASSET ACQUISITION - Calculation of the purchase consideration (Details) - Acquisition of Bee Computing $ in Thousands |
May 31, 2022
USD ($)
shares
|
|---|---|
| Asset Acquisition, Consideration Transferred [Abstract] | |
| Fair value of 16,038,930 Class A ordinary shares at acquisition close on May 31, 2022 | $ 3,416 |
| Effective settlement of preexisting loans | 18,397 |
| Total purchase consideration | $ 21,813 |
| Class A Ordinary shares | |
| Asset Acquisition [Line Items] | |
| Number of shares issued to Selling Shareholders | shares | 16,038,930 |
ASSET ACQUISITION - Estimated fair value of the assets acquired (Details) - USD ($) $ in Thousands |
May 31, 2022 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Estimated fair value of the assets acquired | |||
| Prepayments and other receivables | $ 14,288 | $ 8,310 | |
| Acquired intangible asset | 2,672 | ||
| Total identifiable assets acquired | $ 82,148 | $ 86,804 | |
| Acquisition of Bee Computing | |||
| Estimated fair value of the assets acquired | |||
| Cash | $ 25 | ||
| Prepayments and other receivables | 18,155 | ||
| Acquired intangible asset | 3,633 | ||
| Total identifiable assets acquired | 21,813 | ||
| Total purchase consideration | $ 21,813 | ||
| Estimated Useful Life | 3 years | ||
| Acquisition of Bee Computing | Unpatented technology | |||
| Estimated fair value of the assets acquired | |||
| Estimated Useful Life | 3 years |
INVESTMENTS - Schedule of Long-term Investments (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Carrying amount of equity investments without readily determinable fair value | $ 4,829 | $ 5,058 |
| Carrying amount of equity method investments | 1,569 | 2,991 |
| Carrying amount of long-term investments | $ 6,398 | $ 8,049 |
INVESTMENTS - Schedule of Investments Categorized by Investment Class (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Cost method and equity method investments | |||
| Cost of equity investments without readily determinable fair value | $ 8,952 | $ 9,181 | |
| Equity Securities without Readily Determinable Fair Value, Impairment Loss, Cumulative Amount | 4,123 | $ 4,123 | |
| Impairment recognized | 0 | $ 0 | |
| Net operating income from equity method investments | 382 | $ 151 | |
| Disposition of equity method investments | $ 1,791 | ||
CRYPTOCURRENCY ASSETS - Additional information (Details) $ in Thousands |
1 Months Ended | 6 Months Ended | |
|---|---|---|---|
|
Jan. 31, 2022
USD ($)
item
|
Jun. 30, 2023
USD ($)
item
|
Jun. 30, 2022
USD ($)
|
|
| Loan and pledge agreement | |||
| Indefinite-lived Intangible Assets [Line Items] | |||
| Loan period | 1 year | ||
| Loan principal | $ 6,306 | ||
| Percentage of the current Fair Market Value considered for loan | 65.00% | ||
| Fixed interest rate per annum | 3.25% | ||
| Number of ethereum lend | item | 4,000 | ||
| Cash deposits pledged | $ 9,628 | ||
| Loss on disposal of cryptocurrencies | $ 3,322 | ||
| Two collar agreements with third party | |||
| Indefinite-lived Intangible Assets [Line Items] | |||
| Loan period | 1 month | ||
| Loss on disposal of cryptocurrencies | $ 2,306 | ||
| Ethereum transferred | item | 3,200 | ||
| Percent of initial notional amount of Ethereum received as USDT and USDC | 70.00% | ||
| Carrying amount of Ethereum transferred | $ 3,519 | ||
| Fair value of initial notional amount of Ethereum received as USDT and USDC | $ 4,061 | ||
PREPAYMENTS AND OTHER RECEIVABLES - Summary of Prepayments and Other Current Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Receivables from third party payment service providers | $ 510 | $ 504 |
| Utility and service deposits | 4,560 | 630 |
| Deferred expense | 1,069 | 1,640 |
| Loans to third parties | 2,144 | 1,259 |
| Deductible value-added input tax | 3,263 | 3,535 |
| Derivative assets | 2,039 | |
| Others | 703 | 742 |
| Prepayments and other receivables | $ 14,288 | $ 8,310 |
PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|---|
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | $ 101,516 | $ 95,761 | |
| Less: Accumulated depreciation | (38,545) | (34,151) | |
| Less: Provision for impairment | (34,390) | (34,390) | |
| Property and equipment, net | 28,581 | 27,220 | $ 52,697 |
| Electronics and office equipments | |||
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | 528 | 512 | |
| Motor vehicles | |||
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | 876 | 901 | |
| Leasehold improvements | |||
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | 5,460 | 5,704 | |
| Construction in Progress | |||
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | 1,244 | 8,703 | |
| Machinery and Equipment | |||
| Property, Plant and Equipment [Line Items] | |||
| Property and equipment, cost | $ 93,408 | $ 79,941 |
PROPERTY AND EQUIPMENT, NET - Additional information (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Property, Plant and Equipment [Line Items] | |||
| Depreciation expense | $ 4,868 | $ 11,842 | |
| Provision for impairment | 34,390 | $ 34,390 | |
| Mining machines | |||
| Property, Plant and Equipment [Line Items] | |||
| Provision for impairment | $ 0 | $ 836 | |
INTANGIBLE ASSETS, NET - Schedule of Estimated Amortization Expense (Details) $ in Thousands |
Jun. 30, 2023
USD ($)
|
|---|---|
| Finite-Lived Intangible Assets [Line Items] | |
| 2023 remaining | $ 639 |
| 2024 | 1,237 |
| 2025 | 723 |
| 2026 | 15 |
| 2027 | 15 |
| 2028 and thereafter | 43 |
| Total | $ 2,672 |
INTANGIBLE ASSETS, NET - Additional information (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| INTANGIBLE ASSETS, NET | |||
| Amortization expense continuing operations | $ 642 | $ 4,776 | |
| Alliance International Technologies Limited("Alliance International Technologies") | |||
| INTANGIBLE ASSETS, NET | |||
| Impairment of intangible assets | $ 48,555 | ||
| Asgard Data Centers | |||
| INTANGIBLE ASSETS, NET | |||
| Impairment of intangible assets | 7,539 | ||
| Multi Group | |||
| INTANGIBLE ASSETS, NET | |||
| Impairment of intangible assets | $ 26,909 | $ 26,909 | |
OPERATING LEASES - Operating lease related assets and liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| OPERATING LEASES | ||
| Right-of-use assets | $ 3,523 | $ 4,135 |
| Right-of-use assets, net | 3,523 | 4,135 |
| Operating lease liabilities - current | 1,209 | 1,367 |
| Operating lease liabilities - non-current | 2,331 | 2,837 |
| Total operating lease liabilities | $ 3,540 | $ 4,204 |
OPERATING LEASES - Summary of maturity of operating leases liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Future lease payments under operating leases | ||
| 2023 remaining | $ 615 | |
| 2024 | 1,134 | |
| 2025 | 1,134 | |
| 2026 | 850 | |
| Total | 3,733 | |
| Less: imputed interest | (193) | |
| Total operating lease liabilities | $ 3,540 | $ 4,204 |
OPERATING LEASES - Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| OPERATING LEASES | ||
| Operating lease costs | $ 664 | $ 925 |
| Short term lease costs | 246 | 359 |
| Cash paid amounts included in measurement of operating lease liabilities | $ 678 | $ 1,085 |
| Weighted average remaining lease term | 3 years 2 months 19 days | |
| Weighted average discount rate | 3.28% | |
| Minimum | ||
| OPERATING LEASES | ||
| Operating lease remaining lease term | 2 months 1 day | |
| Maximum | ||
| OPERATING LEASES | ||
| Operating lease remaining lease term | 3 years 3 months | |
ACCOUNTS PAYABLES (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| ACCOUNTS PAYABLES | ||
| Pool participants payable | $ 22,097 | $ 19,761 |
| Utility and service cost payable | 3,633 | 3,636 |
| Others | 25 | 28 |
| Accounts payable | $ 25,755 | $ 23,425 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
| Advance from end users | $ 392 | $ 384 |
| Deposit from customer | 2,110 | 1,302 |
| Business tax and other taxes payable | 117 | 228 |
| Professional fees and services payable | 1,196 | 1,762 |
| Promotional events payables | 396 | 370 |
| Decoration and construction cost payable | 112 | 670 |
| Others | 266 | 439 |
| Total | $ 4,589 | $ 5,155 |
INCOME TAXES (Details) $ in Thousands |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Jun. 30, 2023
USD ($)
claim
|
Jun. 30, 2022
USD ($)
|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| INCOME TAXES | ||||
| Rate of taxable income | 25.00% | 25.00% | ||
| Provision for income tax | $ 0 | $ 0 | ||
| Number of claims | claim | 0.85 | |||
| USA | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 21.00% | |||
| CURAAO | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 2.00% | |||
| MALTA | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 35.00% | |||
| Effective income tax rate reconciliation, percent | 5.00% | |||
| Cyprus | ||||
| INCOME TAXES | ||||
| Provision for income tax | $ 0 | 0 | ||
| Hong Kong | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 8.25% | |||
| Net operating losses | $ 47,940 | |||
| Taxable Income Upto HKD 2000 | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 8.25% | |||
| Taxable Income Over HKD 2000 | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 16.50% | |||
| Mainland China | ||||
| INCOME TAXES | ||||
| Rate of taxable income | 25.00% | |||
| Provision for income tax | $ 0 | $ 0 | ||
| Net operating losses | $ 18,758 | |||
SHARE-BASED PAYMENT - summary of warrants and pre-funded warrants activity and related information (Details) - $ / shares |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Weighted average exercise price | |||
| Outstanding, Beginning balance | $ 0.17 | $ 0.68 | |
| Granted | 0.09 | ||
| Exercised | 0.07 | ||
| Outstanding, Ending balance | 0.17 | $ 0.17 | $ 0.68 |
| Vested and expected to vest | 0.17 | ||
| Exercisable | $ 0.17 | ||
| Weighted average remaining contractual life | |||
| Outstanding | 2 years 6 months 25 days | 2 years 6 months 10 days | |
| Granted | 3 years 3 months 21 days | ||
| Vested and expected to vest | 2 years 6 months 25 days | ||
| Exercisable | 2 years 6 months 25 days | 3 years 25 days | |
| Class A Ordinary shares | |||
| Number of options | |||
| Ordinary shares, Beginning balance | 731,333,300 | 100,000,000 | |
| Ordinary shares, Granted | 679,333,300 | ||
| Ordinary shares, Exercised | (48,000,000) | ||
| Ordinary shares, Ending balance | 731,333,300 | 731,333,300 | 100,000,000 |
| Number of shares options vested | 731,333,300 | ||
| Ordinary shares, Exercisable | 731,333,300 | ||
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| RELATED PARTY TRANSACTIONS | ||
| Revenues | $ 146,937 | $ 492,197 |
| Related party | ||
| RELATED PARTY TRANSACTIONS | ||
| Expense paid amount | 0 | 9,108 |
| Related party | Data Center Operation | ||
| RELATED PARTY TRANSACTIONS | ||
| Expense paid amount | $ 0 | $ 9,108 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Indemnity cost | $ 0 | $ 0 |
LOSSES PER SHARE (Details) |
Dec. 23, 2022 |
|---|---|
| Warrant convertible into common stock ratio | 1.00% |
PURCHASE OF NONCONTROLLING INTEREST (Details) $ in Thousands |
1 Months Ended | ||
|---|---|---|---|
|
Jun. 30, 2022
USD ($)
MW
|
Sep. 30, 2021
MW
|
Jun. 30, 2023
USD ($)
|
|
| Viking Data Centers LLC | |||
| PURCHASE OF NON-CONTROLLING INTEREST | |||
| Book basis of the noncontrolling interest in Asgard | $ | $ 16,689 | ||
| Ohio Mining Site | |||
| PURCHASE OF NON-CONTROLLING INTEREST | |||
| Percentage of equity interest ownership in Ohio Mining Site | 55.00% | ||
| Maximum planned power capacity in Megawatts | 150 | ||
| Number of consideration Megawatts in Site Facilities | 67.5 | ||
| Percentage Of Total Planned Power Capacity | 45.00% | ||
| Viking Data Centers LLC | |||
| PURCHASE OF NON-CONTROLLING INTEREST | |||
| Percentage of equity interest | 51.00% | ||
| Number of access to Mega Watt of planned electrical power | 82.5 | ||
| Number of exclusive access to remaining Megawatts | 67.5 | ||
| Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ | $ 17,785 | ||
PURCHASE OF NONCONTROLLING INTEREST - Assets transferred summary (Details) - Viking Data Centers LLC $ in Thousands |
Jun. 30, 2023
USD ($)
|
|---|---|
| PURCHASE OF NON-CONTROLLING INTEREST | |
| Construction in progress | $ 5,863 |
| Other non-current assets | 4,902 |
| Intangible assets, net | 7,020 |
| Total | $ 17,785 |
SEGMENT REPORTING - Geographical locations (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| SEGMENT REPORTING | |||
| Revenues | $ 146,937 | $ 492,197 | |
| Long-lived assets | 32,104 | $ 31,355 | |
| Hong Kong | |||
| SEGMENT REPORTING | |||
| Revenues | 29,373 | ||
| Long-lived assets | 764 | 1,365 | |
| USA | |||
| SEGMENT REPORTING | |||
| Revenues | 26,884 | 12,195 | |
| Long-lived assets | 31,134 | 29,317 | |
| Kazakhstan | |||
| SEGMENT REPORTING | |||
| Revenues | 6,014 | ||
| Long-lived assets | 373 | ||
| Europe | |||
| SEGMENT REPORTING | |||
| Revenues | 8 | ||
| Blockchain | |||
| SEGMENT REPORTING | |||
| Revenues | 15,654 | 485,556 | |
| British Virgin Islands | |||
| SEGMENT REPORTING | |||
| Revenues | 80,935 | ||
| Cayman Islands | |||
| SEGMENT REPORTING | |||
| Revenues | 40,851 | ||
| Mainland China | |||
| SEGMENT REPORTING | |||
| Long-lived assets | 206 | $ 300 | |
| Inter-segment | |||
| SEGMENT REPORTING | |||
| Revenues | $ (17,387) | $ (40,949) | |
SUBSEQUENT EVENTS (Details) - Two collar agreements with third party |
3 Months Ended | 6 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
|
| SUBSEQUENT EVENTS | ||
| Loan period | 1 month | |
| Percent of initial notional amount of Ethereum received as USDT and USDC | 70.00% | |
| SUBSEQUENT EVENTS | ||
| SUBSEQUENT EVENTS | ||
| Loan period | 1 month |