Chinese Construction Company Turned Mining Firm Lost Over $23 Millions

[DreamStage]

Chinese construction company turned to cryptocurrency mining firm, Huatie HengAn, has reportedly been sold after its value decreased by over 90%.

The firm has been reportedly sold for around 12 million yuan ($1.8 million), after its value decreased from 170 million Chinese yuan ($25.3 million) in under a year.

Still, 8btc notes that its financial filings reveal that the company’s main business appears to be cryptocurrency mining, since in 2018, it purchased 36,500 machines from Avalon and Ebang. While the report allegedly calls the machines servers, the producers are actually known for the production of cryptocurrency mining Application Specific Integrated Circuits and reportedly don’t produce servers in the traditional sense.

8btc claims that the sale of the company attracted much attention from the local crypto community, since it could be the country’s first listed company that has been revealed to engage in crypto mining. The loss sustained by the parent company because of the depreciation of its mining business reportedly amounted to over 95 million yuan ($14 million).

This value purportedly exceeds the initial investment of around $25 million. Furthermore, 8btc notes that the company’s revenue for the year was 53 million yuan ($7.9 million) and that as of Feb. 28, the net loss increased to nearly 158 million yuan (roughly $23.5 million). All of this reportedly decreased the net asset worth of the company to only 12 million yuan ($1.8 million).

Full News Source:
https://cointelegraph.com/news/report-chinese-publicly-listed-construction-company-turned-mining-firm-lost-over-23-million

[betty11]

Very laughable, I feel for their losses. Maybe they thought bitcoin was going to go heaven immediately even as high as $50,000 as some expert were predicting in the past and even speculating now. Bitcoin mining is never something to jump into without carrying out a feasibility study. This news cracks my ribs. abandoning constriction for a new gold and something more profitable but life comes with experience and patience.

[Script3d]

they could have just expand their company to be both construction and mining company, no need to go all in, having more eggs in the basket is better, it backfired them at the end of the day, if there were only patient to expand as both it wouldn't turn out like this.

[okala]

Very laughable, I feel for their losses. Maybe they thought bitcoin was going to go heaven immediately even as high as $50,000 as some expert were predicting in the past and even speculating now. Bitcoin mining is never something to jump into without carrying out a feasibility study. This news cracks my ribs. abandoning constriction for a new gold and something more profitable but life comes with experience and patience.

Am not sure if they loses is as a result of the bitcoin market, I think this have to do with management problem because before the company vent into mining they previous business was not doing well to. So I'm my own thought this continues loses could be as a result of mismanagement.

[mu_enrico]

"They went full Jihan, Never go full Jihan" - random quotes
I think it's only the tip of the iceberg. I bet many shell companies use different permit to get cheap electricity for mining. They got what they deserved.

[susila_bai]

"They went full Jihan, Never go full Jihan" - random quotes
I think it's only the tip of the iceberg. I bet many shell companies use different permit to get cheap electricity for mining. They got what they deserved.

I agree with you, showing the construction business they get cheap electricity and thought of doing mining through it and earn more then construction but it went wrong as the market went down and mining cost also went up. That is why it is always recommended not to go all in and do some investment in real life projects so one goes wrong another investment should be able to survive. 

[lyks15]

It is a bad karma for the Chinese Construction Company because they refuse the other companies that plan to build in their country but they refused it and I think they only get the idea so they can build their own Mining Firm. I am not surprised that even their fellow citizen will not have good business agreement so their construction and business was not become successful.

[Ailmand]

I think they had problems with management. They also failed because of declaring a different business permit. I guess it's better if they focus more on construction business while doing mining as their side business. Mining business isn't also as profitable as it was. To add, China also banned mining. They should have made an in depth study or a feasibility study before being engaged in mining business before operating it.

[Haunebu]

To add, China also banned mining.

Am not so sure about it. There is conflicting news regarding this matter at the moment and we will know for sure what the verdict is very soon. This whole mining business has basically become a far more riskier venture ever since the bear market of 2018.

This is why mining is not always a successful venture. Do your research people.

[markstivn98]

Chinese construction company turned to cryptocurrency mining firm, Huatie HengAn, has reportedly been sold after its value decreased by over 90%.

The firm has been reportedly sold for around 12 million yuan ($1.8 million), after its value decreased from 170 million Chinese yuan ($25.3 million) in under a year.

Still, 8btc notes that its financial filings reveal that the company’s main business appears to be cryptocurrency mining, since in 2018, it purchased 36,500 machines from Avalon and Ebang. While the report allegedly calls the machines servers, the producers are actually known for the production of cryptocurrency mining Application Specific Integrated Circuits and reportedly don’t produce servers in the traditional sense.

8btc claims that the sale of the company attracted much attention from the local crypto community, since it could be the country’s first listed company that has been revealed to engage in crypto mining. The loss sustained by the parent company because of the depreciation of its mining business reportedly amounted to over 95 million yuan ($14 million).

This value purportedly exceeds the initial investment of around $25 million. Furthermore, 8btc notes that the company’s revenue for the year was 53 million yuan ($7.9 million) and that as of Feb. 28, the net loss increased to nearly 158 million yuan (roughly $23.5 million). All of this reportedly decreased the net asset worth of the company to only 12 million yuan ($1.8 million).

Full News Source:
https://cointelegraph.com/news/report-chinese-publicly-listed-construction-company-turned-mining-firm-lost-over-23-million

It was better for them to develop their work, not to surrender so easily, but the question we have to ask is the cause of this loss?
Is it because of the price of the bitcoin or because of the bad planning of the work, this is really bad.

[Bitinity]

I think they had problems with management. They also failed because of declaring a different business permit. I guess it's better if they focus more on construction business while doing mining as their side business. Mining business isn't also as profitable as it was. To add, China also banned mining. They should have made an in depth study or a feasibility study before being engaged in mining business before operating it.

Is it for real? When the China government state that they ban crypto mining officially? AFAIK it is just a proposal which is still under review by the government based on the last news that I read few days back. Mind to share the official statement of the China government if they ban crypto mining?

[kryptqnick]

It's not a good strategy to pretend doing one thing while actually doing another. It's sad that they've lost so much, but IMO business should be built on trust and transparency.
I am confused why the op says it's the first company revealed as a mining one.  What about Bitmain? What about various Bitcoin farms? Mining is not banned yet, so I thought there were quite some mining companies. Or is it that this is the first "imposter" that actually does mining kind of company in China?

[franky1]

"They went full Jihan, Never go full Jihan" - random quotes
I think it's only the tip of the iceberg. I bet many shell companies use different permit to get cheap electricity for mining. They got what they deserved.

the actual quote is they went full bobby lee, never go full bobby lee
(might be worth you checking the current status of BTCC (bobby lees now defunct pool/company named btcchina))

[MakeMoneyBtc]

So they initially bought equipment worth $25M and where's that gone? I mean they bought it last year and I really don't understand how could the value of it depreciate with 90% in less than a year? Yes, probably in China the value of mining equipment has depreciated a lot because of recently rumors regarding the ban of bitcoin mining but still if they would have sold their equipment to companies from others countries the value of that equipment would still be at least 50% or so even if we include the export fees. This seems kind of suspicious to me, how could a company value decrease with 90% after one year considering they had equipment worth $25M?

[pooya87]

basically the whole thing can be summarized in a single sentence:
some people who had no experience or even information about a certain field, entered that field with a lot of capital and their business failed because of that lack of knowledge and experience so they lost a ton of money.

[Beerwizzard]

It seems like they entered the market on high price when mining equipment was also pretty expensive and got huge losses. But one thing is still unclear to me: for now, mining is still considered as profitable activity, especially with cheap chinese electricity. At least most mining farms continue their work for that reason. But those guys somehow also got losses during their activities. How is that possible?

[hugeblack]

"They went full Jihan, Never go full Jihan" - random quotes
I think it's only the tip of the iceberg. I bet many shell companies use different permit to get cheap electricity for mining. They got what they deserved.

It's like finding a gold mine and needing cheap electricity.
We already have cheap electrification Why do not we mining Bitcoin?.
Thinking without planning is what led to such losses even though I am not entirely devoted to the story. They may try to avoid some taxes by announcing losses and so on.

[alisafidel58]

This is the first time that I read a news that a bitcoin mining company went bankrupt. They have all the tools that are needed to mine bitcoin like cheap electricity. I think this is somehow connected to the news that the Chinese government is banning down bitcoin and other crypto related activity in their country.

Are they dodging the Chinese Government with this move? I find it hard to believe that they went bankrupt and lost 90% of their initial investment value.

[alyssa85]

So they initially bought equipment worth $25M and where's that gone? I mean they bought it last year and I really don't understand how could the value of it depreciate with 90% in less than a year? Yes, probably in China the value of mining equipment has depreciated a lot because of recently rumors regarding the ban of bitcoin mining but still if they would have sold their equipment to companies from others countries the value of that equipment would still be at least 50% or so even if we include the export fees. This seems kind of suspicious to me, how could a company value decrease with 90% after one year considering they had equipment worth $25M?

They likely overpaid for the equipment based on the "potential returns" at the time. Price dropped, but difficulty didn't drop along with it, they likely didn't mine the amount of coins they needed to make it work, especially with the lower price.

[Yakamoto]

This is the first time that I read a news that a bitcoin mining company went bankrupt. They have all the tools that are needed to mine bitcoin like cheap electricity. I think this is somehow connected to the news that the Chinese government is banning down bitcoin and other crypto related activity in their country.

Are they dodging the Chinese Government with this move? I find it hard to believe that they went bankrupt and lost 90% of their initial investment value.

Losing 90% of your value after having walked away from a relatively lucrative industry in China probably isn't a method of dodging the government. It is very likely that they had purchased all the machines and simply wouldn't be able to realize the gains required to generate a profit. As other users have said, the price crashed from $20k and the difficulty hadn't changed. Even with cheap electricity, a company needs to make money, and if they make less mining crypto than they made when they were a construction company, of course their value is going to go down. Not to mention that the assets they invested in depreciated rapidly and they don't have much use in industries aside from mining. At least with construction, you always have the opportunity for more contracts. Crypto is essentially going alone and relying on your equipment to generate a profit, with no skill or technical expertise involved (aside from setting up the equipment). That's not a great mix for running an actual company, especially if they didn't massively decrease the expenses they would have incurred from normal operations.