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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 9/29/22 BIT Mining Ltd. 6-K 6/30/22 108:13M Toppan Merrill/FA2 |
Document/Exhibit Description Pages Size
1: 6-K Current, Quarterly or Annual Report by a Foreign HTML 206K
Issuer
2: EX-99.1 Miscellaneous Exhibit HTML 1.89M
3: EX-99.2 Miscellaneous Exhibit HTML 218K
9: R1 Document and Entity Information HTML 42K
10: R2 Unaudited Interim Condensed Consolidated Balance HTML 194K
Sheets
11: R3 Unaudited Interim Condensed Consolidated Balance HTML 50K
Sheets (Parenthetical)
12: R4 Unaudited Interim Condensed Consolidated HTML 218K
Statements of Comprehensive Loss
13: R5 Unaudited Interim Condensed Consolidated HTML 181K
Statements of Cash Flows
14: R6 Unaudited Interim Condensed Consolidated HTML 101K
Statements of Changes in Shareholders' Equity
15: R7 Organization HTML 156K
16: R8 Summary of Significant Accounting Policies HTML 85K
17: R9 Concentration of Risks HTML 42K
18: R10 Asset Acquisition HTML 46K
19: R11 Investments HTML 42K
20: R12 Cryptocurrency Assets HTML 55K
21: R13 Prepayments and Other Receivables HTML 48K
22: R14 Property and Equipment, Net HTML 51K
23: R15 Intangible Assets, Net HTML 69K
24: R16 Operating Leases HTML 55K
25: R17 Accounts Payables HTML 42K
26: R18 Accrued Expenses and Other Current Liabilities HTML 50K
27: R19 Income Taxes HTML 38K
28: R20 Assets and Liabilities Held for Sale HTML 53K
29: R21 Share-Based Payment HTML 195K
30: R22 Related Party Transactions HTML 43K
31: R23 Commitments and Contingencies HTML 36K
32: R24 Losses Per Share HTML 162K
33: R25 Equity Transactions HTML 41K
34: R26 Purchase of Non-Controlling Interest HTML 38K
35: R27 Segment Reporting HTML 103K
36: R28 Discontinued Operations HTML 50K
37: R29 Subsequent Events HTML 33K
38: R30 Summary of Significant Accounting Policies HTML 121K
(Policies)
39: R31 Organization (Tables) HTML 153K
40: R32 Summary of Significant Accounting Policies HTML 38K
(Tables)
41: R33 Concentration of Risks (Tables) HTML 39K
42: R34 Asset Acquisition (Tables) HTML 46K
43: R35 Investments (Tables) HTML 41K
44: R36 Cryptocurrency Assets (Tables) HTML 57K
45: R37 Prepayments and Other Receivables (Tables) HTML 48K
46: R38 Property and Equipment, Net (Tables) HTML 49K
47: R39 Intangible Assets, Net (Tables) HTML 71K
48: R40 Operating Leases (Tables) HTML 55K
49: R41 Accounts Payables (Tables) HTML 41K
50: R42 Accrued Expenses and Other Current Liabilities HTML 49K
(Tables)
51: R43 Assets and Liabilities Held for Sale (Tables) HTML 52K
52: R44 Share-Based Payment (Tables) HTML 199K
53: R45 Related Party Transactions (Tables) HTML 37K
54: R46 Losses Per Share (Tables) HTML 161K
55: R47 Purchase of Non-Controlling Interest (Tables) HTML 36K
56: R48 Segment Reporting (Tables) HTML 103K
57: R49 Discontinued Operations (Tables) HTML 50K
58: R50 Organization (Schedule of Variable Interest HTML 180K
Entity) (Details)
59: R51 Organization (Narrative) (Details) HTML 48K
60: R52 Summary of Significant Accounting Policies HTML 51K
(Estimated Useful Lives of Intangible Assets)
(Details)
61: R53 Summary of Significant Accounting Policies HTML 71K
(Narrative) (Details)
62: R54 Concentration of Risks (Details) HTML 35K
63: R55 Asset Acquisition (Calculation of the purchase HTML 41K
consideration) (Details)
64: R56 Asset Acquisition (Estimated fair value of the HTML 56K
assets acquired) (Details)
65: R57 Investments (Schedule of Long-term Investments) HTML 33K
(Details)
66: R58 Investments (Narrative) (Details) HTML 38K
67: R59 Cryptocurrency Assets (Details) HTML 68K
68: R60 Cryptocurrency Assets - Additional information HTML 44K
(Details)
69: R61 Prepayments and Other Receivables (Summary of HTML 44K
Prepayments and Other Current Assets) (Details)
70: R62 Property and Equipment, Net (Schedule of Property HTML 49K
and Equipment) (Details)
71: R63 Property and Equipment, Net (Narrative) (Details) HTML 39K
72: R64 Intangible Assets, Net (Schedule of Intangible HTML 53K
Assets) (Details)
73: R65 Intangible Assets, Net (Schedule of Estimated HTML 44K
Amortization Expense) (Details)
74: R66 Intangible Assets, Net (Narrative) (Details) HTML 35K
75: R67 Operating Leases (Operating lease related assets HTML 40K
and liabilities) (Details)
76: R68 Operating Leases (Summary of maturity of operating HTML 45K
leases liabilities) (Details)
77: R69 Operating Leases (Narratives) (Details) HTML 49K
78: R70 Accounts Payables (Details) HTML 35K
79: R71 Accrued Expenses and Other Current Liabilities HTML 44K
(Details)
80: R72 Income Taxes (Details) HTML 76K
81: R73 Income Taxes (Schedule of Income (Loss) before HTML 33K
Income Taxes) (Details) (Imported) (Imported)
82: R74 Assets and Liabilities Held for Sale (Details) HTML 80K
83: R75 Share-Based Payment (Summary of Share Option HTML 130K
Activity and Related Information) (Details)
84: R76 Share-Based Payment (Schedule of Share-Based HTML 52K
Compensation Expenses Relating to Options Granted)
(Details)
85: R77 Share-Based Payment (Narrative) (Details) HTML 37K
86: R78 Share-Based Payment (Summary of Warrants HTML 72K
(Excluding Pre-Funded Warrants) Activity and
Related Information ) (Details)
87: R79 Share-Based Payment (Additional information) HTML 42K
(Details)
88: R80 Related Party Transactions (Amounts due from a HTML 33K
Related Party) (Details)
89: R81 Related Party Transactions (Amount due to Related HTML 43K
Party) (Details)
90: R82 Related Party Transactions (Equity transaction HTML 57K
with a related party) (Details)
91: R83 Related Party Transactions (Related Party HTML 36K
transactions) (Details)
92: R84 Commitments and Contingencies (Narrative) HTML 28K
(Details)
93: R85 Losses Per Share (Details) HTML 92K
94: R86 Losses Per Share (Schedule of earnings per share HTML 74K
basic and diluted from discontinued operations)
(Details)
95: R87 Equity Transactions (Narrative) (Details) HTML 119K
96: R88 Purchase of Non-Controlling Interest (Details) HTML 52K
97: R89 Purchase of Non-Controlling Interest - Purchase HTML 38K
price summary (Details)
98: R90 Segment Reporting (Details) HTML 107K
99: R91 Segment Reporting - geographical locations HTML 56K
(Details)
100: R92 Discontinued Operations - (Disposition of VIEs and HTML 31K
VIE subsidiaries) (Details)
101: R93 Discontinued Operations (The Condensed Cash Flows HTML 38K
Of Qufan) (Details)
102: R94 Discontinued Operations (The Operating Results HTML 48K
From Discontinued Operations) (Details)
103: R95 Subsequent Events (Narrative) (Details) HTML 86K
106: XML IDEA XML File -- Filing Summary XML 211K
104: XML XBRL Instance -- btcm-20220630x6k_htm XML 3.21M
105: EXCEL IDEA Workbook of Financial Reports XLSX 214K
5: EX-101.CAL XBRL Calculations -- btcm-20220630_cal XML 240K
6: EX-101.DEF XBRL Definitions -- btcm-20220630_def XML 1.74M
7: EX-101.LAB XBRL Labels -- btcm-20220630_lab XML 2.33M
8: EX-101.PRE XBRL Presentations -- btcm-20220630_pre XML 1.92M
4: EX-101.SCH XBRL Schema -- btcm-20220630 XSD 386K
107: JSON XBRL Instance as JSON Data -- MetaLinks 674± 1.05M
108: ZIP XBRL Zipped Folder -- 0001410578-22-002822-xbrl Zip 510K
Exhibit 99.1
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIT MINING LIMITED
As of December 31, 2021 and June 30, 2022
and for the six months ended June 30, 2021 and 2022
BIT MINING LIMITED
CONTENTS
| ||
|
| Pages |
| | |
| ||
| | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | | |
| | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2021 AND JUNE 30, 2022 | | 1 – 2 |
| | |
| 3 | |
| | |
| 4 – 5 | |
| | |
| 6 – 7 | |
| | |
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | | 8 - 42 |
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
| | | | | | |
| | | | As of December | | As of June |
| | Notes | | 31, 2021 | | 30, 2022 |
| | | | US$ | | US$ |
| | | | Audited | | Unaudited |
ASSETS |
| |
|
|
|
|
Current assets: |
| |
|
|
|
|
Cash and cash equivalents |
| |
| i 17,670 |
| i 22,561 |
Restricted cash |
| |
| i 134 |
| i 123 |
Accounts receivable | | | | i 737 | | i 1,252 |
Prepayments and other current assets |
| 7 |
| i 21,525 |
| i 26,160 |
Cryptocurrency assets | | 6 | | i 55,077 | | i 15,375 |
Assets held for sale | | 14 | | — | | i 16,232 |
Total current assets |
| |
| i 95,143 |
| i 81,703 |
| | | | | | |
Non-current assets: |
| |
|
|
|
|
Property and equipment, net |
| 8 |
| i 70,199 |
| i 47,151 |
Intangible assets, net |
| 9 |
| i 71,931 |
| i 63,788 |
Deposits |
| |
| i 99 |
| i 2,382 |
Long-term investments |
| 5 |
| i 10,050 |
| i 8,530 |
Right-of-use assets | | 10 | | i 6,166 | | i 4,986 |
Amounts due from related party - non-current | | 16 | | i 11,504 | | — |
Goodwill | | | | i 26,569 | | i 26,569 |
Other non-current assets |
| |
| i 4,455 |
| i 3,204 |
Total non-current assets |
| |
| i 200,973 |
| i 156,610 |
| | | | | | |
TOTAL ASSETS |
| |
| i 296,116 |
| i 238,313 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| |
|
|
|
|
Current liabilities: |
| |
|
|
|
|
Accounts payable | | 11 | | i 54,438 | | i 27,411 |
Amounts due to related parties | | 16 | | i 8,021 | | — |
Accrued payroll and welfare payable | | | | i 489 | | i 646 |
Operating lease liabilities – current | | 10 | | i 2,213 | | i 1,524 |
Accrued expenses and other current liabilities | | 12 | | i 18,738 | | i 18,761 |
Income tax payable | | | | i 498 | | i 71 |
Liabilities held for sale | | 14 | | — | | i 2,515 |
Total current liabilities |
| |
| i 84,397 |
| i 50,928 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
1
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares)
| | | | | | |
| | | | As of December | | As of June |
|
| Notes |
| 31, 2021 |
| 30, 2022 |
| | | | US$ | | US$ |
| | | | Audited | | Unaudited |
Non-current liabilities: |
|
|
|
|
|
|
Operating lease liabilities - non-current | | 10 | | i 4,569 | | i 3,544 |
Total non-current liabilities |
|
|
| i 4,569 |
| i 3,544 |
| | | | | | |
TOTAL LIABILITIES |
|
|
| i 88,966 |
| i 54,472 |
| | | | | | |
Commitments and contingencies |
| 17 |
|
|
|
|
| | | | | | |
Shareholders’ equity: |
|
|
|
|
|
|
Class A ordinary shares, par value US$ i i 0.00005 / per share; i i 1,599,935,000 / shares authorized as of December 31, 2021 and June 30, 2022; i 710,078,070 and i 853,869,320 shares issued and outstanding as of December 31, 2021 and June 30, 2022 respectively |
| 19 |
| i 36 |
| i 44 |
Class A preference shares, par value US$ i i 0.00005 / per share; i i 65,000 / shares authorized as of December 31, 2021 and June 30, 2022; i i 65,000 / shares issued and outstanding as of December 31, 2021 and June 30, 2022 | | 19 | | i — | | i — |
Class B ordinary shares, par value US$ i i 0.00005 / per share; i i 400,000,000 / shares authorized as of December 31, 2021 and June 30, 2022; i i 99 / shares issued and outstanding as of December 31, 2021 and June 30, 2022 |
| 19 |
| i — |
| i — |
Additional paid-in capital |
| 19 |
| i 590,567 |
| i 611,832 |
Treasury shares |
|
|
| ( i 21,604) |
| ( i 21,604) |
Accumulated other comprehensive loss |
|
|
| ( i 2,355) |
| ( i 3,156) |
Accumulated deficit and statutory reserve |
| |
| ( i 384,867) |
| ( i 408,903) |
Total BIT Mining Limited shareholders’ equity |
|
|
| i 181,777 |
| i 178,213 |
Non-controlling interests |
|
|
| i 25,373 |
| i 5,628 |
Total shareholders’ equity |
|
|
| i 207,150 |
| i 183,841 |
| | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
| i 296,116 |
| i 238,313 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements
2
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of U.S. dollars (“US$”), except for number of shares and per share (or ADS) data)
| | | | | | |
| | | | For the six months ended June 30, | ||
|
| Notes |
| 2021* |
| 2022 |
| | | | US$ | | US$ |
| | | | Unaudited | | Unaudited |
Revenues |
|
|
| i 438,005 |
| i 492,197 |
Operating costs and expenses: |
|
|
| |
| |
Cost of revenue |
|
|
| ( i 427,261) |
| ( i 489,398) |
Sales and marketing |
|
|
| ( i 454) |
| ( i 339) |
General and administrative |
|
|
| ( i 8,561) |
| ( i 12,364) |
Service development |
|
|
| ( i 891) |
| ( i 2,184) |
Total operating costs and expenses |
|
|
| ( i 437,167) |
| ( i 504,285) |
Other operating income |
|
|
| i 46 |
| i 276 |
Government grant |
|
|
| — |
| i 9 |
Other operating expenses |
|
|
| ( i 434) |
| ( i 1,515) |
Net loss on disposal of cryptocurrencies | | | | ( i 8,634) | | ( i 2,057) |
Impairment of cryptocurrency assets | | | | ( i 8,863) | | ( i 12,620) |
Changes in fair value of derivative instrument | | | | i 836 | | — |
Changes in fair value of contingent considerations | | | | — | | i 1,247 |
Impairment of property and equipment | | | | — | | ( i 836) |
Operating loss from continuing operations |
|
|
| ( i 16,211) |
| ( i 27,584) |
Other income, net |
|
|
| i 280 |
| i 554 |
Interest income |
|
|
| i 37 |
| i 106 |
Interest expense | | | | ( i 709) | | ( i 218) |
(Loss) gain from equity method investments |
| 5 |
| ( i 859) |
| i 151 |
Gain from previously held equity method investment | | | | i 5,500 | | — |
Gain from disposal of subsidiaries |
|
|
| i 126 |
| — |
Loss before income taxes from continuing operations |
|
|
| ( i 11,836) |
| ( i 26,991) |
Income taxes benefits |
| 13 |
| i — |
| i — |
Net loss from continuing operations |
|
|
| ( i 11,836) |
| ( i 26,991) |
Loss from discontinued operations, net of applicable income taxes | | 22 | | ( i 2,177) | | — |
Net loss from discontinued operations, net of applicable income taxes | | | | ( i 2,177) | | — |
Net loss | | | | ( i 14,013) | | ( i 26,991) |
Net loss attributable to non-controlling interests from continuing operations | | | | ( i 694) | | ( i 2,955) |
Net loss attributable to non-controlling interests from discontinued operations | | | | ( i 179) | | — |
Less: Net loss attributable to non-controlling interests | | | | ( i 873) | | ( i 2,955) |
Net loss attributable to BIT Mining Limited |
|
|
| ( i 13,140) |
| ( i 24,036) |
Other comprehensive income (loss): |
|
|
| |
| |
Share of other comprehensive income of an equity method investee | | | | i 631 | | — |
Reclassification into loss from equity method investments | | | | i 131 | | — |
Foreign currency translation gain (loss) |
|
|
| i 864 |
| ( i 902) |
Other comprehensive income (loss), net of tax |
|
|
| i 1,626 |
| ( i 902) |
Comprehensive loss |
|
|
| ( i 12,387) |
| ( i 27,893) |
Less: Comprehensive loss attributable to non-controlling interests |
|
|
| ( i 879) |
| ( i 3,056) |
Comprehensive loss attributable to BIT Mining Limited |
|
|
| ( i 11,508) |
| ( i 24,837) |
| | | | | | |
Losses per share attributable to BIT Mining Limited-Basic and Diluted |
| 18 |
|
|
|
|
Net loss from continuing operations | | | | ( i 0.020) | | ( i 0.033) |
Net loss from discontinued operations | | | | ( i 0.004) | | — |
Net loss |
|
|
| (0.024) |
| ( i 0.033) |
Losses per ADS** attributable to BIT Mining Limited-Basic and Diluted |
| 18 |
|
|
|
|
Net loss from continuing operations | | | | ( i 0.200) | | ( i 0.330) |
Net loss from discontinued operations | | | | ( i 0.040) | | — |
Net loss |
|
|
| ( i 0.240) |
| ( i 0.330) |
Weighted average number of Class A and Class B ordinary shares outstanding: |
| 18 |
|
|
|
|
Basic |
|
|
| i 542,881,582 |
| i 717,955,865 |
Diluted |
|
|
| i 542,881,582 |
| i 717,955,865 |
* The Company has changed its reporting currency from Renminbi (“RMB”) to U.S dollars (“USD”) for the period commencing July 1, 2021. Prior periods’ comparative financial information has been recast as if the Company always used USD as its reporting currency.
** American Depositary Shares, which are traded on the NYSE. Each ADS represents ten Class A ordinary shares of the Company.
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
3
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of U.S. dollars (“US$”))
| | | | |
| | For the six months ended June 30, | ||
|
| 2021* |
| 2022 |
| | US$ | | US$ |
| | Unaudited | | Unaudited |
Cash flow from operating activities | | | | |
Net loss |
| ( i 14,013) |
| ( i 26,991) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
Amortization of right-of-use assets | | i 417 | | i 1,180 |
Depreciation of property and equipment |
| i 6,370 |
| i 17,388 |
Amortization of intangible assets |
| i 1,368 |
| i 4,776 |
Share-based compensation |
| i 62 |
| i 4,474 |
Loss (gain) from equity method investments | | i 859 | | ( i 151) |
Impairment of property and equipment |
| — |
| i 836 |
Gain from previously held equity interest |
| ( i 5,500) |
| — |
Net loss on disposal of cryptocurrencies | | i 8,634 | | i 2,057 |
Impairment of cryptocurrency assets | | i 8,863 | | i 12,620 |
Changes in fair value of derivative instrument | | ( i 836) | | — |
Gain from disposal of subsidiaries | | ( i 126) | | — |
Changes in fair value of contingent considerations |
| — |
| ( i 1,247) |
Changes in operating assets and liabilities: | | | | |
Accounts receivable |
| ( i 215) |
| ( i 642) |
Prepayments and other current assets |
| ( i 1,749) |
| i 8,576 |
Cryptocurrency assets | | ( i 24,690) | | ( i 38,475) |
Other non-current assets | | i 66 | | — |
Accounts payable | | i 10,900 | | ( i 4,839) |
Operating lease liabilities | | ( i 263) | | ( i 1,714) |
Accrued expenses and other current liabilities |
| ( i 5,250) |
| ( i 14,867) |
Amounts due to related party | | — | | ( i 7,644) |
Accrued payroll and welfare payable |
| ( i 1,701) |
| i 199 |
Income tax payable |
| — |
| ( i 9) |
Deposits | | — | | ( i 2,283) |
Net cash used in operating activities |
| ( i 16,804) |
| ( i 46,756) |
| | | | |
Cash flows from investing activities |
|
|
|
|
Acquisition of property and equipment |
| ( i 25,390) |
| ( i 783) |
Cash received from return of long-term investments | | i 546 | | i 1,462 |
Cash received from disposal of cryptocurrency assets | | i 1,616 | | i 34,354 |
Proceeds from disposal of long-term investments |
| i 422 |
| — |
Cash paid for business combination, net of cash received | | ( i 6,562) | | — |
Cash paid for additional interest acquired for Loto Interactive | | ( i 3,378) | | — |
Cash received from asset acquisition | | — | | i 25 |
Net cash (used in) provided by investing activities |
| ( i 32,746) |
| i 35,058 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
BIT MINING LIMITED
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands of U.S. dollars (“US$”))
| | | | |
| | For the six months ended June 30, | ||
|
| 2021* |
| 2022 |
| | US$ | | US$ |
| | | | |
Cash flows from financing activities | | | | |
Proceeds from the exercise of share-based awards |
| i 2,548 |
| — |
Proceeds from short-term borrowings | | i 46,969 | | i 6,306 |
Repayment of short-term borrowings | | ( i 6,622) | | — |
Proceeds from issuance of ordinary shares for private placements | | i 11,560 | | i 14,479 |
Net cash provided by financing activities |
| i 54,455 |
| i 20,785 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
| i 1,418 |
| ( i 394) |
Net increase in cash, cash equivalents and restricted cash |
| i 6,323 |
| i 8,693 |
Cash, cash equivalents and restricted cash at beginning of the period |
| i 47,894 |
| i 17,804 |
Cash, cash equivalents and restricted cash at end of the period |
| i 54,217 |
| i 26,497 |
| | | | |
Balances included in the Unaudited Interim Condensed Consolidated Balance Sheets: | | | | |
Cash, cash equivalents and restricted cash | | i 54,217 | | i 22,684 |
Cash, cash equivalents and restricted cash included in current assets held for sale | | — | | i 3,813 |
Cash, cash equivalents and restricted cash at end of period | | i 54,217 | | i 26,497 |
|
|
|
|
|
Supplemental disclosures of cash flow information: | | | | |
Income tax paid |
| — |
| — |
Interest received | | — | | i 106 |
Interest paid |
| ( i 250) |
| ( i 218) |
Supplemental disclosures of non-cash investing and financing activities: | | | | |
Payment of expense and non-current assets in the form of cryptocurrencies | | i 688 | | i 4,991 |
Proceeds from issuance of ordinary shares for private placement in the form of cryptocurrencies | | i 19,289 | | — |
Short-term loan settled by surrendering the cryptocurrencies collateral | | i 18,949 | | i 6,306 |
Cryptocurrencies borrowed from a third party | | i 10,222 | | — |
Cryptocurrencies acquired in connection with business combination | | i 73,184 | | — |
Cryptocurrencies to be distributed for promotion activities on behalf of a third party | | i 2,281 | | — |
Repayment of deposit in the form of cryptocurrencies | | i 6,586 | | — |
Issuance of ordinary shares in connection with business combination | | i 94,828 | | — |
Issuance of ordinary shares in connection with asset acquisition | | — | | i 3,416 |
Deposits received from customers of mining data center in the form of cryptocurrencies | | — | | i 4,155 |
Consideration paid to purchase the non-controlling interest in subsidiary | | — | | i 17,785 |
Property, plant and equipment transferred from long-term prepayment | | — | | i 3,984 |
* The Company has changed its reporting currency from Renminbi (“RMB”) to U.S dollars (“USD”) for the period commencing July 1, 2021. Prior periods’ comparative financial information has been recast as if the Company always used USD as its reporting currency.
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
5
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands of U.S. dollars (“US$”) except for number of shares)
| | | | | | | | | | | | | | | | | | | | | | |
| | 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 (loss) | | statutory | | Non-controlling | | shareholders’ |
|
| shares |
| shares |
| shares |
| shares |
| shares |
| capital |
| shares |
| income |
| reserve |
| interests |
| equity |
| | | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2020 |
| i 430,127,692 |
| — | | i 99 |
| i 22 |
| — | | i 412,364 |
| ( i 21,604) |
| ( i 4,598) |
| ( i 324,351) |
| ( i 1,983) |
| i 59,850 |
Acquisition of Loto Interactive | | — | | — | | — | | — | | — | | ( i 981) | | — | | — | | — | | i 17,632 | | i 16,651 |
Net loss |
| — |
| — | | — |
| — |
| — | | — |
| — |
| — |
| ( i 13,140) |
| ( i 873) |
| ( i 14,013) |
Foreign currency translation gain (loss) |
| — |
| — | | — |
| — |
| — | | — |
| — |
| i 870 |
| — |
| ( i 6) |
| i 864 |
Share of other comprehensive loss of an equity method investee | | — | | — | | — | | — | | — | | — | | — | | i 631 | | — | | — | | i 631 |
Reclassification into loss from equity method investments | | — | | — | | — | | — | | — | | — | | — | | i 131 | | — | | — | | i 131 |
Issuance of ordinary shares for private placement |
| i 85,572,963 |
| i 65,000 | | — |
| i 4 |
| — | | i 30,920 |
| — |
| — |
| — |
| — |
| i 30,924 |
Issuance of ordinary shares for business combinations | | i 56,236,295 | | — | | — | | i 3 | | — | | i 94,825 | | — | | — | | — | | — | | i 94,828 |
Issuance of ordinary shares from exercise of share-based awards | | i 32,393,290 | | — | | — | | i 2 | | — | | i 2,494 | | — | | — | | — | | — | | i 2,496 |
Share-based compensation |
| — |
| — | | — |
| — |
| — | | i 62 |
| — |
| — |
| — |
| — |
| i 62 |
Balance as of June 30, 2021* |
| i 604,330,240 |
| i 65,000 | | i 99 |
| i 31 |
| — | | i 539,684 |
| ( i 21,604) |
| ( i 2,966) |
| ( i 337,491) |
| i 14,770 |
| i 192,424 |
* The Company has changed its reporting currency from Renminbi (“RMB”) to U.S dollars (“USD”) for the period commencing July 1, 2021. Prior periods’ comparative financial information has been recast as if the Company always used USD as its reporting currency.
6
BIT MINING LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
(Amounts in U.S. dollars (“US$”) except for number of shares)
| | | | | | | | | | | | | | | | | | | | | | |
|
| 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 |
| i 710,078,070 |
| i 65,000 | | i 99 |
| i 36 |
| — | | i 590,567 |
| ( i 21,604) |
| ( i 2,355) |
| ( i 384,867) |
| i 25,373 |
| i 207,150 |
Net loss | | — | | — | | — | | — | | — | | — | | — | | — | | ( i 24,036) | | ( i 2,955) | | ( i 26,991) |
Foreign currency translation loss |
| — |
| — | | — |
| — |
| — | | — |
| — |
| ( i 801) |
| — |
| ( i 101) |
| ( i 902) |
Issuance of Class A ordinary shares and pre-funded warrants in private placement, net of issuance costs | | i 112,000,000 | | — | | — | | i 6 | | — | | i 14,473 | | — | | — | | — | | — | | i 14,479 |
Issuance of ordinary shares for asset acquisition | | i 16,038,930 | | — | | — | | i 1 | | — | | i 3,415 | | — | | — | | — | | — | | i 3,416 |
Purchase of non-controlling interests |
| — |
| — | | — |
| — |
| — | | ( i 1,096) |
| — |
| — |
| — |
| ( i 16,689) |
| ( i 17,785) |
Share-based compensation |
| i 15,752,320 |
| — | | — |
| i 1 |
| — | | i 4,473 |
| — |
| — |
| — |
| — |
| i 4,474 |
Balance as of June 30, 2022 |
| i 853,869,320 |
| i 65,000 | | i 99 |
| i 44 |
| — | | i 611,832 |
| ( i 21,604) |
| ( i 3,156) |
| ( i 408,903) |
| i 5,628 |
| i 183,841 |
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.
7
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of Renminbi (“RMB”) United States dollars (“US$”), Hong kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
1. ORGANIZATION
BIT Mining Limited (formerly, 500.com 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 provides cryptocurrency mining, data center operation and mining pool services in 2021.
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 i 16,038,930 Class A ordinary shares to the Selling Shareholders.
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 i 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 i 55%. The Ohio mining site has a total planned power capacity up to i 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 by transferring certain assets that represent i 67.5MW, or i 45%, of total planned power capacity at the Ohio Mining Site. After completion of the transaction, the Company has exclusive access to i 82.5MW of planned electrical power and Viking Data Centers has exclusive access to the remaining i 67.5MW, in accordance to their respective equity ownership immediately prior to the transaction. See Note 20 for detailed discussion.
As of June 30, 2022, 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.
/8
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
1. ORGANIZATION (continued)
iAs of June 30, 2022, the Company’s major subsidiaries are listed below:
| | | | | | | | |
| | | | | | Percentage of | | |
| | Date of | | Place of | | ownership by | | |
Entity |
| establishment |
| establishment |
|
| Principal activities | |
| | | | | | | | |
|
| |
| |
|
|
| |
Fine Brand Limited (“BVI”) | | | i British Virgin Islands | | i 100 | % | i Investment Holding | |
BT Mining Limited (“BT Mining”) | | | i Cayman Islands | | i 100 | % | i Investment Holding | |
500wan HK Limited (“500wan HK”) | | | i Hong Kong | | i 100 | % | i Investment Holding | |
Bee Computing (HK) Limited (“Bee Computing”) | | | i Hong Kong | | i 100 | % | i Miner Manufacturing | |
E-Sun Sky Computer (Shenzhen) Co., Ltd. (“E-Sun Sky Computer”) | | | i Mainland China | | i 100 | % | i Technology Service | |
Star Light Inc. (“Star Light”) | | | i Cayman Islands | | i 100 | % | i Investment Holding | |
Skill Esport Limited (“ Skill Esport”) | | | i Hong Kong | | i 100 | % | i Cryptocurrency Mining | |
Summit Bend US Corporation (“Summit Bend”) | | | i USA | | i 100 | % | i Investment Holding | |
Star Light Ohio I Corporation (“Ohio I”) | | | i USA | | i 100 | % | i Cryptocurrency Mining | |
Star Light Ohio II Corporation (“Ohio II”) | | | i USA | | i 100 | % | i Investment Holding | |
Asgard Data Centers LLC (“Asgard”) | | | i USA | | i 100 | % | i Data Center Service | |
Alliance International Technologies Limited (“Alliance International Technologies”) | | | i British Virgin Islands | | i 100 | % | i Investment Holding | |
Hong Kong Sunstar Technology Co., Limited (“Sunstar Technology”) | | | i Hong Kong | | i 100 | % | i Mining Pool | |
Beijing Guixinyanghang Technology Limited (“Guixinyanghang”) | | | i Mainland China | | i 100 | % | i Technology Service | |
E-Sun Kazakhstan Limited | | | i Kazakhstan | | i 100 | % | i Investment Holding | |
1324492 B.C.Ltd | | | i Canada | | i 100 | % | i Investment Holding | |
The Multi Group Ltd (“The Multi Group” or “TMG”) | | | i Malta | | i 100 | % | i Investment Holding | |
Multi Warehouse Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Multi Brand Gaming Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Multilotto UK Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Lotto Warehouse Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Wasp Media Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Round Spot Services Ltd* | | | i Cyprus | | i 100 | % | i Online Gaming | |
Multi Pay N.V.* | | | i Curacao | | i 100 | % | i Online Gaming | |
Oddson Europe Ltd* | | | i Malta | | i 100 | % | i Online Gaming | |
Loto Interactive Limited (“Loto Interactive”) | | | i Cayman Islands | | i 59.79 | % | i Investment Holding | |
Brighten Express Limited** | | | i Hong Kong | | i 59.79 | % | i Investment Holding | |
Rising Move International Limited** | | | i British Virgin Islands | | i 59.79 | % | i Investment Holding | |
Interactive Lab Limited** | | | i British Virgin Islands | | i 59.79 | % | i Technology Service | |
Precious Success Holdings Limited** | | | i British Virgin Islands | | i 30.49 | % | i Investment Holding | |
PAL Development Limited** | | | i Hong Kong | | i 30.49 | % | i Investment Holding | |
Global Score Asia Limited** | | | i British Virgin Islands | | i 59.79 | % | i Investment Holding | |
Trade Express Services Inc. ** | | | i British Virgin Islands | | i 59.79 | % | i Investment Holding | |
Rise Accord Holdings Limited** | | | i British Virgin Islands | | i 59.79 | % | i Investment Holding | |
China Excellent Net Technology Investment Limited** | | | i Hong Kong | | i 56.80 | % | i Investment Holding | |
Hong Kong Interactive Lab Limited** | | | i Hong Kong | | i 59.79 | % | i Technology Service | |
Virtual Asset Ratings Limited** | | | i British Virgin Islands | | i 59.79 | % | i Technology Service | |
Loto Interactive Information Technology (Shenzhen) Limited (“Loto Interactive Information”) ** | | | i Mainland China | | i 59.79 | % | i Investment Holding | |
Shenzhen Lewanwuxian Information Technology Co., Ltd. ** | | | i Mainland China | | i 30.49 | % | i Online Gaming | |
Interactive Medical Lab Limited** | | | i British Virgin Islands | | i 59.79 | % | i Investment Holding | |
Interactive Medical Lab Corporation** | | | i USA | | i 59.79 | % | i Investment Holding | |
Might Winner Limited** | | | i Hong Kong | | i 59.79 | % | i Investment Holding | |
H.K CB. Cute Technology Co., Limited** | | | i Hong Kong | | i 59.79 | % | i Investment Holding | |
Shenzhen Quanjing Financial Leasing Co., Ltd ** | | | i Mainland China | | i 59.79 | % | i Investment Holding | |
Ganzi Changhe Hydropower Consumption Service Co., Ltd** | | | i Mainland China | | i 59.79 | % | i Data Analysis and Storage Service | |
Sichuan Lecaiyuntian Internet Technology Co., Ltd ** | | | i Mainland China | | i 59.79 | % | i Data Analysis and Storage Service | |
Chengdu Keying Interactive Information Technology Limited** | | | i Mainland China | | i 59.79 | % | i Data Analysis and Storage Service | |
Chengdu Yilaike Technology Co., Ltd. (“Chengdu Yilaike”) ** | | | i Mainland China | | i 59.79 | % | i Data Analysis and Storage Service | |
GreenTech Ltd** | | | i Kazakhstan | | i 30.49 | % | i Data Analysis and Storage Service |
* A subsidiary of the Multi Group
** A subsidiary of Loto Interactive
On June 21, 2022, the Company committed to a plan to sell its equity interest in Loto Interactive and its subsidiaries. The sale was subsequently closed on July 12, 2022 and after the sale, the Company no longer controls or exercises significant influence over Loto Interactive and its subsidiaries. Assets and liabilities related to Loto Interactive and its subsidiaries are reclassified to assets and liabilities held for sale as of June 30, 2022. Further see Note 14 and Note 23.
/9
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
1. ORGANIZATION (continued)
The Company has previously conducted the lottery business in mainland China through a series of contractual arrangements with Shenzhen Youlanguang Science and Technology Co., Ltd., Shenzhen E-Sun Network Co., Ltd., and Shenzhen Guangtiandi Science and Technology Co., Ltd. (collectively, the “lottery business related variable interest entities (“VIEs”)”), and their respective shareholders. Since March 31, 2021, the Company also consolidated the financial results of Zhejiang Keying Huancai Information Technology Co., Ltd. (“Zhejiang Keying”), a VIE primarily engaged in the provision of data analysis and storage services, through its contractual arrangement with Loto Interactive Information Technology (Shenzhen) Co., Ltd., which is indirectly controlled by the Company after the completion of the acquisition of the majority interest of Loto Interactive Limited on March 31, 2021.
On July 23, 2021, the Company announced the decision to dispose of the VIE structures in mainland China, and on August 3, 2021, the Group has terminated all of the VIE structures with the lottery-related affiliated entities and Zhejiang Keying, and the Group has entered into agreement with Zhejiang Keying and Zhejiang Keying’s shareholders to transfer all of the equity interests of Zhejiang Keying’s subsidiaries to Loto Shenzhen. In February 2022, the Company has completed the transfer of the equity interests of Zhejiang Keying’s subsidiaries to Loto Shenzhen. From July 23, 2021, the Company no longer retained any financial interest over the lottery business related VIEs and accordingly deconsolidated the lottery business related VIEs’ financial statements from the Company’s consolidated financial statements. The disposal of lottery business related VIEs represented a strategic shift and has a major effect on the Company’s result of operations. Accordingly, results of operations related to lottery business related VIEs have been reported as discontinued operations for the six months ended June 30, 2021.
The Company, its subsidiaries are hereinafter collectively referred to as the “Group”.
i2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
iBasis 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, 2022 and results of operation and cash flows for the six months ended June 30, 2021 and 2022. Results for the six months ended June 30, 2022 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, long-term investments and goodwill, the valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation and valuation of contingent consideration from business combination and purchase price allocation for business combination and assets acquisition. Actual results could materially differ from those estimates.
/10
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
iForeign currency translation and change in reporting currency
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$. The functional currency of the Multi Group and its subsidiaries is EUR. The functional currency of Loto Interactive and its subsidiaries is HKD. E-Sun Sky Computer with its former VIEs and Beijing Guixinyanghang determined their functional currencies to be RMB. The Group uses the monthly average exchange rate for the period and the spot exchange rate at the balance sheet date to translate the operating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive loss as a component of shareholders’ equity.
Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates. Exchange gains and losses resulting from foreign currency transactions are included in the unaudited interim condensed consolidated statements of comprehensive loss.
Foreign currency translation and change in reporting currency (continued)
Starting from the third quarter of 2021, the Group changed its reporting currency from RMB to US$, to reduce the impact of increased volatility of the US$ to RMB exchange rate on the Group’s reported operating results. The aligning of the reporting currency with the underlying operations will better depict the Group’s results of operations for each period. The related financial statements prior to July 1, 2021 have been recasted to US$ as if the financial statements originally had been presented in US$ since the earliest periods presented. The change in reporting currency resulted in cumulative foreign currency translation adjustment to the Group’s comprehensive loss of a loss of US$ i 40 for the six months ended June 30, 2021.
/ iBusiness 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.
11
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 cumulative results of operations attributable to non-controlling interests are also recorded as non-controlling interests in the Company’s unaudited interim condensed consolidated balance sheets.
The Group recognized changes in fair value of contingent consideration in the amount of a gain of US$ i 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.
iCryptocurrency 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 indicating that it is more likely than not that the indefinite-lived asset is impaired. For each unit of cryptocurrency, impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Group has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Group concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. For the six months ended June 30, 2021 and 2022, the Group recognized impairment loss of US$ i 8,863 and US$ i 12,620, respectively.
/12
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cryptocurrency assets (continued)
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.
iNonmonetary transaction
The Group enters into nonmonetary transactions such as distributions of cryptocurrencies to pay for operating expense and acquire non-current asset. Such transactions are accounted for in accordance with ASC 845, “Nonmonetary Transactions”, which requires the transfer or distribution of a nonmonetary asset or liability to be based, generally, on the fair value of the asset or liability that is received or surrendered, whichever is more clearly evident. No gain or loss is recognized on the transaction.
iIntangible assets
Intangible assets represent computer software, internet domain name, licensing agreement, and intangible assets arising from business combination and asset acquisitions. Computer software, internet domain name and licensing agreement purchased from third parties are initially recorded at cost and amortized on a straight-line basis over their estimated useful lives of the respective assets. The Group performs valuation of the intangible assets arising from business combination and asset acquisitions to determine the relative fair value to be assigned to each asset acquired. The acquired intangible assets are recognized and measured at fair value and are expensed or amortized using the straight-line approach over the estimated useful life of the assets. Estimated useful lives of the respective assets are set out as follows:
i
| | |
Category |
| Estimated Useful Life |
| | |
Computer software |
| i 3- i 10 years |
Internet domain name |
| i 10 years |
Licensing agreement |
| i Agreement term |
Intangible assets arising from business combination and asset acquisitions |
|
|
Licenses and brand name |
| i 10 years |
Mobile applications and software | | i 5 years |
Internet domain name and brand name |
| i 10 years |
Strategic contract | | i 5 years |
Unpatented technology | | i 3 years |
iGoodwill
The Group assesses goodwill for impairment in accordance with ASC 350-20 (“ASC 350-20”), “Intangibles–Goodwill and Other: Goodwill”, which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.
In January 2017, the FASB issued Accounting Standards Update No. 2017-04(“ASU 2017-04”), “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Group early adopted the ASU 2017-04 on January 1, 2019.
During the six months ended June 30, 2021 and 2022, i i no / impairment of goodwill was recognized.
/
13
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
iImpairment 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$ i 836 for impairment of mining machines of Loto Interactive in Kazakhstan. i No impairment of long-lived assets other than goodwill was recorded during the six months ended June 30, 2021.
/ iFair value measurements
Financial instruments primarily include cash and cash equivalents, restricted cash, accounts receivables, other receivables, 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. Contingent consideration related to the acquisition of Alliance International Technologies (formerly known as “Blockchain Alliance Technologies Limited”) is included in accrued expenses and other current liabilities in the consolidated balance sheets, the fair value of which was based on the number of shares of ordinary shares that were expected to be issued and the fair value of the ordinary shares of the Company. 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.
As of June 30, 2022, there is no item of the Group’s assets or liabilities that is measured at fair value on a recurring basis in the period subsequent to its initial recognition.
14
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
iRelated 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.
iRevenue recognition
The Group’s revenues were derived principally from cryptocurrency mining, data center services and mining pool services. The Group also provided sports information service through its former lottery business related VIE subsidiaries and disposed of this business line together with the disposal of VIE structures on July 23, 2021. 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. The consideration also corresponds to the proportion of computing power the Group contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in cryptocurrency transaction verification services is an output of the Group’s ordinary activities. The provision of computing power is the only performance obligation in the Group’s contracts with the pool operator. The transaction consideration the Group receives is noncash consideration. The Group measures the cryptocurrencies at fair value using the quoted price of the related cryptocurrency 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.
15
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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, in exchange for a fee (“pool operator fee”) for its coordination efforts as the pool operator. The Group 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. The mining rewards the mining pool receives from the blockchain network include the block rewards and the transaction verification fees related to the transactions included in the block.
The Group considers itself the principal in transactions with the blockchain networks and recognizes the mining pool revenue on a gross basis. The performance obligation is to create or validate each block. Revenue is recognized at the point when the block creation or validation is complete and the Group has received the rewards. Revenue is measured at the fair value of rewards using the quoted price of the related cryptocurrency 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, delivers such aggregated computing power to the blockchain network, 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. 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.
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, 2021 and June 30, 2022, the Group recorded advance from customers balance of US$ i 744 and US$ i 469 respectively, which was included in “accrued expenses and other current liabilities” in the accompanying unaudited interim condensed consolidated balance sheets. US$ i 672 and US$ i 277 of deferred revenue included in the opening balances of advance from customers was recognized during the six months ended June 30, 2021 and 2022, respectively. The amounts were included in revenues on the accompanying unaudited interim consolidated statements of comprehensive loss.
Refer to Note 21 regarding the discussion of the Group’s disaggregate revenue data.
16
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
iCost of services
Cost of mining pool services
Cost of mining pool services which was offered under BTC.com consists primarily of the mining rewards allocated to each pool participant in exchange for their computing power contributed to the mining pool. The mining rewards allocated to the pool participants include both the block rewards as well as the transaction verification fees related to the transactions included in the block, depending on the sharing mechanism chosen by individual pool participants. Cost of mining pool services also consists of other direct costs related to providing the mining pool service such as server fees and labor for maintaining the mining pool service. Cost of mining pool services were US$ i 405,347 from April 15, 2021 to June 30, 2021 and US$ i 447,997 for the six months ended June 30, 2022. 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, were US$ i 8,567 from March 31, 2021 to June 30, 2021 and US$ i 4,319 for the six months ended June 30, 2022. These costs are expensed as incurred.
Server leasing and maintenance expenses
Server leasing and maintenance expenses, which consist primarily of leasing expense of hosting servers and other equipment used in providing online services and cryptocurrency mining business, were US$ i 4,140 and US$ i 8,538 for the six months ended June 30, 2021 and 2022, 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$ i 5,461 and US$ i 16,584 for the six months ended June 30, 2021 and 2022, 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$ i 1,312 and US$ i 4,748 for the six months ended June 30, 2021 and 2022, 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.
/
17
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
iSales and marketing expenses
Sales and marketing expenses consist primarily of employee costs, commission to certain internet companies and expenses related to promotional activities. These costs are expensed as incurred.
iService development expenses
Service development expenses consist primarily of personnel-related expenses incurred for the development of, enhancement to, and maintenance of the Group’s website that either (i) did not meet the capitalization criteria in accordance with ASC 350, “Intangibles - Goodwill and other”; or (ii) met the capitalization criteria but the costs cannot be separated on a reasonably cost-effective basis between maintenance and relatively minor upgrades and enhancements. Service development expenses are recognized as expenses when incurred.
iIncome taxes
The Group follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive loss in the period that includes the enactment date.
Interest and penalties arising from underpayment of income taxes are computed in accordance with the applicable tax law and is classified in the consolidated statements of comprehensive loss as income tax expense. The amount of interest expense is computed by applying the applicable statutory rate of interest to difference between the tax position recognized and the amount previously taken or expected to be taken in a tax return.
In accordance with the provisions of ASC 740 (“ASC 740”), “Income taxes” the Group recognizes in its financial statements the impact of a i tax position if a tax return position or future tax position is “more likely than not” to be sustained upon examination based solely on the technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit, determined on a cumulative probability basis, that has a greater than fifty percent likelihood of being realized upon settlement. The Group’s estimated liability for unrecognized tax position which is included in the “long-term payables” account is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The outcome for a particular audit cannot be determined with certainty prior to the conclusion of the audit and, in some cases, appeal or litigation process. The actual benefits or liability ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are recorded in the Group’s financial statements. Additionally, in future periods, changes in facts, circumstances, and new information may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur.
In conjunction with ASC 740, the Group also applied ASC 740-30 (“ASC 740-30”), “Income Taxes: Other Considerations or Special Areas”, to account for the temporary differences arising from the undistributed earnings of the foreign subsidiaries. According to ASC 740-30, all undistributed earnings of a subsidiary shall be presumed to be transferred to the parent entity. Accordingly, the undistributed earnings of a subsidiary included in consolidated income shall be accounted for as a temporary difference and affect deferred tax expense unless the tax law provides a means by which the investment in a domestic subsidiary can be recovered tax free.
/18
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes (continued)
In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The Group adopted the ASU on January 1, 2021. The adoption did not have a material impact on the Group’s consolidated financial statements.
iRecent 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.
i3. 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, 2022, 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 suppliers
For the six months ended June 30, 2021 and 2022, the supplier accounted for 10% of more of the Group’s costs was as follows:
i
| | | | | |
| | For the six months ended June 30, |
| ||
| | 2021 | | 2022 |
|
| | US$ | | US$ |
|
A |
| i 17.8 | % | i 18.7 | % |
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.
/19
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
3. CONCENTRATION OF RISKS (continued)
Vulnerability due to change of regulations or policies (continued)
As of June 30, 2022, the mining pool subsidiary of the Company has completely exited the mainland China market, ceased registering new users from mainland China and retired accounts of existing users from mainland China. The Group has been working on solutions with its existing users in mainland China, such as migrating users’ mining machines to overseas markets so that they have access to the services in a compliant manner.
The Group had begun the development of the international operations before these regulatory and policy developments in mainland China. In the second half of 2021, the Group has finished the migration of the cryptocurrency operations to international markets.
i4. ASSET ACQUISITION
On May 31, 2022, the Company completed the first closing of its previously announced share exchange agreement dated April 5, 2021 (as amended and restated in April 2022, the “Amended and Restated Share Exchange Agreement”) entered into by the Company and the shareholders (the “Selling Shareholders”) of the acquisition of Bee Computing (HK) Limited (“Bee Computing”). At the first closing of the Amended and Restated Share Exchange Agreement, the Company issued i 16,038,930 of its Class A ordinary shares to the Selling Shareholders. Meanwhile, the Company’s preexisting loans to Bee Computing was considered effectively settled upon the acquisition. The settlement amount was included in the total purchase consideration. The transaction was accounted for as an asset acquisition as Bee Computing did not meet the definition of a business upon acquisition.
The following table presents the calculation of the purchase consideration of the acquisition date.
i
| | |
|
| Amount |
|
| US$ |
Fair value of i 16,038,930 Class A ordinary shares at acquisition close on May 31, 2022 |
| i 3,416 |
Effective settlement of preexisting loans |
| i 18,397 |
Total purchase consideration |
| i 21,813 |
The following is a summary of the estimated fair value of the assets acquired as of the acquisition date.
i
| | | | |
|
| Amount |
| Amortization Years |
| | US$ | | |
Cash |
| i 25 | | |
Prepayments and other receivables |
| i 18,155 | | |
Acquired intangible asset |
| i 3,633 | | i 3.0 |
Total identifiable assets acquired |
| i 21,813 | | |
Total purchase consideration |
| i 21,813 | | |
The acquired intangible asset was the unpatented technology for the Litecoin ASIC mining machines, which has estimated useful life of i 3 years from the date of acquisition.
/
20
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
5. INVESTMENTS
Long-term Investments
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
Carrying amount of equity investments without readily determinable fair value |
| i 7,670 |
| i 7,255 |
Carrying amount of equity method investments |
| i 2,380 |
| i 1,275 |
Carrying amount of long-term investments |
| i 10,050 |
| i 8,530 |
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$ i 9,543, net of US$ i 1,873 in accumulated impairment and US$ i 9,128, net of US$ i 1,873 in accumulated impairment as of December 31, 2021 and June 30, 2022, respectively. There was no impairment recognized for the six months ended June 30, 2021 and 2022.
Equity method investments
Investments were classified as equity method investments as the Group have significant influence over the entities. The net operating income (loss) from equity method investments from continuing operations for the six months ended June 30, 2021 and 2022 were US$( i 859) and US$ i 151, respectively. The net operating losses from equity method investments included in net loss from discontinued operations for the six months ended June 30, 2021 and 2022 were US$ i 500 and i nil, respectively.
/
21
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
6. CRYPTOCURRENCY ASSETS
The movement of cryptocurrency assets is as follows:
i
| | | | |
|
| For the year ended | | For the six months |
| | | ended June 30, 2022 | |
| | US$ | | US$ |
Beginning balance |
| — |
| i 55,077 |
Receipts from issuance of ordinary shares for private placement |
| i 19,289 |
| i — |
Cryptocurrencies acquired in connection with business combination |
| i 73,184 |
| i — |
Cryptocurrencies borrowing | | i 10,222 | | i — |
Cryptocurrencies mined from mining pool business |
| i 1,275,238 |
| i 450,809 |
Cryptocurrencies mined from mining business |
| i 39,013 |
| i 37,938 |
Cryptocurrency to be distributed for promotion activities on behalf of a third party |
| i 3,179 |
| i — |
Deposits received from customers of mining data center | | i 3,965 | | i 4,155 |
Distribution to pool participants |
| ( i 1,282,143) |
| ( i 468,151) |
Repayment of deposit in the form of cryptocurrencies |
| ( i 6,586) |
| i — |
Repayment of cryptocurrencies borrowings | | ( i 6,523) | | i — |
Payment of service expense and long-lived assets |
| ( i 2,295) |
| ( i 4,991) |
Cryptocurrencies paid in connection with asset acquisition | | ( i 1,731) | | i — |
Disposal of cryptocurrencies* |
| ( i 37,599) |
| ( i 47,498) |
Others |
| ( i 379) |
| i 656 |
Impairment of cryptocurrency assets | | ( i 31,757) | | ( i 12,620) |
Ending balance of cryptocurrency assets, net |
| i 55,077 |
| i 15,375 |
* In January 2022, the Company entered into a loan agreement and a pledge agreement for i one year, pursuant to which the lender agreed to lend to the Company funds equal to approximately US$ i 6,306,which was i 65% of the current fair market value of i 4,000 Ethereum, with a fixed interest rate of i 3.25% per annum. In June 2022, the loan has been fully settled by rendering the pledged Ethereum to the lender. Disposal of cryptocurrencies for the six months ended June 30, 2022 included the carrying amount of the pledged Ethereum of US$ i 9,628 rendered to the lender and the Group recorded a loss on disposal of cryptocurrencies in the amount of approximately US$ i 3,322.
/ /
i7. PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of the following:
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
| | | | |
Receivables from third party payment service providers |
| i 574 |
| i 468 |
Utility deposits | | i 2,820 | | i 647 |
Deferred expense* |
| i 401 |
| i 634 |
Loans to the third parties** | | i 9,328 | | i 1,675 |
Deductible value-added input tax |
| i 7,458 |
| i 3,630 |
Prepayments for long-term assets*** | | — | | i 17,991 |
Others |
| i 944 |
| i 1,115 |
Prepayments and other current assets |
| i 21,525 |
| i 26,160 |
* Deferred expense represents cash paid in advance to vendors, such as technology service expense, consultant expense and compliance expense, which would be amortized according to their respective service periods.
/ /22
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
7. PREPAYMENTS AND OTHER CURRENT ASSETS (continued)
** Loans to the third parties as of December 31, 2021 mainly consist of the free interest and due on demand loans of US$ i 7,965 to Bee Computing which engages in the research and development of cryptocurrency mining chips and mining machines. The preexisting loans were effectively settled on the acquisition date. See Note 4 for detail discussion.
*** Prepayments for long-term assets mainly consist of the prepayments to vendors in connection with the research and development of cryptocurrency mining chips and mining machines.
i8. PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following:
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
| | | | |
Machinery and equipment | | i 95,979 | | i 56,599 |
Electronics and office equipment | | i 1,280 |
| i 8,206 |
Motor vehicles | | i 966 |
| i 754 |
Leasehold improvements | | i 9,082 |
| i 5,802 |
Construction in progress | | i 7,662 | | i 3,158 |
| | | | |
Property and equipment, cost | | i 114,969 |
| i 74,519 |
Less: Accumulated depreciation | | ( i 22,284) |
| ( i 27,368) |
Less: Provision for impairment | | ( i 22,486) | | — |
| | | | |
Property and equipment, net | | i 70,199 |
| i 47,151 |
Depreciation expenses from continuing operations for the six months ended June 30, 2021 and 2022 were approximately US$ i 5,741 and US$ i 17,388, respectively. Depreciation expenses from discontinued operations for the six months ended June 30, 2021 and 2022 were approximately US$ i 629 and i nil, respectively.
Provision for impairment as of December 31, 2021 was approximately US$ i 22,486, mainly due to the closure and demolition of data centers in Sichuan, China. Additional provision for impairment for the six months ended June 30, 2022 was approximately US$ i 836, mainly due to the impairment of mining machines of Loto Interactive in Kazakhstan. The property and equipment of Loto Interactive are presented as assets held for sale as of June 30, 2022. See Note 14 for detailed discussion.
/
23
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
9. INTANGIBLE ASSETS, NET
Intangible assets consist of the following:
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
Cost: |
|
|
|
|
Computer software |
| i 3,988 |
| i 3,470 |
License agreement |
| i 22,252 |
| i 22,252 |
Internet domain name |
| i 150 |
| i 150 |
Brand name |
| i 71,292 |
| i 71,292 |
Strategic contract | | i 18,199 | | i 10,010 |
Unpatented technology | | — | | i 3,633 |
|
| i 115,881 |
| i 110,807 |
Accumulated amortization: |
| |
| |
Computer software |
| ( i 3,317) |
| ( i 2,854) |
License agreement |
| ( i 5,470) |
| ( i 5,470) |
Internet domain name |
| ( i 10) |
| ( i 18) |
Brand name |
| ( i 7,279) |
| ( i 10,207) |
Strategic contract | | ( i 909) | | ( i 1,561) |
|
| ( i 16,985) |
| ( i 20,110) |
| | | | |
Impairment *: | | | | |
Computer software | | ( i 581) | | ( i 525) |
License agreement | | ( i 16,782) | | ( i 16,782) |
Brand name | | ( i 9,602) | | ( i 9,602) |
| | ( i 26,965) | | ( i 26,909) |
Intangible assets, net |
| i 71,931 |
| i 63,788 |
* The impairment of US$ i 26,909 was related to the acquired intangible assets of the Multi Group that were recognized during the year ended December 31, 2019. The additional impairment of US$ i 56 was related to the intangible assets of computer software of Loto Interactive during the year ended December 31, 2021. The intangible assets of Loto Interactive are presented as held for sale as of June 30, 2022. See Note 14 for detailed discussion.
/Amortization expenses from continuing operations for the six months ended June 30, 2021 and 2022 were approximately US$ i 1,341 and US$ i 4,776, respectively. Amortization expenses from discontinued operations for the six months ended June 30, 2021 and 2022 were approximately US$ i 27 and i nil, respectively. Annual estimated amortization expense for each of the five succeeding years is as follows:
i
| | |
|
| US$ |
| | |
2022 remaining |
| i 4,267 |
2023 |
| i 9,133 |
2024 |
| i 9,096 |
2025 |
| i 8,782 |
2026 | | i 7,313 |
2027 and thereafter |
| i 25,197 |
| | |
Total |
| i 63,788 |
/24
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
10. OPERATING LEASES
The Group entered into various operating lease agreements for offices space. The remaining lease terms ranges from i 1.17 to i 4.25 years. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table presents the operating lease related assets and liabilities recorded on the Group’s unaudited interim condensed consolidated balance sheet.
i
| | | | |
| | As of |
| As of |
| | December 31, | | |
|
| 2021 |
| 2022 |
| | US$ |
| US$ |
Right-of-use assets | | i 6,553 |
| i 4,986 |
Impairment of right-of-use assets | | ( i 387) | | — |
Right-of-use assets, net | | i 6,166 | | i 4,986 |
| | | | |
Operating lease liabilities - current | | i 2,213 |
| i 1,524 |
Operating lease liabilities – non-current | | i 4,569 |
| i 3,544 |
Total operating lease liabilities | | i 6,782 |
| i 5,068 |
For the six months ended June 30, 2021, the Group had operating lease costs from continuing operations of approximately US$ i 491 and recorded short-term lease costs of approximately US$ i 23. And the Group had recorded short-term lease costs from discontinuing operations of approximately US$ i 170. For the six months ended June 30, 2022, the Group had operating lease costs from continuing operations of approximately US$ i 925 and recorded short-term lease costs of US$ i 359. Cash paid for amounts included in the measurement of operating lease liabilities were US$ i 328 and US$ i 1,085 for the six months ended June 30, 2021 and 2022, respectively. As of June 30, 2022, the weighted average remaining lease term was i 4.08 years and the weighted average discount rate was i 3.41%.
As of December 31, 2021, the impairment of right-of-use assets of US$ i 387 was related to the impairment of Loto Interactive due to the closure of data centers business in Sichuan, China and was recorded in the other operating expenses in the statement of comprehensive loss. The operating leases of Loto Interactive are presented as assets or liabilities held for sale as of June 30, 2022. See Note 14 for detailed discussion.
The following table summarizes the maturity of operating lease liabilities as of June 30, 2022:
i
| | |
| | Operating leases |
| | US$ |
2022 remaining |
| i 749 |
2023 |
| i 1,405 |
2024 |
| i 1,188 |
2025 | | i 1,188 |
2026 | | i 891 |
Total |
| i 5,421 |
Less: imputed interest |
| ( i 353) |
Present value of lease liabilities |
| i 5,068 |
/
25
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
11. ACCOUNTS PAYABLES
Accounts payables consist of the following:
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
Pool participants payable* | | i 53,400 | | i 25,823 |
Utility cost payable | | i 983 | | i 1,547 |
Others | | i 55 | | i 41 |
|
| i 54,438 |
| i 27,411 |
* Pool participants payable represents payments to pool participants in the mining pool business which are settled in cryptocurrencies.
/ /
i12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
i
| | | | |
|
| As of |
| As of |
| | December 31, | | |
| | 2021 | | 2022 |
| | US$ | | US$ |
| | | | |
Advance from end users* |
| i 5,237 |
| i 4,916 |
Deposit from customer** | | i 3,965 | | i 7,965 |
Business tax and other taxes payable |
| i 255 |
| i 124 |
Professional fees and services payable |
| i 4,033 |
| i 2,026 |
Promotional events payables |
| i 394 |
| i 119 |
Decoration and construction cost payable |
| i — |
| i 2,560 |
Contingent consideration |
| i 1,247 |
| i — |
Others |
| i 3,607 |
| i 1,051 |
| | | | |
Total |
| i 18,738 |
| i 18,761 |
* 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.
/ /
i13. 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 i 21% of taxable income
/26
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
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 i 2% of taxable income.
Malta
Under the current laws, profits tax in Malta is generally assessed at the rate of i 35% of taxable income. When dividend is paid or declared to the holding company, i the paying entity is entitled to claim 6/7 of the profit tax paid as refund, which may effectively reduce income tax rate to i 5%.
Cyprus
Round Spot Services Ltd is incorporated in Cyprus and does not conduct any substantive operations of its own. i i 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, 2021 and 2022.
Hong Kong
500wan HK, Sunstar Technology, Skill Esport and the Hong Kong subsidiaries of Loto Interactive are incorporated in Hong Kong, under the current laws, profits tax in Hong Kong is generally assessed at the rate of i 8.25% of taxable income 8.25% of taxable income up to HKD2,000 and assessed at the rate of i 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 i 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 i i 25 / % in 2021 and 2022. i i 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, 2021 and 2022.
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, 2022, the Group had net operating losses (“NOLs”) of approximately US$ i 62,066 from subsidiaries incorporated in mainland China and US$ i 19,118 from Hong Kong subsidiaries, which can be carried forward to offset future net profit for income tax purposes. The NOLs from subsidiaries incorporated in mainland China as of June 30, 2022 will expire in years i 2023 to i 2027 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, 2021 and 2022.
27
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
14. ASSETS AND LIABILITIES HELD FOR SALE
On March 31, 2021, the Company completed the subscription for shares of Loto Interactive and Loto Interactive became a subsidiary of the Company. On June 21, 2022, the Company committed to a plan to sell its equity interest in Loto Interactive and its subsidiaries. The sale was subsequently closed on July 12, 2022. See Note 22 for more information regarding this transaction. The Company does not believe that the sale of Loto Interactive constitutes a strategic shift that will have a major effect on its operations or financial results and as such, Loto Interactive has not been reclassified as discontinued operations in the Group’s financial statements, but instead has been presented as assets and liabilities held for sale as of June 30, 2022.
The following table summarizes the major classes of asset and liabilities reclassified as held for sale as of June 30, 2022.
i
| | |
| | As of |
| | |
|
| 2022 |
| | US$ |
Current assets: |
|
|
Cash and cash equivalents |
| i 3,813 |
Accounts receivable |
| i 127 |
Prepayments and other current assets | | i 4,390 |
Total current assets | | i 8,330 |
| | |
Non-current assets: | | |
Property and equipment, net |
| i 3,184 |
Long-term investments | | i 451 |
Other current assets |
| i 4,267 |
Total non-current assets |
| i 7,902 |
Total assets held for sale |
| i 16,232 |
| | |
Current liabilities: | | |
Accounts payable |
| i 254 |
Amounts due to related parties | | i 376 |
Accrued payroll and welfare payable | | i 716 |
Accrued expenses and other current liabilities |
| i 43 |
Income tax payable | | i 418 |
Operating lease liabilities - current | | i 606 |
Total current liabilities |
| i 2,413 |
| | |
Non-current liabilities: | | |
Operating lease liabilities - non-current | | i 102 |
Total non-current liabilities | | i 102 |
Total liabilities held for sale |
| i 2,515 |
/
28
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
15. SHARE-BASED PAYMENT
On March 28, 2011, the shareholders and board of directors of the Company approved the 2011 Share Incentive Plan (the “Plan”). The Plan provides for the grant of options, restricted shares and other share-based awards. These options were granted with exercise prices denominated in US$, which is the functional currency of the Company. The board of directors has authorized under the Plan the issuance of up to i 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 i ten years from the grant date.
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$, which is the functional currency of the Company. The board of directors has authorized under the Plan the issuance of up to i 12% of the Company’s issued and outstanding ordinary shares from time to time, on an as-exercised and fully diluted basis, upon exercise of awards granted under the Plan. The maximum term of any issued share option is i ten years from the grant date.
A summary of share option and restricted shares activity and related information for the year ended December 31, 2021 and for the six months ended June 30, 2022 are as follows:
Share options granted to employees and directors
i
| | | | | | | | | | |
|
| |
| |
| Weighted |
| Weighted |
| |
| | | | Weighted | | average | | average | | |
| | | | average | | grant date | | remaining | | Aggregated |
| | Number of | | exercise | | fair value per | | contractual | | intrinsic |
| | options | | price | | share | | year | | value |
| | | | US$ | | US$ | | (Years) | | US$ |
| | | | | | | | | | |
Outstanding, January 1, 2021 | | i 7,259,020 | | i 0.99 | | i 1.09 | | i 0.51 | | i 907 |
Granted | | i — | | i — | | i — | | — | | i — |
Forfeited | | ( i 3,708,680) | | i 2.70 | | i 1.15 | | — | | i — |
Exercised | | ( i 3,508,990) | | i 0.71 | | i 1.00 | | — | | i 524 |
Outstanding, December 31, 2021 | | i 41,350 | | i 0.40 | | i 0.97 | | i 1.81 | | i 9 |
Granted | | i — | | i — | | i — | | — | | i — |
Forfeited | | i — | | i — | | i — | | — | | i — |
Exercised | | i — | | i — | | i — | | — | | i — |
Outstanding, June 30, 2022 (unaudited) | | i 41,350 | | i 0.40 | | i 0.97 | | i 1.31 | | i — |
Vested and expected to vest at June 30, 2022 (unaudited) | | i 41,350 | | i 0.40 | | i 0.97 | | i 1.31 | | i — |
Exercisable at June 30, 2022 (unaudited) | | i 41,350 | | i 0.40 | | i 0.97 | | i 1.31 | | i — |
/29
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
15. SHARE-BASED PAYMENT (continued)
iRestricted shares granted to employees and directors
| | | | | | | | |
|
| |
| Weighted |
| Weighted |
| |
| | | | average | | average | | |
| | | | grant date | | remaining | | Aggregated |
| | Number of | | fair value per | | contractual | | intrinsic |
| | options | | share | | year | | value |
| | | | US$ | | (Years) | | US$ |
| | | | | | | | |
Outstanding, January 1, 2021 | | i 30,884,300 |
| i 0.62 |
| i 8.98 |
| i 27,796 |
Granted | | i 25,777,390 |
| i 0.42 |
| i 9.55 |
| i 15,827 |
Forfeited | | — |
| — |
| — |
| — |
Exercised | | ( i 34,632,130) |
| i 0.60 |
| — |
| i 21,264 |
Outstanding, December 31, 2021 |
| i 22,029,560 |
| i 0.42 |
| i 9.55 |
| i 13,526 |
Granted |
| i — |
| i — |
| — |
| i — |
Forfeited |
| i — |
| i — |
| |
| |
Exercised |
| ( i 15,752,320) |
| i 0.42 |
| — |
| i 977 |
Outstanding, June 30, 2022 (unaudited) | | i 6,277,240 | | i 0.42 | | i 9.05 | | i 389 |
Vested and expected to vest at June 30, 2022 (unaudited) |
| i 6,277,240 |
| i 0.42 |
| i 9.05 |
| i 389 |
Exercisable at June 30, 2022 (unaudited) |
| i 6,277,240 |
| i 0.42 |
| i 9.05 |
| i 389 |
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, 2022, there was i no unrecognized share-based compensation costs related to equity awards granted to employees and directors that is expected to be recognized.
30
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
15. SHARE-BASED PAYMENT (continued)
Total share-based compensation expenses relating to options and restricted shares granted to employees and directors for the six months ended June 30, 2021 and 2022 are included in:
i
| | | | | | |
| | For the six months ended June 30, 2021 | ||||
| | Employees | | Directors | | Total |
|
| US$ |
| US$ |
| US$ |
| | | | | | |
Sales and marketing |
| i 16 |
| i — |
| i 16 |
General and administrative |
| i 30 |
| i 8 |
| i 38 |
Service development |
| i 8 |
| i — |
| i 8 |
| | | | | | |
|
| i 54 |
| i 8 |
| i 62 |
| | | | | | |
| | For the six months ended June 30, 2022 | ||||
| | Employees | | Directors | | Total |
|
| US$ |
| US$ |
| US$ |
| | | | | | |
Cost of revenue |
| i 1,372 |
| — |
| i 1,372 |
General and administrative |
| i 919 |
| i 2,046 |
| i 2,965 |
Service development |
| i 137 |
| — |
| i 137 |
| | | | | | |
|
| i 2,428 |
| i 2,046 |
| i 4,474 |
/On June 27, 2022, the Company completed a private placement, in which it issued certain pre-funded warrants to purchase i 4,800,000 ADSs, Series A warrants to purchase i 16,000,000 ADSs and Series B warrants to purchase i 16,000,000 ADSs. The pre-funded warrants are exercisable immediately at an exercise price of US$ i 0.01 per ADSs and were exercised in full in August 2022. Each Series A warrant is exercisable for i one ADS at an exercise price of US$ i 1.10 per ADSs. 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 i one ADS at an exercise price of US$ i 1.00 per ADSs. The Series B warrants are immediately exercisable and will expire on the 2½th anniversary of the issuance date. See Note 19 for detailed discussion of the private placement.
A summary of warrants (excluding pre-funded warrants) activity and related information for the year ended December 31, 2021 and for the six months ended June 30, 2022 are as follows:
i
| | | | | | | | |
| | | | | | Weighted | | |
| | | | | | Average | | |
| | Class A | | Weighted Average | | Remaining | | Aggregate |
| | Ordinary Shares | | Exercise Price | | Contractual Life | | Intrinsic Value |
|
| |
| US$ |
| (Years) |
| US$ |
Outstanding, January 1, 2021 |
| — |
| — |
| — |
| — |
Granted |
| i 100,000,000 |
| i 0.68 |
| i 2.03 |
| — |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| — |
| — |
| — |
| — |
Outstanding, December 31, 2021 |
| i 100,000,000 |
| i 0.68 |
| i 2.03 |
| — |
Granted |
| i 320,000,000 |
| i 0.11 |
| i 3.73 |
| — |
Forfeited |
| — |
| — |
| — |
| — |
Exercised |
| — |
| — |
| — |
| — |
Outstanding, June 30, 2022 (unaudited) |
| i 420,000,000 |
| i 0.24 |
| i 3.21 |
| — |
Vested and expected to vest at June 30, 2022 (unaudited) |
| i 420,000,000 |
| i 0.24 |
| i 3.21 |
| — |
Exercisable at June 30, 2022 (unaudited) |
| i 420,000,000 |
| i 0.24 |
| i 3.21 |
| — |
31
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
i16. RELATED PARTY TRANSACTIONS
Amounts due from related party – non-current
As of December 31, 2021, the balance of prepayments to related party was in the amount of US$ i 11,504. The balance consisted of prepayments for assets purchased from Viking Data Centers, the minority interest shareholder of a subsidiary. 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 20 for detail discussion. As of June 30, 2022, the amount due from related party was i zero.
Amounts due to related parties
As of December 31, 2021, the balance of due to related parties was in the amount of US$ i 8,021, which mainly consisted of (i)US$ i 6,320 of the payable to the minority interest shareholders of a subsidiary for the remaining consideration of the asset acquisition of Asgard Data Centers; (ii) US$ i 1,325 of the payable to the minority interest shareholders of a subsidiary for the data center operation costs; (iii) US$ i 59 of the payment of property and equipment made by a former shareholder of a subsidiary of the Group on behalf of Loto Interactive; (iv)US$ i 299 of payable for business cooperation expense due to a minority interest shareholder of a subsidiary of Loto Interactive, and (v) US$ i 18 of the expense paid by a director of a subsidiary of the Group on behalf of Loto Interactive. 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 20 for detail discussion. The amounts related to Loto Interactive was reclassified to liabilities held to sale as of June 30, 2022. See Note 14 for detail discussion. As of June 30, 2022, the amount due to related parties was i zero.
Equity transaction with a related party
Good luck Information is controlled by Mr. Man San Vincent Law, a founder of the Company. In December 2020, the Company entered into a definitive share subscription agreement with Good Luck Information for the issuance and sale of i 85,572,963 Class A ordinary shares for a total purchase price of approximately US$ i 23 million. The per share purchase price of US$ i 0.269 is the closing trading price of the Company’s ADSs on December 18, 2020, the last trading day immediately preceding the date of the purchase agreement, as adjusted by a i 1-to-10 ADS to ordinary shares ratio. In January 2021, the Company determined that i 50% of the subscription price, or approximately US$ i 11.5 million, shall be settled by U.S. dollars, with the remaining i 50% of the subscription price, or approximately US$ i 11.5 million, being settled by bitcoins. The applicable bitcoin to U.S. dollars exchange rate was US$ i 32,326.29 to one bitcoin, being the average of the closing trading prices for bitcoin published by Coinmarketcap for each of the 31 days ended January 20, 2021. On February 23, 2021, the Company closed the private placement transaction pursuant to the definitive share subscription agreement with Good Luck Information. The Company received i 356.04342 bitcoins and US$ i 11.5 million in cash from Good Luck Information, and the Company issued i 85,572,963 Class A ordinary shares to Good Luck Information. Upon closing, Good Luck Information holds i 16.6% of the Company’s issued and outstanding ordinary shares.
Related Party transaction
i
| | | | |
| | For the six months ended June 30, | ||
|
|
| 2022 | |
|
| US$ |
| US$ |
Data center operation costs for services provided by Viking Data Centers before ceased to be related party | | i — | | i 9,108 |
|
| i — |
| i 9,108 |
/
32
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
17. 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.
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.
Guarantees (continued)
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, 2021 and June 30, 2022.
Indemnity cost
There was i i no / indemnity cost occurred as of December 31, 2021 and June 30, 2022.
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 2021 and for the six months ended June 30, 2022.
Operating lease commitments
The information of lease commitments is provided in Note 10.
/
33
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
18. LOSSES PER SHARE
iBasic and diluted losses per share for each of the six months ended June 30, 2021 and 2022 presented is calculated as follows:
| | | | | | | | |
| | For the six months ended June 30, | ||||||
| | 2021 | | 2022 | ||||
|
| US$ |
| US$ |
| US$ |
| US$ |
|
| Class A |
| Class B |
| Class A |
| Class B |
| | | | | | | | |
Losses per share from continuing operations—basic: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss from continuing operations attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share—basic |
| ( i 11,142) |
| — |
| ( i 24,036) |
| i — |
| | | | | | | | |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Denominator used for losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Losses per share from continuing operations — basic |
| ( i 0.020) |
| — |
| ( i 0.033) |
| i — |
| | | | | | | | |
Losses per share from continuing operations—diluted: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss from continuing operations attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share— diluted |
| ( i 11,142) |
| — |
| ( i 24,036) |
| i — |
Reallocation of net loss from discontinued operations attributable to BIT Mining Limited’s ordinary shareholders as a result of conversion of Class B to Class A shares |
| — |
| — |
| i — |
| i — |
Net loss from continuing operations attributable to ordinary shareholders |
| ( i 11,142) |
| — |
| ( i 24,036) |
| i — |
| | | | | | | | |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Conversion of Class B to Class A ordinary shares |
| i 99 |
| — |
| i 99 |
| i — |
Denominator used for losses per share |
| i 542,881,582 |
| i 99 |
| i 717,955,865 |
| i 99 |
Losses per share from continuing operations—diluted |
| ( i 0.020) |
| — |
| ( i 0.033) |
| i — |
| | | | | | | | |
Losses from continuing operations per ADS: |
|
|
|
|
|
|
|
|
Denominator used for losses per ADS - basic |
| i 54,288,148 |
| — |
| i 71,795,577 |
| i — |
Denominator used for losses per ADS - diluted |
| i 54,288,158 |
| — |
| i 71,795,587 |
| i — |
Losses from continuing operations per ADS – basic |
| ( i 0.200) |
| — |
| ( i 0.330) |
| i — |
Losses from continuing operations per ADS – diluted |
| ( i 0.200) |
| — |
| ( i 0.330) |
| i — |
/ /34
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
18. LOSSES PER SHARE (continued)
| | | | | | | | |
| | For the six months ended June 30, | ||||||
| | 2021 | | 2022 | ||||
|
| US$ |
| US$ |
| US$ |
| US$ |
|
| Class A |
| Class B |
| Class A |
| Class A |
| | | | | | | | |
Losses per share from discontinued operations—basic: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss from discontinued operations attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share—basic |
| ( i 1,998) |
| — |
| — |
| — |
| | | | | | | | |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Denominator used for losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Losses per share from discontinued operations — basic |
| ( i 0.004) |
| — |
| — |
| — |
| | | | | | | | |
Losses per share from discontinued operations—diluted: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of net loss from discontinued operations attributable to BIT Mining Limited’s ordinary shareholders used in calculating loss per ordinary share— diluted |
| ( i 1,998) |
| — |
| — |
| — |
Reallocation of net loss from discontinued operations attributable to BIT Mining Limited’s ordinary shareholders as a result of conversion of Class B to Class A shares |
| — |
| — |
| — |
| — |
Net loss from discontinued operations attributable to ordinary shareholders |
| ( i 1,998) |
| — |
| — |
| — |
| | | | | | | | |
Denominator: |
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding used in calculating basic losses per share |
| i 542,881,483 |
| i 99 |
| i 717,955,766 |
| i 99 |
Conversion of Class B to Class A ordinary shares |
| i 99 |
| — |
| i 99 |
| — |
Denominator used for losses per share |
| i 542,881,582 |
| i 99 |
| i 717,955,865 |
| i 99 |
Losses per share from discontinued operations—diluted |
| ( i 0.004) |
| — |
| — |
| — |
| | | | | | | | |
Losses from discontinued operations per ADS: |
|
|
|
|
|
|
|
|
Denominator used for losses per ADS - basic |
| i 54,288,148 |
| — |
| i 71,795,577 |
| — |
Denominator used for losses per ADS - diluted |
| i 54,288,158 |
| — |
| i 71,795,587 |
| — |
Losses from discontinued operations per ADS – basic |
| ( i 0.040) |
| — |
| — |
| — |
Losses from discontinued operations per ADS – diluted |
| ( i 0.040) |
| — |
| — |
| — |
i19. EQUITY TRANSACTIONS
The authorized share capital consisted of i 2,000,000,000 ordinary shares at a par value of US$ i 0.00005 per share, of which i 1,599,935,000 shares were designated as Class A ordinary shares, i 65,000 shares as Class A preference shares and i 400,000,000 as Class B ordinary shares. The rights of the holders of Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Each share of Class A ordinary shares is entitled to i one vote per share and is not convertible into Class B ordinary shares under any circumstances. Each share of Class B ordinary shares is entitled to i ten votes per share and is convertible into one Class A ordinary share at any time by the holder thereof. The voting power of each Class A preference share is equal to that of i 10,000 Class A ordinary shares. The Class A preference shares cannot be converted into Class A ordinary shares, Class B ordinary shares, or ADRs and are not entitled to receive dividends.
/35
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
19. EQUITY TRANSACTIONS (continued)
The Company’s Board of Directors has appointed Mr. Man San Vincent Law as its Executive Director, effective as of April 5, 2021, and authorized the Company to issue i 65,000 Class A preference shares (the “Preference Shares”) at US$ i 1.0 per share, for a total consideration of US$ i 65,000, to Good Luck Capital Limited (“Good Luck”), a company wholly-owned by Mr. Law. Following the issuance of the Preference Shares, Mr. Man San Vincent Law’s aggregate voting power increased from approximately i 17.66% to approximately i 48.78% (based on the Company’s total outstanding share capital as of June 30, 2022) and assuming issuance of all shares under the Share Exchange Agreement). The following is a summary of the key terms associated with the Preference Shares.
(1) The voting power of each Preference Share is equal to that of i 10,000 Class A ordinary shares of the Company, subject to proportional reduction commensurate with the number of Class A ordinary shares beneficial owned by Good Luck;
(2) The Preference Shares cannot be converted into Class A ordinary shares, Class B ordinary shares, or ADRs;
(3) The Preference Shares are not entitled to receive dividends;
(4) If Good Luck transfers the Preference Shares to a third party which is not an affiliate of Good Luck, or when Good Luck ceases to be controlled by any person holding executive office in or being a member of the board of director of the Company, Class A Preference Shares shall cease to have any voting right and
(5) If Mr. Law ceases to serve as a director of the Company, the Company shall be entitled to redeem the Class A Preference Shares at the original subscription price.
For the six months ended June 30, 2021, i 3,508,990 share options were exercised at the exercise prices of US$ i 0.2 per share resulting in the issuance of i 3,508,990 Class A ordinary shares at US$ i 0.00005 each for an aggregate consideration of US$ i 2,496, and i 28,884,300 restricted shares were vested and exercised without exercise prices. For the six months ended June 30, 2021, i 85,572,963 Class A ordinary shares were issued for private placement and i 56,236,295 Class A ordinary shares were issued for business combinations. As of June 30, 2021, i 604,330,240 and i 99 Class A and Class B ordinary shares were issued and outstanding, respectively.
For the six months ended June 30, 2022, i 15,752,320 restricted shares were vested and exercised without exercise price.
On May 31, 2022, i 15,752,320 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 have offered (1) i 11,200,000 ADSs, (2) certain pre-funded warrants to purchase i 4,800,000 ADSs (the “Pre-Funded Warrants”) in lieu of the ADSs being offered, and (3) certain warrants including (i) Series A warrants to purchase up to i 16,000,000 ADSs (the “Series A Warrants”) and (ii) Series B warrants to purchase up to i 16,000,000 ADSs (the “Series B Warrants”) (the Series A Warrants and Series B Warrants are collectively referred as the “Warrants”), 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$ i 1.00. The combined purchase price of each Pre-Funded Warrant and the accompanying Warrants is US$ i 0.99. Each Pre-Funded Warrant is exercisable for one ADS at an exercise price of US$ i 0.01. The Pre-Funded Warrants have been exercised in full in August 2022.
As of June 30, 2022, i 853,869,320 and i 99 Class A and Class B ordinary shares were issued and outstanding, respectively.
36
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
20. PURCHASE OF NON-CONTROLLING INTEREST
In September 2021, the Company entered into a Membership Interest Purchase Agreement and certain other auxiliary agreements with Viking Data Centers, LLC (“Viking Data Centers”) to acquire the i 51% equity interest in Asgard Data Centers LLC (“Asgard”), which intended to operate a cryptocurrency mining data center in Ohio (the “Ohio Mining Site”). In October 2021, the Company increased its equity interest ownership in the Ohio Mining Site to i 55%. The Ohio mining site has a total planned power capacity up to i 150 megawatts (“MW”).
In June 2022, the Company entered into an agreement with Viking Data Centers that the Company agreed to purchase all remaining equity interest from Viking Data Centers for approximately US$ i 17,785, by transferring certain assets that represent i 67.5MW, or i 45%, of total planned power capacity at the Ohio Mining Site. After completion of the transaction, the Company has exclusive access to i 82.5MW of planned electrical power and Viking Data Centers has exclusive access to the remaining i 67.5MW, in accordance to their respective equity ownership immediately prior to the transaction.
The following table summarizes the assets transferred:
i
| | |
|
| Amount |
| | US$ |
Construction in progress | | i 5,863 |
Other non-current assets |
| i 4,902 |
Intangible assets, net |
| i 7,020 |
Total |
| i 17,785 |
Net book value of the non-controlling interest purchased was approximately US$ i 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.
/
37
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
21. SEGMENT REPORTING
The Group continually monitors the reportable segments for changes in facts and circumstances to determine whether changes in the identification or aggregation of operating segments are necessary. In December 2020, the Group announced the entrance into the cryptocurrency industry. As of June 30, 2021, the Group have completed the transformation of its business to become a cryptocurrency mining enterprise. In accordance with ASC topic 280, “Segment Reporting”, the Group’s chief operating decision maker has been identified as the Board of Directors and the chief executive officer, who makes resource allocation decisions and assesses performance based on the different business operating results. As a result, the Group has i three reportable segments, including the mining pool business, the data center business and the cryptocurrency mining. The Group’s other business, mainly consisting of online gaming in Europe, was not material for the six months ended June 30, 2021 and 2022.
/38
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
The following table presents summary information by segment for the six months ended June 30, 2021 and 2022, respectively.
| | | | |
| | For the six months ended June 30, | ||
| | 2021 | | 2022 |
| | US$ | | US$ |
Reportable segment revenue: |
|
|
|
|
Mining pool |
| i 413,650 |
| i 450,780 |
Data center |
| i 11,424 |
| i 3,394 |
Cryptocurrency mining |
| i 11,378 |
| i 37,823 |
Others |
| i 1,553 |
| i 200 |
Total segment and consolidated revenue |
| i 438,005 |
| i 492,197 |
Reportable segment cost of revenue-exclusive depreciation and amortization: |
|
|
|
|
Mining pool |
| ( i 405,347) |
| ( i 447,997) |
Data center |
| ( i 8,567) |
| ( i 4,319) |
Cryptocurrency mining |
| ( i 4,821) |
| ( i 13,700) |
Others |
| ( i 1,753) |
| ( i 2,050) |
Total segment and consolidated cost of revenue-exclusive depreciation and amortization |
| ( i 420,488) |
| ( i 468,066) |
Reportable segment cost of revenue-depreciation and amortization: |
|
|
|
|
Mining pool |
| ( i 1,234) |
| ( i 4,748) |
Data center |
| ( i 1,610) |
| ( i 2,343) |
Cryptocurrency mining |
| ( i 3,845) |
| ( i 14,241) |
Others |
| ( i 84) |
| — |
Total segment and consolidated cost of revenue-depreciation and amortization |
| ( i 6,773) |
| ( i 21,332) |
Total segment and consolidated cost |
| ( i 427,261) |
| ( i 489,398) |
Reconciling items: |
|
|
|
|
Operating expenses |
| ( i 9,906) |
| ( i 14,887) |
Other operating income |
| i 46 |
| i 276 |
Government grant |
| — |
| i 9 |
Other operating expenses |
| ( i 434) |
| ( i 1,515) |
Net loss on disposal of cryptocurrencies |
| ( i 8,634) |
| ( i 2,057) |
Impairment of cryptocurrency assets |
| ( i 8,863) |
| ( i 12,620) |
Changes in fair value of derivative instrument |
| i 836 |
| — |
Impairment of property and equipment | | — | | ( i 836) |
Changes in fair value of contingent considerations | | — | | i 1,247 |
Operating loss from continuing operations |
| ( i 16,211) |
| ( i 27,584) |
Other income, net |
| i 280 |
| i 554 |
Interest income |
| i 37 |
| i 106 |
Interest expense |
| ( i 709) |
| ( i 218) |
(Loss) gain from equity method investments |
| ( i 859) |
| i 151 |
Gain on previously held equity method investment |
| i 5,500 |
| — |
Gain from disposal of a subsidiary |
| i 126 |
| — |
Net loss from continuing operations |
| ( i 11,836) |
| ( i 26,991) |
39
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
21. SEGMENT REPORTING (continued)
The following table presents the revenue from continuing operations by geographical locations for the six months ended June 30, 2021 and 2022, respectively.
i
| | | | |
| | For the six months ended June 30, | ||
Revenues |
| 2021 |
| 2022 |
| | US$ | | US$ |
Hong Kong |
| i 97 |
| i 27,613 |
USA |
| — |
| i 7,782 |
Kazakhstan |
| — |
| i 6,014 |
Europe |
| i 1,446 |
| i 8 |
Mainland China |
| i 22,812 |
| — |
Blockchain |
| i 413,650 |
| i 450,780 |
|
| i 438,005 |
| i 492,197 |
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, 2021 and June 30, 2022, respectively.
i
| | | | |
Long-lived assets |
| As of December 31, 2021 |
| As of June 30, 2022 |
| | US$ | | US$ |
USA |
| i 35,873 |
| i 23,709 |
Hong Kong |
| i 31,745 |
| i 26,442 |
Mainland China |
| i 6,435 |
| i 564 |
Kazakhstan |
| i 2,310 |
| i 1,421 |
Europe |
| i 2 |
| i 1 |
|
| i 76,365 |
| i 52,137 |
40
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
22. DISCONTINUED OPERATIONS
Disposition of VIEs and VIE subsidiaries
On July 23, 2021, the Group terminated all of its lottery business-related VIE contracts for i nil consideration and disposed of its Chinese lottery-related business.
From July 23, 2021, the Group no longer retained any financial interest over lottery business related VIEs and accordingly deconsolidated lottery business related VIEs’ financial statements from the Group’s consolidated financial statements. The disposal of lottery business related VIEs represented a strategic shift and has a major effect on the Group’s result of operations. Accordingly, revenues, expenses and cash flows related to lottery business related VIEs have been reclassified in the consolidated financial statements as discontinued operations for the six months ended June 30, 2021.
iThe condensed cash flows of lottery business related VIEs were as follows for the six months ended June 30, 2021:
| | |
|
| For the six months ended June 30, |
| | 2021 |
| | US$ |
Net cash used in operating activities |
| ( i 2,798) |
Net cash provided by investing activities |
| i 799 |
Net cash used in financing activities |
| ( i 26,117) |
| | |
Effect of foreign exchange on cash |
| ( i 10) |
iThe operating results from discontinued operations included in the Group’s unaudited interim condensed consolidated statements of comprehensive loss were as follows for the six months ended June 30, 2021:
| | |
|
| For the six months ended June 30, |
| | 2021 |
| | US$ |
Major classes of line items constituting pre-tax profit of discontinued operations |
|
|
| | |
Revenues |
| i 980 |
Cost of revenue |
| ( i 163) |
Sales and marketing |
| ( i 462) |
General and administrative |
| ( i 2,058) |
Service development expenses |
| ( i 530) |
Other income that are not major |
| i 56 |
Loss from discontinued operations, before income tax |
| ( i 2,177) |
Income tax expense |
| i — |
Loss from discontinued operations, net of income tax |
| ( i 2,177) |
/
i23. SUBSEQUENT EVENTS
Sale of Shares of Loto Interactive Limited
On July 12, 2022, the Company entered into a share sale and purchase agreement (the “Sale and Purchase Agreement”) with an unaffiliated third party (the “Buyer”), pursuant to which the Company agreed to sell, and the Buyer agreed to purchase, approximately i 51% of the total issued share capital of Loto Interactive, representing i 279,673,200 shares of Loto Interactive at the price of HK$ i 0.28 per share (the “Sale Price”) for a total consideration of HK$ i 78,308 (the “Transaction”). After the Transaction, the Company’s share ownership in Loto Interactive decreased to i 8.79%.
/41
BIT MINING LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”), United States dollars (“US$”), Hong Kong dollars (“HKD”) and EUR, except for number of shares and per share (or ADS) data)
Private Placement
In August 2022, the Company have completed the registered direct offering of i 15,566,665 of the Company’s ADSs, Series A Warrants to purchase up to an aggregate of i 15,566,665 ADSs and Series B Warrants to purchase up to an aggregate of i 15,566,665 ADSs, at a combined purchase price of US$ i 0.60 per ADS and associated warrants. Each ADS represents i ten Class A ordinary shares, par value US$ i 0.00005 per share. The private placement resulted in gross proceeds to the Company of $ i 9,340 before the deduction of placement agent fees and expenses and offering expenses payable by the Company. The Series A Warrants will have an exercise price of US$ i 0.66 per ADS, will be exercisable at any time upon issuance and will expire i five years from the date of issuance. The Series B Warrants will have an exercise price of US$ i 0.60 per ADS, will be exercisable at any time upon issuance and will expire two and a half years from the date of issuance.
Exercise of Pre-Funded Warrants
In June 2022, the Company have offered (1) i 11,200,000 ADSs, (2) certain pre-funded warrants to purchase i 4,800,000 ADSs (the “Pre-Funded Warrants”) in lieu of the ADSs being offered, and (3) certain warrants including (i) Series A warrants to purchase up to i 16,000,000 ADSs (the “Series A Warrants”) and (ii) Series B warrants to purchase up to i 16,000,000 ADSs (the “Series B Warrants”), to certain institutional investors. In August 2022, the Pre-Funded Warrants have been exercised in full with exercise price of US$ i 0.01.
42
| This ‘6-K’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| Filed on: | 9/29/22 | |||
| 7/12/22 | 6-K | |||
| For Period end: | 6/30/22 | 6-K | ||
| 6/27/22 | 424B5, 6-K | |||
| 6/21/22 | ||||
| 5/31/22 | 6-K | |||
| 12/31/21 | 20-F | |||
| 10/1/21 | ||||
| 9/23/21 | ||||
| 9/22/21 | 6-K | |||
| 9/16/21 | ||||
| 8/23/21 | ||||
| 8/3/21 | ||||
| 7/23/21 | 6-K | |||
| 7/1/21 | ||||
| 6/30/21 | 6-K | |||
| 6/21/21 | 6-K | |||
| 6/18/21 | ||||
| 5/21/21 | ||||
| 4/20/21 | 424B3, 6-K | |||
| 4/19/21 | ||||
| 4/15/21 | 6-K | |||
| 4/5/21 | 6-K | |||
| 3/31/21 | 6-K | |||
| 3/28/21 | ||||
| 2/23/21 | 6-K | |||
| 1/29/21 | ||||
| 1/20/21 | ||||
| 1/1/21 | ||||
| 12/31/20 | 20-F | |||
| 12/18/20 | ||||
| 6/12/20 | ||||
| 4/9/20 | ||||
| 3/11/20 | ||||
| 12/31/19 | 20-F, 6-K, NT 20-F | |||
| 8/9/19 | ||||
| 4/25/19 | ||||
| 3/21/19 | ||||
| 2/21/19 | ||||
| 1/10/19 | ||||
| 1/1/19 | ||||
| 7/26/18 | ||||
| 5/23/18 | ||||
| 3/23/18 | ||||
| 2/5/18 | ||||
| 1/10/18 | ||||
| 12/14/17 | ||||
| 12/1/17 | ||||
| 9/4/17 | ||||
| 9/1/16 | ||||
| 8/12/16 | ||||
| 5/17/16 | ||||
| 5/12/16 | ||||
| 4/1/16 | ||||
| 7/8/15 | ||||
| 6/26/15 | ||||
| 5/6/15 | ||||
| 12/3/14 | ||||
| 10/3/14 | ||||
| 10/9/13 | ||||
| 4/30/13 | ||||
| 2/24/12 | ||||
| 8/25/11 | ||||
| 5/9/11 | ||||
| 3/28/11 | ||||
| 3/8/11 | ||||
| 2/9/11 | ||||
| 7/2/09 | ||||
| 1/1/08 | ||||
| 7/25/07 | ||||
| 7/10/07 | ||||
| 6/18/07 | ||||
| 4/20/07 | ||||
| 8/17/06 | ||||
| 4/18/05 | ||||
| 11/3/03 | ||||
| 11/26/98 | ||||
| List all Filings | ||||