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The revenue in 2020 is only 625,000.Why does Ninetowns spend 100 million US dollars to buy mining machines?



Editor’s Note: Although Ninetowns has reversed its four-year loss, it has not achieved it through its main business. The cryptocurrency business is its highlight. The former giant of the game circle, today's cryptocurrency concept stock, The Ninth City (Ninetowns, NCTY) disclosed its 2020 financial report. According to the Form 20-F document submitted by Ninetowns to the SEC, the company's revenue in 2020 will be 625,000 yuan, compared with 343,000 yuan in the same period last year. Net profit was 393 million yuan, compared with a net loss of 196 million yuan in the same period last year. Prior to this, Ninetowns had suffered losses for four consecutive years. Since The9 entered the field of cryptocurrency, its performance in the secondary market has changed. From the edge of delisting for a long time, the stock price once rose to as high as 89 US dollars per share, hitting a new high since its listing. For this reason, The9 is more concerned about the progress of its cryptocurrency business, so what key information is contained in The9's financial report? This article is the sixth in the US stock blockchain series, and it will take you to understand the situation of the ninth city. Ninetowns was originally a member of the game circle, and in its early years it relied on acting as an agent for World of Warcraft and became a giant in the game field. At that time, World of Warcraft not only brought a huge amount of turnover to it, but also brought it a good performance in the secondary market. However, with the change of ownership of the World of Warcraft agent, The9's game business has gone from bad to worse. LooksRare’s native token LOOKS will unlock 3.75% of the total supply at 13:00 on January 2, 2023: On December 29, according to TokenUnlocks data, LooksRare’s native token LOOKS will be released once at 13:00 on January 2, 2023 Small amount of unlocking, the unlocking amount is 37.5 million LOOKS, accounting for 3.75% of the total supply (1 billion), or about 5.52 million US dollars. Among the unlocked tokens, there are 25 million for the team and 12.5 million for the treasury. [2022/12/29 22:14:45]According to the Form 20-F documents submitted by Ninetowns, the game revenue data of Ninetowns in 2018, 2019, and 2020 are 1.66 million yuan, 304,000 yuan, 62.5 million yuan, respectively. 10,000 yuan, and only 625,000 yuan in game revenue in 2020. As of the date of this annual report, The9 operates only two games in China, Legend of Immortals and The World of Kings. (Games operated by the Ninth City in 2020, source: The Ninetowns report stated that it also operated mobile games such as "Knight Forever", "Q Jiang Three Kingdoms" and "Pop Fashion" before. "Knight Forever" and "Q Jiang Sanguo" ceased operations in 2019, and "Pop Fashion" ceased operations in 2020. We once obtained a license from Smilegate to develop a new mobile game called Crossfire. However, prior to the launch of Crossfire, the company's license to operate the game expired on October 31, 2020. The 2022 World 5G Conference will set up a metaverse forum: According to news on August 9, the opening of the 2022 World 5G Conference is coming soon, China Net Technology learned. This year, a metaverse forum will be set up to share the current achievements and applications of metaverse innovative technologies. Discussion topics cover multiple fields closely related to the development and innovation of Metaverse, including mobile communications, hardware and software devices, content-zce ecology, artificial intelligence, computing platforms, blockchain, NFT, etc. When Tan Jianrong, an academician of the Chinese Academy of Engineering, talked about the development trend and situation of the Metaverse, he said that the Metaverse will promote the network to enter the third-generation Internet, from the PC Internet to the mobile Internet, and then to the Metaverse Internet. Metaverse integrates the digital space and the real space. At present, all Internet applications need 3D upgrades, and there must be new applications and business models. Tan Jianrong believes that the Metaverse has three major characteristics: virtual avatars, real experience, and time travel. Eight elements: identity, friends, immersion, low latency, diversity, anytime, anywhere, economic system and civilization. Regarding the future industrial application of the metaverse, Tan Jianrong pointed out that the energy metaverse, agricultural metaverse, finance and investment metaverse, real estate metaverse, and vocational education metaverse will all be the space for the development of the metaverse. However, from the concept to the implementation of the metaverse, it is still necessary to strengthen the source and expansion of metaverse resources, talent training, hardware construction and other aspects of collaborative creation. [2022/8/9 12:12:32] If you only focus on Ninetowns’ game revenue, its net profit is very unreasonable. The revenue was only 625,000 yuan, but the net profit was as high as 393 million yuan. In the same period last year, it also lost 196 million yuan. How did Ninetowns turn losses into profits? Flyfish Club, a member-only NFT restaurant in New York, will open in 2023: On January 13, VCR Group, a hotel services company founded by entrepreneur Gary Vaynerchuk, announced that its member-only private dining club Flyfish Club in New York City will conduct live token sales. Guests wishing to enter the restaurant must purchase their membership on the blockchain, which is sold as an NFT. According to its website, Flyfish member NFT holders can lease their tokens to non-token holders on a monthly basis or resell them; there will be no repeated annual fees. Customers can pay for food and drinks in U.S. dollars, although cryptocurrency is required for membership. Flyfish Club claims to be the first members-only NFT restaurant and is scheduled to open in early 2023. (Cointelegraph) [2022/1/13 8:45:55] According to the Form 20-F document submitted by Ninetowns, the income generated from the sale of a subsidiary is about 476 million yuan. (The9's 2020 financial data, source: The9 said in the report that it raised 475.6 million yuan ($72.9 million) from the sale of subsidiaries in 2020, including the sale of three subsidiaries holding mortgaged properties Proceeds and Asia Development's court-ordered liquidation. In 2019, RMB 1.2 million was obtained through the sale of subsidiaries, including the sale of two non-important subsidiaries with no major business operations. The NBA announced its 2021 rookie list on NBA Top Shot: Golden Finance reported that the NBA announced its 2021 rookie list on the NFT market NBA Top Shot on Wednesday. NBA Top Shot, along with the NBA and the National Basketball Players Association, has "curated" 20 moments from the 2020-2021 season, according to a blog post published Wednesday. These moments are permanently treasured on the blockchain as digital collectibles, the article explained. Highlight clips featuring notable players like Zion Williamson and Ja Morant have sold for $100,000 each. [2021/3/4 18:12:57] Starting this year, Ninetowns has entered the field of cryptocurrency with a high profile, and will focus on cryptocurrency in the future. The9 revealed in its 2020 financial report that in 2021 it will spend over $100 million to purchase Bitcoin and Filecoin mining machines. Among them, a deposit of 1.4 million US dollars has been paid to BIT Microelectronics Technology Co., Ltd. to obtain the right of first refusal of 5,000 Shenma mining machines within one year, and 922 units have been purchased so far; 24,000 S19j ant mining machines have been ordered from Bitmain, with a total consideration of 8,280 million US dollars, and the mining machines will be delivered from November 2021. During the period from February to March 2021, a total of 44,748 Bitcoin mining machines were purchased from 14 mining machine owners by issuing 36,554,940 Class A ordinary shares. News | Kakao plans to launch its cryptocurrency wallet Klip in the first half of 2020: Finance Magnates quoted BusinessKorea as saying that Kakao Corp., the parent company of the Korean instant messaging application KakaoTalk, plans to launch its cryptocurrency wallet Klip in the first half of next year. The development task has been handed over to GroundX, Kakao's blockchain division, which is expected to complete this part of the work in the first quarter of 2020. The company's goal is to introduce encryption services to existing messaging platforms and integrate wallets into KakaoTalk. [2019/12/2] Signed a $10 million Filecoin mining machine and technical support service with a Filecoin mining machine supplier. If the global total computing power remains stable, the total computing power of all Bitcoin mining machines purchased by Ninetowns will reach 3558PH/s after delivery in October 2022, and the cumulative mining income in the next year and a half will reach 5200 Bitcoins. On the official WeChat public account of Ninetowns, it disclosed in detail the progress and future expectations of its cryptocurrency business. Ninetowns is currently actively developing cryptocurrency business. The main progress updates are as follows: 1. In February 2021, NBTC Ltd., a wholly-owned subsidiary of The9, signed a strategic cooperation framework agreement with Bit Microelectronics Technology Co., Ltd., a manufacturer of Shenma mining machines. NBTC Limited paid a deposit of US$1.4 million and obtained the right of first refusal to purchase 5,000 Shenma mining machines within one year. So far, Ninetowns has completed two batches of purchases, purchasing a total of 922 Whatsminer mining machines, with a cumulative computing power of about 66 PH/s. These Shenma mining machines have all been deployed. 2. In March 2021, NBTC Limited signed a mining machine purchase agreement with Bitmain, an ant mining machine manufacturer. According to the agreement, Ninetowns will purchase 24,000 S19j ant mining machines, which will be delivered starting from November 2021. The total consideration is US$82.8 million, which will be paid in installments according to the agreed schedule. The first installment of US$16.6 million has been paid. 3. In February 2021, Ninetowns signed a purchase agreement with five bitcoin mining machine owners to purchase bitcoin mining machines by issuing Ninetowns common shares. According to the agreement, Ninetowns issued a total of 26,838,360 Class A ordinary shares (equivalent to 894,612 ADSs) at a price of US$0.37 per share (equivalent to US$11.18 per ADS) to obtain 26,007 bitcoin mining machines , the total computing power is about 549PH/s. 4. In February 2021, Ninetowns signed a legally effective memorandum of understanding with six bitcoin mining machine owners to purchase bitcoin mining machines by issuing Ninetowns common shares. As of today, The9 has signed definitive purchase agreements with 5 bitcoin mining machine owners and has issued a total of 3,832,830 common shares at a price of US$0.78 per common share (equivalent to US$23.35 per ADS) (equivalent to 127,761 ADS shares), and obtained 8,489 Bitcoin mining machines with a total computing power of about 156PH/s. 5. In March 2021, Ninetowns signed a legally effective memorandum with three bitcoin mining machine owners to purchase bitcoin mining machines by issuing Ninetowns common shares. According to the memorandum, Ninetowns shall issue approximately 5,883,750 ordinary shares (equivalent to 196,125 American Depository Shares ADSs) to the seller at a price of approximately US$1.3 per Class A ordinary share (equivalent to US$38.51 per ADS) in exchange for Obtain 10,252 Bitcoin mining machines with a total computing power of about 192PH/s. 6. In February 2021, Ninetowns signed a framework agreement with a Filecoin mining machine supplier to purchase Filecoin mining machines and technical support services at a price of US$10 million. 7. In February 2021, Ninetowns and YA II PN, LTD. signed a financing agreement. According to this agreement, at any time within 36 months after the signing of the agreement, Ninetowns can sell up to $100 million in ADSs. As of now, Ninetowns has not begun to exercise this equity financing power. 8. As of today, the Bitcoin mining machines deployed by Ninetowns have contributed a total computing power of about 693 PH/s. Under the current deployment of computing power, Ninetowns can get 3 bitcoin rewards every day. So far, Ninetowns has received a total of 126 bitcoin rewards. 9. Based on the number of bitcoin mining machines that Ninetowns currently owns, and considering the bitcoin mining machine purchase agreement that Ninetowns has signed, if Ninetowns does not sign any new mining machine purchase agreements, and assuming that the total global computing power does not increase Under the circumstances, by October 2022, Ninetowns’ Bitcoin mining machines are expected to contribute about 3,558 PH/s of total computing power. Under this computing power, Ninetowns is expected to receive about 15 bitcoin rewards every day. The cumulative bitcoin rewards are expected to be approximately 5,200 bitcoins. 10. In addition to Bitcoin, Ninetowns is also actively mining Filecoin cryptocurrency. According to the framework agreement reached with the Filecoin mining machine supplier, the first batch of $1.1 million Filecoin mining machine purchases have been executed, and will continue to be purchased according to market conditions. At present, Ninetowns has an independent node on the Filecoin network, and has completed the packaging of 8P effective storage computing power. Under the assumption that the total global computing power does not increase, by August 2022, the effective storage computing power of this 8P is expected to reward The9 with approximately 200,000 Filecoins. Considering that the total computing power of the entire network will continue to increase, the actual rewards for this batch may be less than this number. Ninetowns believes that the future development space of distributed storage projects is huge, and will be more actively involved in the ecological construction of Filecoin. Judging from these ten actions, since the beginning of this year, Ninetowns has raised funds through the issuance of additional stocks, and on the other hand, it has purchased mining machines with large sums. However, the $100 million budget does not seem to be able to meet The9's cryptocurrency business needs. Gyro Finance is concerned that Ninetowns stated in the report that based on current estimates and the market price of Bitcoin mining machines, we expect to further invest approximately US$250 million to achieve our business goals. If our internal financial resources are insufficient to meet our cash requirements, we may seek additional financing by issuing equity securities or through debt financing, such as borrowing from commercial banks or other financial institutions or lenders. Although Ninetowns reversed the losses in the past four years, it was not realized through the main business. Since Ninetowns entered the field of cryptocurrency, the cryptocurrency business has been its highlight. Since this is a business that will only start to work in 2021, this revenue data is not reflected in the 2020 financial report. For this reason, you can pay attention to its 2021 No. 1 Quarterly reports to learn more about The9's cryptocurrency progress. In addition, $100 million in mining equipment does not seem to be sufficient for the business. It can be expected that there will continue to be news of Ninetowns issuing additional shares or financing within the year.


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