500.com dives deeper into blockchain sector with Bee Computing buy

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China-based online lottery company 500.com (NYSE: WBAI) continued its foray into the blockchain sector by acquiring ASIC mining machine manufacturer Bee Computing.

500.com has been an active M&A player throughout the new year. According to a filing with the U.S. Securities and Exchange Commission (SEC), the company bought the 3-year-old Hong Kong-registered hardware maker for $100 million. Both parties agreed to structure the deal as a share exchange agreement with 45,825,530 Class A shares are expected to change hands if all milestones are satisfied. 

Those milestones include the continuous mass-production of Bitcoin mining machines incorporated with 7-nanometer ASICs; development and mass-production of a new generation of Bitcoin mining machines incorporated with 7-nanometer ASICs; and the successful development of high-performance and mass-producible ETH and LTC ASIC mining machines.

The purchase comes when ASIC miners are in high demand since block reward mining companies are in short supply of those machines. 500.com plans to invest no less than $30 million to further develop digital currency mining chips and mining machines after first closing.

The disclosure by 500.com states that in 2019 Bee Computing worked with MediaTek Inc, the largest chip designer in Asia, to develop an ASIC mining that uses a seven-nanometer chip. Taiwan Semiconductor Manufacturing Company manufactured the chip. ASE Technology Holding Co., Ltd., the world’s largest semiconductor testing company and a significant Bee Computing investor, then tested and packaged it.

This latest announcement continues the strategic pivot 500.com started late last year as it shifted its focus away from its underperforming online lottery business and towards the blockchain sector. In March, the company announced it intends to change its English name to “BIT Mining Limited” and ticker symbol to “BTCM.” It also announced plans to move its HQ out of Shenzhen to the more blockchain-friendly city-state of Singapore.

A pivot is a glorified way of saying “Oh my, we’ve failed.” With 500.com, it appears like they’re pivoting to another doomed business model. Diving headlong into the block reward mining sector will not give 500.com the long-term sustainability its shareholders want. Supporting the altcoin BTC over Bitcoin SV is an even bigger mistake. A pivot should offer a better vision, not more of the same high-risk behaviors. Until 500.com has learned that lesson, history is likely to repeat itself. 

See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”