500.com to purchase another $8.5M worth of ASIC mining machines

Getting your Trinity Audio player ready...

Chinese sports lottery company 500.com (NYSE: WBAI) recently announced it would purchase another batch of ASIC mining machines as part of its pivot into developing its blockchain-related business.

The New York Stock Exchange-listed online sports lottery firm signed a definitive agreement to purchase 5,900 ASIC miners for 55.2 million yuan (around $8.5 million). As part of the deal, 500.com will pay a performance bond of RMB2,000 per machine for the first 5,000 ASIC rigs or RMB10 million (approximately US$1.5 million) in aggregate.

500.com did not disclose the brand and model of the miners being obtained. The firms expect all the ASIC miners to be delivered in the second quarter of 2021. 

Under the agreement framework, 500.com also agreed to procure up to 10,000 additional ASIC mining machines in 2021. The precise amount is subject to availability. If all 15,900 ASIC mining machines are delivered and installed, the firm’s total hash rate is projected to increase by 1,000 petahashes per second (PH/S). 

Its board first signaled 500.com’s radical diversification of its business model in December amid a shake-up of its senior leadership team and a new CEO’s appointment. In January, the firm officially announced its entry into the digital currency mining arena by buying $14.4m (£10.7m/€11.9m) worth of ASIC mining machines from an unnamed seller.

Last week, the firm announced it was increasing its ownership share in Hong Kong-based Loto Interactive Limited, bringing its stake from 33.7% to around 54.2%. The deal will see 500.com pay a total consideration of around HK$105m ($13.5m) for 169,354,839 Loto Interactive shares, while Loto Interactive is expected to become a subsidiary of 500.com after it is complete.

The moonshot pivot comes with a fair amount of uncertainty. 500.com has not stated definitively which blockchain it would be supporting. If it goes down the FOMO trail of block reward mining instead of transforming into transaction processing, any revenue gains will be short-lived. 

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