Tech 26 June 2018Erik Gibbs
BTCC sells almost 50% of its mining operations
The cryptocurrency exchange BTCC has agreed to give up almost half of its mining operations. The mining arm of the company, BTCC Pool Limited, is expected to go to Hong Kong-based Value Convergence Holdings Limited (VCHL), pending due diligence and final contract negotiations. If things stay as they are, VCHL will take possession of 49% of the company for about HK$147 million (US$18.7 million).
VCHL released a memorandum of understanding (MOU) outlining the details of the sale on Monday. VCHL is a publicly traded company on the Hong Kong Stock Exchange that deals in securities and asset management and, soon, cryptocurrency mining. The move is the latest in VCHL’s quest to expand more into the FinTech and cryptocurrency spaces.
VCHL will purchase the company for a combination of cash and shares, but the exact breakdown has not yet been divulged. The share price will be fixed at US$0.19 a piece, approximately 8% less than the market listed price. BTCC is obligated to guarantee a net profit of US$3.8 million through June 30, 2019, or will be on the hook for any difference once the contract negotiations are finalized.
BTCC was previously known as BTC China. Following moves by the People’s Bank of China that banned initial coin offerings (ICO) and exchanges last year, the company moved out of China and became registered in the UK. It was then acquired by a Hong Kong-based blockchain investment firm at the beginning of this year. BTCC operates three core businesses—its Mobi crypto wallet, a USD/BTC exchange and the mining operations. BTCC is also the company behind the now defunct DAX exchange.
BTCC’s share of the crypto mining space has dropped significantly since January. It started the year controlling around 3.3% of the market, but that figure is now down to around 1.1%. According to CoinMarketCap, the company was trading as much as US$123 million in January and was the eighth highest-ranked exchange in terms of volume. It now only trades approximately US$41 million.
BTCC was founded by Bobby Lee, brother of Litecoin founder Charlie Lee. He is a Stanford computer science graduate who was previously the VP of technology for Wal-Mart China.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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