NCTY, a Shanghai-based online game operator, announced their plan to purchase a bitcoin mining machine through a legal binding with an unrelated Bitcoin mining machine owner, by the issuance of class A ordinary shares. Amount of Class A ordinary released is under the condition that adjustment mechanisms will be assessed after 6 months. Furthermore, 8,127,390 Class A ordinary shares are to be released to the investors in accordance to the NCTY stock price of US$24.81 prior.
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NCTY stock saw a substantial plummet after the news, however, the stock surged 9.1% due to favorable cryptocurrency conditions, after the BTC dip on Wednesday, consisting of the lowest price of the week. NCTY closed the last session at $22.86, declining 14.32% or -$3.82, as BTC decreased up to 4%, inevitably affecting all cryptocurrency related stocks.
About The9 Limited
Bitcoin’s steady increase in price has surged mining activity. Cryptocurrency miners such as NCTY have adequate machinery with high computing power to enable verification of transactions on blockchain networks. The higher the hash rate a Bitcoin miner provides, the higher the probability of solving a complex math problem first and being paid in BTC for the services provided.
Additionally, The9 has recently declared to the public its aim to increase its computing power and hash rate. NCTY also announced on March 19th, to purchase 24,000 Antminers, which will increase a considerable 2.2 EH/s to its hash rate. However, these are scheduled to be delivered after approximately eight months, which will improve the company’s revenue in the long term.
The9 specializes to increase Bitcoin’s total computing power and increment in hash rate, and are paid in Bitcoin for their services. BTC generated is then sold in accordance to company decision. Therefore, their revenue potential goes down when Bitcoin is down hence NCTY stock decreased as BTC fell. However, it recovered in the premarket due to favorable cryptocurrency conditions.