“Fat sheep to be slaughtered”? U.S. short sellers once again eye China’s crypto mining companies

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With the success of many traditional “failed” companies in the United States filling in Bitcoin mining assets, a large number of Chinese companies have recently begun to follow suit, including 500.com, Ninetowns, SOS and BTBT. The one with the highest market value is undoubtedly BTBT led by Yuhong.

BTBT’s share price from less than US$1 at the beginning of the year soared to nearly US$30 on January 4, a year-round surge of 3,691%, and was even listed as one of the top ten stocks in 2020. However, due to the short-selling agency J Capital Research’s eye, the stock price fell nearly 30% after the report was released on the 11th, and the current stock price is 16 US dollars.

“待宰肥羊”?美做空机构再次盯上中国加密挖矿企业 In all fairness, J Capital’s investigation is not professional, mainly due to the special nature of the encryption mining industry, and there is no information to follow from short-selling institutions. Compared with traditional industry companies such as Ruixing, there are more research materials in the United States for reference. (Get the short selling report PDF for BTBT, welcome to join Wushuo’s internal reference knowledge planet)

J Capital’s short selling report mainly includes three core parts:

1. Consulted with the government officials of the mine site disclosed in the BTBT financial report, as well as the mining machine manufacturers Bitmain and Shenma, but the other party said that they had not heard of BTBT, so it proved that BTBT’s mine and mining machine reserves are false.

(This chain of evidence is naturally very absurd. Due to the sensitive status of the mines, Chinese government officials will not admit that most of the mining machines are purchased from dealers or mine owners who sell second-hand mining machines)

2. BTBT’s auditing agency is very bad. The stock price of underwriting clients has fallen by an average of 75%. The auditor’s tenure is only 9 months and he resigned 12 days before the end of the BTBT fiscal year.

3. The predecessor of BTBT and the five executives of Dianniu Finance, the “first share of China’s auto loan”, are in prison, and the chairman is at large.

Then BTBT made a rebuttal, and the basic operating conditions can also be seen in the rebuttal:

1. As of December 18, 2020, the third quarter financial results disclosed, the company has a total of 40,865 mining machines, including 7,025 Antminer S17+, 195 Antminer S17E, 32 Antminer S17Pro, 105 Antminer S19Pro, 800 Antminer T3 , 9,110 Antminer T17, 256 Antminer T17 +, 2200 Whatsminer M10, 4,125 Whatsminer M20S, 16917 Whatsminer M21S and 100 Whatsminer M31S. (There is an error in the refutation here, T3 should be core movement instead of ants)

As of January 15, 2021, Xinjiang has 14,639 mining machines; Inner Mongolia has 17,926 mining machines; Sichuan Province has 1,650 mining machines; Yunnan Province has 4,550 mining machines; Nebraska has 2,000 mining machines, Germany There are 100 mining machines in Texas.

As of December 18, 2020, the company has earned a total of 1,331.2 bitcoins in 2020, which can be verified by third-party mining pools HuobiPool and Antpool.

2. The former CEO and chief financial officer of the company were removed from their management and board of directors in October 2019. The company’s board of directors elected a new CEO and chief financial officer in October 2019, and established a new management team.

In all fairness, the short seller did not ask the key to the question, such as the source and ownership of the mining machine, the predecessor of XMAX, and the background of the actual controller, etc., refer to Yuhong Bitcoin mining company’s US stock listing a few months ago called the mining machine The deducted XMX will no longer be repurchased. And BTBT’s response is also more professional, so the stock price has been relatively stable afterwards, and there has been no continuous plunge.

Why do short sellers like to target crypto mining companies?

First of all, due to the emerging industry, most of them are taking the opportunity to transform and hype. The original company’s main business or shell company often fails and has more negative news; secondly, encryption mining machines, especially in China, are still in a policy fuzzy zone; finally, Bitcoin has some difficulties in auditing, and professional audit institutions are often unwilling to participate in the work of such companies, which leads to relatively chaotic financial audits.

Earlier, Canaan, the first listed stock of crypto mining, was also attacked by short-sellers in turn, and the stock price also experienced short-term fluctuations. However, this year, with the performance improvement and the skyrocketing Bitcoin price, the stock price also increased. Refer to Canaan’s Q3 financial report: The pre-sale amount is nearly 300 million or enters the digital currency industry. The stock price rises 200% in two months

It is expected that a large number of mining farms will go to the United States for listing or backdoor listings in the future, and short sellers will become more and more familiar with Chinese crypto mining companies. The mining industry is not complicated, and the chain is very simple. For companies that are about to go public, as long as they do their own audit and compliance work, there is no need to be too afraid of short-selling institutions.

Wu said that the blockchain previously exclusively disclosed that Bitmain and Shenma mining machines will also be listed in the United States in the next two years. These two upstream mining companies will bring the Chinese mining US stock market to the climax.