As bitcoin prices hit a succession of new highs in late 2020 and early 2021, it caught the eye of numerous non-crypto companies in China looking for a profit boost. For an increasing number of non-crypto firms — which include a tea retailer, a sports lottery provider and a shipping giant — that has not just meant dabbling in cryptocurrency investing as Tesla, the electric car company, has recently done. These Chinese companies are pivoting upstream and rolling up their proverbial sleeves to become bitcoin miners. 

Among the Chinese companies that are now engaged in crypto mining, there are commonalities. They are all publicly listed companies that have suffered recent losses or been on the verge of delisting, and they may be turning to creative measures to grow their business or just bolster their stock prices. 

The adage — when you’re in a hole, stop digging — has been reinterpreted by these companies, as they hang their hopes of reviving their fortunes on digging up gold via crypto mining.

The surge in bitcoin prices over the past few months means bitcoin mining has become increasingly profitable. Bitcoin prices have risen from US$10,780 at the start of October to a high of US$58,354 on Feb. 21. Bitcoin is currently at about US$48,700 as of publishing time — still more than five-fold compared to a year ago. 

Non-crypto firms pivot to crypto mining

“The world’s financial experts and leaders in business, science, and politics have demonstrated confidence in the future of blockchain technology and cryptocurrency, leading to massive growth within the industry,” said Yi Long, the CEO of Urban Tea Inc.

Urban Tea, founded in 2011, is a Nasdaq-listed tea and baked goods retailer based in Hunan province, China. Famous for its milk tea and breads, Urban Tea announced on Feb. 17 that it would join in the cryptocurrency mining business “to generate greater value to shareholders.” 

Alongside that announcement, Urban Tea appointed a new chief operating officer, Fengdan Zhou, who brought expertise in cryptocurrency mining-machine procurement and maintenance. The company also appointed Yunfei Song, a scientist at the Chinese Academy of Sciences, as an independent director. He came with know-how of cryptocurrency mining and digital asset management.  

Also on the same day, Sino-Global Shipping America Ltd., the New York-based shipping and freight logistics firm, also announced plans to enter the crypto world. But instead of hiring experts or getting directly involved in crypto mining, it chose to buy equity in crypto-mining company Nine-Chain Intelligent. 

Sino-Global signed a letter of intent to acquire 51% of Nine-Chain Intelligent, which is located in Erenhot in Inner Mongolia and runs a network of cloud computing centers. Nine-Chain Intelligent says its total bitcoin computing power reaches 4500P, or about 3% of total bitcoin mining computing power. It also has about 7% of global ethereum computing power. The acquisition, valued at about 55.2 million yuan, or about US$8.5 million, is subject to a third-party valuation.  

While Urban Tea and Sino-Global are less obvious corporate participants in the recent bitcoin mining boom, they certainly weren’t the first.

Last month, Shenzhen-based — an online sports lottery provider — announced that it would issue shares worth approximately US$14.4 million for buying bitcoin mining machines. A few days later, it announced it was acquiring China’s leading bitcoin mining pool, Bitdeer, including

The9 Ltd., the Shanghai-based online game developer and provider, also recently jumped into crypto mining by obtaining not only bitcoin mining gear but also Filecoin mining machines. In January, it established a wholly-owned subsidiary NBTC Ltd. to operate its blockchain and cryptocurrencies business. It also signed a cooperation deal with various investors in the cryptocurrency mining industry, including the former director of Canaan Inc., one of the largest crypto mining rig providers. 

Since then, The9 has purchased over 35,000 units of bitcoin mining machines from different providers and signed a US$10 million pact with a Filecoin mining machine vendor to buy filecoin mining machines. The9 also recently signed a memorandum of understanding to invest about US$7 million to buy a 70% stake in Hangzhou SuanLi Technology Co., a cryptocurrency cloud mining blockchain software-as-a-service company. 

Why crypto mining?

Some of the formerly non-crypto companies are investing in crypto mining — a low-labor, capital-intensive line of work — as a way to diversify their core business.  

In 2013, became the first Chinese internet lottery company to list on the New York Stock Exchange. But in 2015, Beijing banned the use of the internet to sell lottery tickets, which forced to transfer its main internet lottery business to on-site lottery retailing. But the in-person sales proved to be not as profitable as online selling.’s share price tumbled, hitting a low of US$2.69 at the end of 2020. However, since it announced plans to invest in the crypto mining industry, its shares have surged, reaching US$24.89 as of publishing time. 

The9 Ltd. was in a similar situation. Established in 1999, it was the exclusive mainland China distributor for the games “Mu Online” from Korea and “World of Warcraft” during the early 2000s. 

In 2004, The9 listed on Nasdaq and saw its stock price peak at US$1,530 in 2008. But more recently, it fell on harder times. In November 2020, when its stock prices had fallen to below US$3, it was warned by Nasdaq about not meeting the minimum market capitalization of US$35 million for 30 consecutive business days and would need to delist if this continued. But after announcing its entry into crypto mining, The9’s shares rose sharply and is currently at US$44.92 as of publishing time.  

Both Sino-Global and Urban Tea’s businesses were also on the decline. Urban Tea posted operating losses for several years while Sino-Global posted losses in 2019 and 2020. After their crypto mining announcements, both have seen their share prices rise sharply. Urban Tea jumped from US$1.74 a share at the end of 2020 to US$6.28 on Feb. 22. Sino-Global shares rose from US$2.06 at end of 2020 to US$11 on Feb. 8. Their shares are now off these recent highs — Sino-Global shares are at about US$5.95 while and Urban Tea’s is at $4.74 as of today — but they are still well above where they finished last year. 

Uncertainties of crypto mining cast a shadow 

A more controversial example is Bit Digital Inc. Founded in 2015, Bit Digital, formerly Golden Bull Ltd, engaged mainly in the P2P car rental business in China and was listed on Nasdaq in 2018. But as Beijing cracked down P2P lending in 2018, it struggled. Bit Digital was on the brink of delisting when the company announced last September that it would go into crypto mining, and then bought nearly US$14 million worth of bitcoin mining equipment on Dec. 4 last year. Bit Digital’s share price rallied from around US$5 that month to a new high of US$29 on Jan. 4 this year.  

But in a Jan. 11 report, the U.S. short-sellers J Capital Research called Bit Digital a “fake cryptocurrency business” and added that its “assets probably do not exist, and the business is designed to steal funds from investors.” The company’s shares have since fallen, and it currently faces a class action lawsuit by investors in New York.

China is home to two-thirds of the world’s bitcoin computing power. But regulatory supervision of the crypto mining business remains in its infancy, is often unclear and some would say, often inadequate. 

But what is clear is that building crypto mining farms is not actively encouraged. In China, buying and selling bitcoin are illegal, but the mining of it is not, so Chinese cryptocurrency miners operate in a gray zone of uncertainties. What do you do with your crypto once you’ve mined it? 

While China continues allowing its miners to keep mining crypto, the authorities are keeping a close eye on their activities and withdrawing support. 

Last year, Chinese miners experienced at least three waves of having their bank accounts frozen, when they got swept up by investigations related to money laundering. Inner Mongolia — home to some of the world’s oldest and largest bitcoin mines — also issued a policy that Inner Mongolia would cancel preferential electricity prices for the crypto mining companies and encouraged them “to orderly exit” or transform to state-supported cloud computing firms.” 

What is also clear is that, even as new investors hungrily eye bitcoin mining’s potential profitability, the competition between existing miners has already been escalating. 

Because crypto mining is so power-hungry, mining machine efficiency is paramount. For months now, some of the newest models of crypto mining technology have a long wait list or are already sold out. Many crypto farms are now also corporate-owned, with more resources to gird against competition.  

But the corporate newcomers to crypto mining may be certain about one thing: There is a finite supply of bitcoin, and demand — with the likes of Tesla as well as among mainstream institutional investors like MassMutual and Guggenheim joining the bitcoin-buying crowd— keeps going up. 

The maximum supply of bitcoin is fixed at 21 million, and the last bitcoin is expected to be mined around 2140. That gives all the crypto mining companies — whether established or new to the business — many more years to adjust and come up with profit-making strategies.