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China Firm Mines Bitcoin Secretly, End up Losing $23 Million

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A Chinese company has sold off its subsidiary at only 10% of the original valuation after suffering losses from suspected secret cryptocurrency mining activities amounting to some USD 23 million.

Huatie HengAn, the subsidiary of listed Chinese company Huatie, was reported by local media outlet 8BTC as having been sold for USD 2 million. Just one year ago, it had been valued at USD 25 million.

Originally a construction company, in 2018, Huatie HengAn allegedly bought about 36,500 pieces of hardware equipment it listed as “servers” from hardware manufacturers Canaan and Ebang. These are both specialized Bitcoin mining hardware producers, so it was suspected that the pieces of equipment were bought solely for the purpose of mining crypto instead of construction.

Huatie’s end of year report released last December showed losses of about USD 14 million for its subsidiary firm. By February 2018, this net loss had risen to a total amount of USD 23 million.

The company can take comfort from the fact that they weren’t the only ones who suffered in the mining business. Although the first half of 2018 already saw prices of crypto falling, it wasn’t until the latter half of the year that difficulties emerged for Bitcoin miners.

Hashflare was the first big casualty, closing down its popular cloud mining services. And then when Bitmain – along with its failed support for Bitcoin Cash – posted massive losses, hash power began to drop for the first time in years.

 

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