A U.S.-listed Chinese sports lottery company, 500.com Ltd (NYSE: WBAI), has announced a preliminary purchase agreement to acquire Bitcoin (BTC) mining machines valued at $14.4 million. The deal will be settled by issuing 11,882,860 Class A ordinary shares at $1.21 per share, reflecting a growing trend of traditional enterprises diversifying into cryptocurrency mining.
Transaction Details: Shares for Miners, Including Popular Models
According to the official announcement, 500.com has reached an initial agreement with an unnamed non-U.S. seller to purchase a range of Bitcoin mining hardware. The machines include the S17, T17, and S9 models from Bitmain, one of the industry's largest manufacturers, as well as the M20s from Microbt. These are well-established models known for their robust hashing power and energy efficiency.
The company clarified that the transaction remains subject to the seller's satisfaction of closing conditions. The deal is expected to be fully completed before the end of the first quarter of 2021, with installation of the machines scheduled within four weeks of delivery. Once operational, the total hash power capacity of the acquired fleet is estimated to reach 918.5 PH/s (petahashes per second).
Management anticipates that revenue from mining activities will begin to flow in the first half of 2021. For a company traditionally focused on sports lottery services, this marks a significant pivot into the digital asset space.
Market Reaction: Shares Soar on Mining Expansion
The news was well received by investors. 500.com's stock price surged over 11% on the announcement, reaching a new yearly high of $13.94. The rally reflects market optimism that the company is capitalizing on the rising value of Bitcoin and seeking additional revenue streams beyond its core lottery business.
The move aligns with a broader institutional trend. In late 2020, U.S.-based Riot Blockchain achieved a market capitalization of $1 billion after aggressively acquiring mining hardware during the bear market. Similarly, microgrid software company CleanSpark announced on December 22, 2020, that it would purchase 1,000 Bitcoin mining machines (S19 Antminers), boosting its mining capacity to 300 PH/s. CleanSpark's shares doubled from December 11 to year-end 2020.
Strategic Context: Traditional Firms Embracing BTC Mining
Why are lottery and software companies jumping into mining? For one, the surge in Bitcoin's price — which broke $40,000 in early January 2021 — has made mining highly profitable. Companies with access to cheap capital or equity financing can acquire mining rigs without significant cash outlay, as demonstrated by 500.com's share-based payment.
Additionally, mining provides a direct exposure to Bitcoin appreciation while generating operational cash flow. By contrast, simply holding Bitcoin on the balance sheet does not produce income. For firms like 500.com, which may face pressure from shareholders to innovate, mining offers a tangible business transformation story.
Risks and Challenges
Despite the excitement, Bitcoin mining carries substantial risks. Hardware prices are volatile, network difficulty adjusts upward over time, electricity costs can erode margins, and regulatory actions pose threats — especially for Chinese companies. In early 2021, Chinese authorities in several provinces began cracking down on mining farms due to energy consumption concerns, which could impact deployment and operations.
Moreover, the longevity of the Bitcoin bull run is uncertain. If prices correct sharply, mining profitability could collapse, leaving companies with underutilized assets. 500.com's foray into mining is thus a high-risk, high-reward gamble that reflects the rapidly evolving landscape of institutional crypto adoption.
Conclusion
500.com's decision to spend $14.4 million on Bitcoin mining rigs underscores a broader shift: traditional companies are no longer content to merely watch the crypto market from the sidelines. By issuing shares to acquire miners, 500.com is betting that the digital gold rush has room for corporate players. Whether this bet pays off will depend on Bitcoin's price trajectory, operational efficiency, and the ability to navigate an increasingly complex regulatory environment.