AKRON, Ohio, Aug. 18, 2023 — BIT Mining Limited (NYSE: BTCM) (“BIT Mining,” “the Company,” “we,” “us,” or “our company”), a leading technology-driven cryptocurrency mining company, today reported its unaudited financial results for the second quarter ended June 30, 2023.

Cryptocurrency Business Progress

BIT Mining has four primary business segments: self-mining, mining pool, data center operation, and mining machine manufacturing. The Company is pursuing its development strategy to focus on cryptocurrency mining operations globally.

Mining Machine Manufacturing

We continue to invest in the research and development of the next generation of 7nm BTC mining machines. Together with our strategic ally, Chain Reaction, a semiconductor company focused on disruptive blockchain and privacy hardware, we are producing next-generation BTC mining systems. Our system design team continues to work on ASIC validation while completing the hash board to increase hash rates. We expect to optimize the hardware and software design as well as have the mining machine’s first engineering prototype sample by September 2023.

Self-mining

As of today, the total hash rate capacity of our DOGE/LTC mining machines in operation is approximately 31,607.3 GH/s. For the three months ended June 30, 2023, we produced 29.4 million DOGE and 16,027 LTC from our DOGE/LTC cryptocurrency mining operations and recognized revenue of approximately US$3.6 million.

Due to declines in cryptocurrency markets since the second half of 2022, we have suspended the operation of certain types of BTC mining machines. Considerable uncertainty persists in the market despite this quarter’s modest recovery and narrow growth in cryptocurrency asset prices. Facing this current environment, we remain determined to improve our quality and efficiency. As of today, the total hash rate capacity of our BTC mining machines in operation is approximately 50.9 PH/s. For the three months ended June 30, 2023, we produced 22.6 BTC from our BTC cryptocurrency mining operations and recognized revenue of approximately US$0.6 million. We also recognized revenues of approximately US$0.4 million from our ETC and other cryptocurrency mining operations.

Mining Pool

Supported by the growth in cryptocurrency prices in the second quarter of 2023, our mining pool business revenue increased from US$60.0 million for the three months ended March 31, 2023, to US$65.9 million for the three months ended June 30, 2023.

Data Center Operation – Power Outage at Ohio Mining Site

During the second quarter of 2023, our 82.5 megawatt space (the “82.5 Megawatt Space”) in the Ohio Mining Site recognized approximately $3.6 million in service fee revenue, representing a sequential decrease of 39.0% compared with the first quarter of 2023, primarily due to the power outage discussed below.

From April 24, 2023, to May 26, 2023, the Ohio Mining Site experienced a continuous power outage. The outage from April 24, 2023, to April 28, 2023, was caused by the utility company serving the Ohio Mining Site (the “Utility Company”) temporarily suspending electricity supply to the Ohio Mining Site for maintenance purposes. The outage after the completion of maintenance was caused by our service provider, Viking Data Centers LLC (“VDC”), failing to timely settle charges with the Utility Company. VDC was responsible for settling such charges on a regular basis, per our relevant agreements. VDC failed to pay the Utility Company in a timely manner despite our paying VDC on time for our portion of the electricity bills. After being made aware of this incident, we worked closely with VDC and the Utility Company to resolve this problem. On May 26, 2023, the electricity supply to the Ohio Mining Site was restored.

We continue to monitor this situation with VDC and urge them to rectify the management of the electricity supply. Furthermore, we reserve all of our rights under our Restructuring and Spin-Off Agreement with VDC, as well as our claims under other relevant agreements.

In the wake of the negative impact of the power outage at the Ohio Mining Site, the Company is also actively seeking potential alternative locations other than Akron, Ohio. On June 26, 2023, the Company entered into a hosting services agreement with Texas-based Lonestar Dream Inc. for 13 megawatts of power capacity (the “Texas Mining Site”). Currently, we have about 3,600 DOGE/LTC mining machines operating at the Texas Mining Site.

“We are delighted to share that for the second quarter of 2023, both our top- and bottom-line results continued to improve quarter-over-quarter. Despite ongoing uncertainties and operational challenges, we resolutely executed our strategy and successfully capitalized on the ongoing recovery in the cryptocurrency market,” said Xianfeng Yang, CEO of BIT Mining. “Furthermore, we continued to drive progress in our mining machine business’ collaboration with Chain Reaction on the development of our next-generation 7nm BTC mining machine, and are on track to complete hardware and software design optimization as well as produce an engineering prototype sample by September 2023. Meanwhile, our diversified revenue streams strategy propelled revenue growth in the mining pool business, which also benefited from the strengthening cryptocurrency prices in the second quarter of 2023. Looking ahead, we will remain dedicated to enhancing efficiency, upgrading our mining machine technology and expanding our industry presence while creating shareholder value through sustained innovation.”

Second Quarter 2023 Highlights

  • Revenues were US$74.1 million for the second quarter of 2023, representing a sharp decrease of US$121.4 million from US$195.5 million for the second quarter of 2022 and an increase of US$1.2 million from US$72.9 million for the first quarter of 2023. Revenues during the second quarter of 2023 were primarily comprised of US$65.9 million in revenue contribution from the mining pool business.
  • Operating loss was US$1.5 million for the second quarter of 2023, representing a significant decrease of US$19.0 million from US$20.5 million for the second quarter of 2022 and a decrease of US$4.5 million from US$6.0 million for the first quarter of 2023.
  • Non-GAAP operating loss1 was US$1.5 million for the second quarter of 2023, as compared with non-GAAP operating loss of US$17.8 million for the second quarter of 2022 and non-GAAP operating loss of US$5.2 million for the first quarter of 2023.
  • Net loss attributable to BIT Mining was US$0.9 million for the second quarter of 2023, as compared with net loss attributable to BIT Mining of US$18.2 million for the second quarter of 2022 and net loss attributable to BIT Mining of US$4.9 million for the first quarter of 2023.
  • Non-GAAP net loss1 attributable to BIT Mining was US$1.2 million for the second quarter of 2023, as compared with non-GAAP net loss attributable to