BTC.com(BTCM) - 2024 Q2 - Quarterly Report

Financial Performance - Revenues for the six months ended June 30, 2024, were $19,359,000, a decrease of 8.1% compared to $21,055,000 in the same period of 2023[10] - Net income for the six months ended June 30, 2024, was $18,948,000, compared to a net loss of $5,851,000 in 2023, indicating a turnaround in financial performance[10] - The Group incurred a net loss from continuing operations of $5,079 for the six months ended June 30, 2023, and minimal net income of $21 for the six months ended June 30, 2024[30] - The net loss from continuing operations for the six months ended June 30, 2024, was $21, compared to a net loss of $5,079 for the same period in 2023, indicating a significant improvement[142] - Revenue from continuing operations for the six months ended June 30, 2024, decreased to $19,359 thousand from $21,055 thousand in 2023, representing a decline of approximately 8.1%[154] Operating Costs and Losses - Operating loss from continuing operations improved to $509,000 in 2024 from a loss of $6,876,000 in 2023, reflecting a significant reduction in operating costs[10] - The total segment and consolidated cost of revenue exclusive of depreciation and amortization decreased to $9,223 in 2024 from $14,471 in 2023, a reduction of approximately 36.5%[151] - For the six months ended June 30, 2024, the cost of data center services was US$7,642, a decrease from US$11,491 in the same period of 2023, reflecting a reduction of approximately 33%[71] - The cost of cryptocurrency mining decreased from US$8,809 in the six months ended June 30, 2023, to US$6,621 in 2024, representing a decline of about 25%[72] Assets and Liabilities - Total current liabilities decreased from $44,926,000 as of December 31, 2023, to $15,616,000 as of June 30, 2024, a reduction of 65.2%[4] - Total shareholders' equity increased from $25,132,000 as of December 31, 2023, to $45,883,000 as of June 30, 2024, reflecting a growth of 82.6%[7] - Cash and cash equivalents decreased from $3,244,000 as of December 31, 2023, to $2,296,000 as of June 30, 2024, a decline of 29.2%[4] - Long-lived assets as of June 30, 2024, totaled US$21,027 thousand, down from US$27,106 thousand as of December 31, 2023, reflecting a reduction of approximately 22.5%[155] - Long-lived assets in the USA decreased to US$19,842 thousand in 2024 from US$25,400 thousand in 2023, a decline of about 21.9%[155] Cryptocurrency Assets - Cryptocurrency assets increased significantly from $7,625,000 as of December 31, 2023, to $16,692,000 as of June 30, 2024, representing a growth of 119.5%[4] - The Group's cryptocurrency assets are included in current assets and are measured at fair value each reporting period[41] - The Group recognized a fair value adjustment on cryptocurrency assets of $893, increasing retained earnings upon the adoption of ASU 2023-08[42] - The impairment of cryptocurrency assets was recorded at US$2,359 as of December 31, 2023, with no further impairment recognized in the first half of 2024[96] Revenue Sources - The Group's revenues are primarily derived from cryptocurrency mining and data center services, with mining pool business classified as discontinued operations[59] - Revenue from cryptocurrency mining is recognized when computing power is provided, with consideration received in the form of cryptocurrencies[61] - The Group's data center services include rack space and cloud services, with revenue recognized monthly based on services rendered[62] - The cryptocurrency mining segment revenue decreased to US$9,092 for the six months ended June 30, 2024, down from US$11,590 in 2023, reflecting a decline of approximately 21.5%[151] - The data center segment revenue remained relatively stable, with a slight increase to US$15,307 in 2024 from US$15,294 in 2023[151] Shareholder Information - The weighted average number of Class A and Class B ordinary shares outstanding increased from 1,093,318,465 in 2023 to 1,119,383,655 in 2024, indicating a slight increase in share count[10] - The Group issued 2,291,280 Class A ordinary shares as compensation to an employee upon meeting certain research and development targets[127] - The Group had outstanding warrants of 730,833,300 with a weighted average exercise price of US$0.17 as of June 30, 2024[132] Legal and Compliance Issues - The Group has accrued a legal contingency of $10,000 related to a deferred prosecution agreement with the U.S. Department of Justice[30] - The Group's liquidity and cash position are expected to be further depleted due to the legal penalties and ongoing compliance issues with the New York Stock Exchange[30] - The Group is subject to quarterly monitoring for compliance with a business plan submitted to regain compliance with NYSE listing standards[30] - The Group's ability to continue as a going concern is under substantial doubt due to uncertainties in cash flows and cryptocurrency asset prices[31] Customer and Supplier Relations - As of June 30, 2024, customer A accounted for 21.3% of the Group's revenues, while customer B accounted for 11.2% in the same period[80] - The Group's accounts receivable from customer A represented 62.4% of total accounts receivable as of June 30, 2024[81] - The cost incurred from supplier A was 43.6% for the six months ended June 30, 2024, down from 45.6% in the same period of 2023[82] Miscellaneous - The Group entered into a convertible loan agreement on July 18, 2024, to lend RMB5,800 (US$800) to a third party with a 10% annual interest rate[156] - The Group has the option to convert the loan into up to 1.6% of the Borrower's shares during the borrowing term[156] - If the Borrower fails to repay the principal by the maturity date, the Group can convert the loan into up to 3.87% of the Borrower's shares[156]