NASDAQ listed Chinese gaming company The9 Ltd. has announced on entering the cryptocurrency mining business with investments from the former executives of Bitcoin mining hardware manufacturer Canaan. Following the announcement, the stock prices of The9 rally up to 87%, boosting its market capitalization to nearly $60 million. The move comes just less than two months after The9 receives a market capitalization deficiency notice from NASDAQ warning of being delisted.
On Jan. 3, The9 Ltd. announced on signing a legally binding investment term sheet with the former board directors of Canaan, including Sun Qifeng, Zhang Li, and Kong Jianping.
The purpose of the investment term sheet includes The9 issuing Class A ordinary shares and warrants to the former Canaan directors. They will then help The9 to develop its crypto mining business including finding the best crypto mining machines for the operation.
In the announcement release, Jianping Kong, the former Director and Co-Chairman of Canaan Inc., stated:
"We will assist The9 to purchase cryptocurrencies mining machines including but not limited to AvalonMiners, AntMiners, WhatsMiners, and Ipollo miners, and build up a professional team to focus on cryptocurrencies business.”
If the necessary conditions are fulfilled, The9 will be eligible to secure $34 million in either U.S dollars or cryptocurrencies. Subsequently, a wholly-owned subsidiary called NBTC Limited will be set up to handle The9’s blockchain and crypto mining operation.
The9 chairman and CEO Jun Zhu stated the purpose behind building crypto mining machines for The9, saying:
"Our goal is to build up cryptocurrencies mining machines for The9 that will contribute 8% to 10% of the global hash rate of bitcoin, 10% of the global hash rate of Ethereum, and 10% of the global hash rate of Grin.”
Following the announcement on entering crypto mining operation, The9's stock soared up by 87% during the U.S. trading hours, pushing the market capitalization to $58 million.
Notably, On Nov. 17, The9 had received a market capitalization deficiency notice from NASDAQ's listing qualification division. Apparently, the gaming company at that time did not have the listing requirement of maintaining a minimum market capitalization of $35 million.