The9 Signed a Legally Binding Memorandum of Understanding on the Additional Purchase of Bitcoin Mining Machines

Rhea-AI Summary

The9 Limited (Nasdaq: NCTY) has signed a binding Memorandum of Understanding (MOU) to acquire 2,000 Bitcoin mining machines, totaling approximately 100PH/S, through the issuance of Class A shares. About 8,127,390 shares will be issued based on a price of $24.81 prior to the MOU, with a 6-month lock-up period. Additionally, The9 has finalized agreements for 12,246 mining machines with a total hash rate of approximately 288PH/S, which will result in the issuance of 9,387,840 Class A shares, also with a 6-month lock-up. Valuation adjustments will apply based on market assessments.

Positive

• Acquisition of 2,000 Bitcoin mining machines enhances operational capacity.
• Issuing shares for the purchase limits cash outflow and preserves liquidity.
• Strategic focus on expanding Bitcoin mining operations in a growing sector.

Negative

• Issuance of over 17 million shares could dilute existing shareholders' equity.
• Dependence on Bitcoin market valuation for share price adjustments may introduce financial risk.

SHANGHAI, April 9, 2021 /PRNewswire/ -- The9 Limited (Nasdaq: NCTY) ("The9"), an established Internet company, today announced that it signed a legally binding Memorandum of Understanding (the "MOU") with an unrelated Bitcoin mining machine owner to purchase Bitcoin mining machines by the issuance of Class A ordinary shares. This batch of Bitcoin mining machines consists of 2,000 units of AvalonMiners with total hash rate of approximately 100PH/S. According to the MOUs, The9 will issue approximately 8,127,390 Class A ordinary shares (equivalent to 270,913 ADSs) to the sellers based on The9 share price of US$24.81 prior to the MOU, with a lock up period of 6 months. The number of Class A ordinary shares to be issued is subject to certain price adjustment mechanisms to be assessed 6 months after the signing of the definitive agreements. The9 will designate an independent valuation firm to conduct examination and assessment of the Bitcoin mining machine fair market value, and will make adjustment to the number of Class A ordinary shares to be issued if needed.

The9 also announced that it completed the signing of the definitive agreements for 12,246 units of Bitcoin mining machines with total hash rate of approximately 288PH/S. The number of Class A ordinary shares to be issued is calculated with reference to the fair market values on the valuation reports issued by an independent valuation firm and The9 share price prior to the respective Memorandums of Understanding signing date. The9 will issue a total number of 9,387,840 Class A ordinary shares (equivalent to 312,928 ADSs) to the sellers, with a lock up period of 6 months.

About The9 Limited

The9 Limited (The9) is an Internet company based in China listed on Nasdaq in 2004. The9 aims to become a diversified high-tech Internet company.

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SOURCE The9 Limited

FAQ

What is the significance of The9's MOU related to Bitcoin mining machines?

The9's MOU signifies an expansion in its Bitcoin mining capacity by acquiring 2,000 additional machines with a total hash rate of approximately 100PH/S.

How many shares will The9 issue for the Bitcoin mining machines purchase?

The9 will issue approximately 8,127,390 Class A ordinary shares for the purchase of 2,000 Bitcoin mining machines.

What is the lock-up period for shares issued by The9?

The shares issued by The9 for the Bitcoin mining machines purchase will have a lock-up period of 6 months.

How does The9's acquisition affect its stock symbol NCTY?

The acquisition may impact NCTY by potentially diluting existing shares but could also enhance revenue from increased Bitcoin mining operations.

What hash rate will The9 achieve with the new Bitcoin mining machines?

With the new acquisitions, The9 will achieve a total hash rate of approximately 388PH/S, combining both recent and previous purchases.