China’s SOS Targets 41 BTC, 909 ETH in Q1 ‘21 While Battling to Save Brand
SOS Limited has Monday March 15 announced its installation of a second fleet of 5,000 cryptocurrency mining rigs in what seems like another move to assure the credibility of its brand following a scathing allegation of fraud on its crypto mining operation. Short-sellers Hindenburg Research and Culper Research on Friday Feb 26 raised concerns ranging from regulatory risk to alleged false claims by the Chinese company about its business in two separate reports.
Its share dropped almost immediately by 17% – having risen more than six-fold in mid-February amid enthusiasm for Bitcoin reaching all-time highs – after Hindenburg called the company to be “an obvious China-based shell game” and Culper thinks its shares are “worthless” as its crypto mining purchases and acquisition claims appear to be “extremely problematic.” Culper notes in its research:
“We think the bedrock of SOS’s claims to be a burgeoning cryptocurrency operation is crumbling underneath the Company’s feet, and SOS has incessantly raised capital to line its own pockets. We view SOS’s capital raises as predatory, as they reward insiders at the expense of minority shareholders. To that end, both major shareholders and insiders have indicated intentions to sell.”
By March 1, SOS Limited stock jumped 24% in premarket trading to reverse the drop after the alleged “distorted, misleading, and unsubstantiated” claims it says were made against its business. The market reversal came after the company reportedly uploaded videos of what is its cloud computing power center.
The company also claims it “believes certain social media accounts of some Company board members may have been impersonated or disabled for short periods of time” on purpose to “manipulate the price of the Company’s shares, with the aim of causing a stock price decline in order to economically benefit the short sellers, to the detriment of the Company’s public shareholders.”
It says it plans to continue to defend itself by providing more information to quell the effect of the accusation by the short sellers – one of which is being suggested to be engaged in a “short and distort campaign.” With its latest announcement of more rigs, added to its prior fleet of 5,000 mining rigs, the company says it expects its combined fleet to have the capacity to calculate an average of 353 Peta-Hashes per second for mining Bitcoin and 707 Giga-Hashes per second for mining Ether though subject to factors such as down time for maintenance, reconfiguration and others that may materially impact computing performance in the future.
Regardless of the down time for its fleet, worldwide hash power and other operating conditions, the company says it expects to generate at least 41 BTC and 909 ETH (worth about $4 mln based on the current prices of both assets) in the first quarter of 2021, a result its CFO, Steven Li, notes would “reflect only a partial quarter of operations, since our current fleet of mining rigs was only recently installed during the first quarter.”
The mining results neither include the company’s financial results nor address its other non-mining operations such as its marketing data, technology and solutions for emergency rescue services, it states in its release.
As a high-tech company providing a wide range of services including marketing data, technology and solutions for emergency rescue services, SOS announced its planned cloud-based crypto mining and crypto currency security and insurance operation in January 2021.
Its initial focus is on mining key mainstream cryptocurrencies such as BTC to later expand to the full coverage of all mainstream cryptocurrencies and then provide a variety of cloud-based crypto mining services like self-mining, miner trusteeship, cryptocurrency-related DeFi, security and insurance services for cryptocurrencies, etc.