Chinese Firm Lost $850 Million Due to Crypto-Related Activities

Chinese Firm Lost $850 Million Due to Crypto-Related Activities
Chinese Firm Lost $850 Million Due to Crypto-Related Activities
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A Chinese crypto news outlet, 8BTC in a report says that a Chinese firm, Huatie HengAn, subsidiary of Huatie lost 90% of its  $25 million initial value in 2018. The company wounded up roughly within a year and was sold out at 10% of its initial worth. The loss was allegedly due to underground mining activities, amounting to $23 million.

The company’s financial report for the years 2018 showed that the company had a loss of $14 million, as joint coin market experience a downfall from $800 billion to $105 billion. At that time, the company’s loss was 50% of its initial capital. Their nightmare became even more frightening in the first two months of 2019 as the earlier mentioned loss figure rose to $23 million, accounting for 90% of its initial investment. At this point, Huatie HengAn threw in the towel and liquidated.

The politicking in Huatie HengAn

Huatie HengAn is known to be a construction company but later diversified and ventured into cryptocurrency mining due to its prospect and attractive returns. The company and many others alike, however, didn’t see the long staying bear market coming in strong in Q3 2018. The report further says that the construction company began to purchase “servers” from Canaan and Ebang. These two firms are however crypto mining manufacturers that specify in the sales of crypto mining hardware. It could thus be assumed that the “servers” purchased meant mining hardware although the company has not confirmed that the acquisition of “servers” were for mining cryptocurrencies.

If this conjecture were accurate, Huatie HengAn would be the newest in the growing list of business affected by 2018’s unfavorable market. The year experienced an extensive bear market which adversely affected above 80% of crypto miners generally.

2018 was terrible for crypto miners

Since China began its decentralized currency, the country has become the heart of cryptocurrency mining. But unfortunately, many miners experienced losses in the later months of 2018, due to the fact that the global market fell steadily.

Q1 2018 was really juicy for many mining companies. They had favorable markets during this period, making a handful of gains in the period by online crypto trading. As the year went by, juicy gradually became sour. By Q3 2018, financial situations became very hard and unpalatable for online crypto traders.

Companies began to close down in their numbers. Cloud mining services like Hashflare were the first on the list. The company closed down due to a sharp decline in profit from buying Bitcoin (BTC) until there was none at all. Scarier reports later started emanating – reports of big guns in the crypto mining space that started to experience serious losses. Bitmain, for example, was forced to downsize, letting go of many staffs and even eliminating a whole department. GMO incurred losses in the tune of $12 million later compelling the company to fold. Ebang Bitmain and Canaan couldn’t actualize plans of intensive initial public offerings (IPO).

Even ‘mighty’ Nvidia was not left out of the gloomy days. Demand became lesser in 2018, and this made the company try to rid itself of unsold inventory.

About Ali Raza

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A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.