Company held by Alvin Chau negotiating purchase of cryptocurrency mining equipment

A company held by Suncity Group Executive Director, Alvin Chau Cheok Wa, is in negotiations to purchase cryptocurrency mining hardware usually used to mine Bitcoins.

The negotiations were revealed in a recent filing at the Hong Kong Stock Exchange, by Sun International Group, a Suncity vehicle engaged in the provision of a wide range of financial services including securities and futures trading, corporate placing, credit financing and asset management.

According to the company, Extra Blossom Holdings Limited, an indirect wholly-owned
a subsidiary of the company entered into a non-legally binding MOU with Mindfulness Venture Fund I, L.P., a limited partnership established in the Cayman Islands for transfer and assignment of equipment for cryptocurrency mining.

‘The Board believes that the entering into of the MOU can diversify the development of the group by investing in a new business,’ Sun International stated.

Still, the company noted that no binding agreement in relation to the proposed purchase has been reached as of the date of this announcement and that the deal may or may not proceed.

The Executive Director of Suncity Group, Alvin Chau, was previously an executive director and the chairman of Sun International Group but resigned in July 2013, being replaced by Cheng Ting Kong.

Cheng and Chau indirectly hold some 66 per cent of Sun International, via a company named First Cheer Holdings Limited.

Cryptocurrency mining is a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger. Since Bitcoins can’t be printed like fiat currency, the only way to create more coins is to ‘mine’ for them.

Each time a cryptocurrency transaction is made, a cryptocurrency miner is responsible for ensuring the authenticity of information and updating the blockchain with the transaction. 

This equipment consists of an aggregate of 1000 sets of cryptocurrency miners, including Bitmain Antminer S19, Bitmain Antminer T19, MicroBT Whatsminer M32 and MicroBT Whatsminer M31S.

No purchase amount has been defined yet, but the consideration payable for the equipment will be subject to further negotiation between the parties of the MOU and shall be payable by the purchaser by procuring Sun International to allot and issue new shares at the issue price of HK$0.321 per Share to the vendor.

Mindfulness Venture Fund was described as a limited partnership established in the Cayman Islands principally engaged in the supply of equipment for the operation of cryptocurrency mining farms in Inner Mongolia, Xinjiang and Sichuan province.

According to the Cambridge Bitcoin Electricity Consumption Index, as of April 2020, China was responsible for 65 per cent of all Bitcoin mining, with 36 per cent taking place in Xinjiang due to heavy energy requirements for such operations and cheap coal being available in the province.

It takes about 10 minutes and some 72,000 GW to mine one Bitcoins.

Having priced as high as US$52,000, Bitcoin was trading lower at around US$32,000 last Friday, but still up some 700 per cent from its March, 2020 low of US$3,850.

The Monetary Authority of Macao considers that Bitcoin, or any kinds of cryptocurrencies, as a virtual commodity that is neither a legal tender nor a financial instrument subject to its supervision.

Previously it also stated that it explicitly required all banks and payment services institutions in Macau not to participate in or provide, directly or indirectly, any financial services that involve the use of virtual currencies or virtual commodities as the means of payment.