Shares of Future FinTech Group (Nasdaq: FTFT) surged as much as 13% Monday after it announced a deal to acquire 50 million yuan (roughly $7.6 million) worth of Antminer Bitcoin mining machines from Nanjing Shunru Electronic Technology Co. Ltd.
The blockchain-powered e-commerce and fintech services provider said in a statement today that it will buy 20,000 Bitcoin mining machines. The deal “guarantees” a minimum bitcoin hash rate of 200 PH/s for at least 180 days each year.
Shanchun Huang, the chief executive officer of Future FinTech, noted that the “frame agreement” will mark the company’s “first step” in delving into the bitcoin space.
"The recent sharp increase in the price of Bitcoin has provided us with the opportunity and economic incentive to develop an encrypted digital currency mining business," Huang said.
He added, “We will continue to optimize the Company's comprehensive platform in the field of cryptocurrency mining and blockchain technology services to maximize returns to our shareholders."
After hitting a high of $6.64 per American depositary share early, Future FinTech’s stock fell to flat to $5.90 intraday.
Future FinTech is looking to take advantage of Wall Street’s euphoria for bitcoin, as Elon Musk continues to drive up the price of the cryptocurrency. Intraday, Bitcoin USD (BTC-USD) was trading up 3% at $57,868. Year-to-date, the price of Bitcoin has doubled.
Formerly known as SkyPeople Fruit Juice Inc., the company delved into blockchain technology in 2017 and began to develop applications and digital asset systems for financial and retail businesses. The former producer of fruit juices has altered its business strategy and shifted its source of revenue to blockchain-based global e-commerce, as well as financial and management consulting.
The company is unprofitable, and earnings have declined by 36.3% per year over the past five years. Impacted by the coronavirus, the revenues of Future FinTech declined sevenfold in the three months through September to $43.66 million.
Earlier this month, Future FinTech announced two acquisitions. These were obtaining stakes of 60% each in Sichuan Ticode Supply Chain Management Co. and fintech provider Guang Dong Hi-Card Business Service Co., Ltd.
Future FinTech also recently set up a new joint venture in the United Arab Emirates to provide services and solutions in the global digital currency industry.