BIT Mining Analyst On Sidelines Until Resurgence In Bitcoin, Clarity On North American Operating Track Record

H.C. Wainwright analyst Kevin Dede maintained a Hold rating on BIT Mining Limited BTCM.

While recognizing BIT Mining's bitcoin-related vertical integration and diversification, many businesses are just kicking into gear in North America with little demonstrated execution leading to the re-rating in a note titled "Crypto Pool Hack Costing Millions Highlights Need and Use of Forensic Software."

This past Monday, Hong Kong-based BIT Mining announced roughly $3.0 million of crypto theft from its BTC.com subsidiary, the group responsible for most of the company's revenue via bitcoin mining pool operations. 

BIT Mining's statement indicates the company intends to deploy "considerable resources" in recovering stolen funds within an industry plagued by cybercrime. 

Last week, an NPR article stated that South Korea's primary spy agency, the National Intelligence Service, estimates that North Korea alone is responsible for as much as $1.2 billion in hacked crypto over the past five years. 

In early November, the Chain Bulletin, a crypto newsletter, suggested that up to $3.0 billion has been hacked from crypto accounts this year, through October, versus roughly $3.2 billion last year. BIT Mining's theft was insignificant, given the scale of others. 

Part of the crypto industry response is evident in the emergence of multiple forensic software systems, including one under Dede's coverage, Blockchain Intelligence Group (BIG), held by BIGG Digital Assets Inc; others include Chainanalysis and Elliptic, each privately operated. 

These software packages track transactions across multiple blockchains uncovering the movement of coins and tokens in locating perpetrators via Internet addresses. 

Dede understood BIT Mining is in the process of engaging in a similar approach in China with the hope of providing more information regarding its offensive and defensive retaliation over the next few days. 

Brand new to Dede's coverage universe, the analyst saw the company well diversified across the bitcoin ecosystem as a mining pool operator, mining machine manufacturer, bitcoin miner, and a host of crypto mining rigs. 

At this juncture and as its business gains steam in North America, Dede remains more comfortable waiting on the sidelines for a resurgence in the bitcoin ecosystem. 

Dede also sought a more clearly established North American operating track record as the company's mining equipment is migrated to its new Ohio facility from hosting locations in Kazakhstan.

Price Action: BTCM shares traded higher by 10.60% at $1.59 on the last check Wednesday.