Targeting Africa: Chinese Bitcoin Mining Giant Invests In Trading Platform

Targeting Africa: Chinese Bitcoin Mining Giant Invests In Trading Platform

Beijing-based bitcoin mining giant Bitmain has invested $1.6 million in Shenzen-based BitKan, a bitcoin data and trading services provider, with a view to expanding over-the-counter bitcoin trading in non-mature bitcoin markets including in Africa and the U.S., BitcoinMagazine reported.

Bitmain is an integrated circuit design company specializing in research, development, and sales for mining chips and miners. The company manufactures Bitcoin mining hardware and also operates Antpool, the world’s largest Bitcoin mining pool with 28 percent of the network’s hashrate.

BitKan is a bitcoin-focused data and trading services provider. The two Chinese companies were already cooperating in advertising and promotion when Bitmain decided to invest in BitKan to help expand its over-the-counter bitcoin trading services.

“It is a very attractive business that will provide a platform for people all over the world to trade bitcoin, especially to those living in non-mature bitcoin markets such Africa, South America, and India,” said Sharif Allayarov, sales and marketing manager for Bitmain, in an BitcoinMagazine interview.

What is bitcoin mining anyway?

Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of past transaction, according to BitcoinMining. This ledger of past transactions is called the block chain. The block chain serves to confirm to the rest of the network that transactions have taken place.

You can buy bitcoin mining hardware on Amazon. A sample of prices today range from $149 to $914. Different hardware comes with different mining capacities. Mining capacity is measured in trillions of hashes per second (Th/s).

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Unlike paper money, bitcoin doesn’t have a central government deciding when to print and distribute money.

With bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This is how they issue the currency. It creates incentive for more people to mine, according to BitcoinMining.

Mining is an integral part of bitcoin. Bitcoin miners help keep the bitcoin network secure by approving transactions. This ensures fairness while keeping the Bitcoin network stable and safe, BitcoinMining asserts.

Bitcoin rally

Bitcoin rallied strongly in the second half of 2015, with record-setting levels of currency outflows from China, Bloomberg reported in December. Many observers assumed Chinese investors were bidding up the virtual currency’s value to try and get around their government’s capital controls.

Proponents of this idea pointed to the fact that most bitcoins sold in October were purchased with Chinese renminbi.

But when you compare bitcoin prices with China’s capital flow trends dating back to the start of 2012, a different pattern emerges: bitcoin valuation rose as cash flowed into China and fell as it departed, Bloomberg reported.

BitKan was founded by former employees of China-based IT giant Huawei in 2013, and attracted an undisclosed “multi-million” yuan (1 million Chinese yuan is equivalent to $157,000 USD) in angel funding from Lanqi Venture Capital, according to BitcoinMagazine.

Expansion strategy involves the U.S.

BitKan CEO Liu Yang told CoinDesk after the angel funding that the company wants to expand to the U.S. and focus on non-bitcoin areas to maintain flexibility.

“We will register a company in the U.S. as the first step of our globalization strategy. This is the reason that we need investment. We will plan to expand into non-BTC areas to maintain maximum flexibility facing uncertain market condition, but we believe that the soundness of our plans eventually show if we continue to focus on creating values for our customers,” Yang told CoinDesk.

In February, Bitmain participated in a funding round of Israeli payments service Simplex. In March, it was involved in funding with smart contracts platform Rootstock. This month’s investment in BitKan reflects Bitmain’s growing interest in investing in the wider bitcoin ecosystem, BitcoinMagazine reported.