Chinese internet company The9 (NASDAQ:NCTY) typically flies under the radar, but shares are racing higher today thanks to a big announcement. It turns out that NCTY stock is moving in an appealing direction — cryptocurrency mining. So what do you need to know about The9 now?
To start, what is The9? Investors should note that the Shanghai-based company has been trading on the Nasdaq Exchange since 2004. Also importantly, the company is working to expand from a regular internet business to one that has a diversified, high-tech focus. Right now this means embracing blockchain-related work and mobile gaming. According to a new press release, it also means expanding into the world of cryptocurrency mining.
So what exactly does that press release say? Well, earlier on Monday, The9 shared that it has signed a cooperation and investment term sheet with several prominent investors in the crypto space. This group of investors includes Jianping Kong, the former co-chairman and director of Canaan (NASDAQ:CAN), a mining machine manufacturer. Qifeng Sun, another former Canaan director, is also part of this new investment deal for The9.
Importantly, The9 is hoping to rely on Kong, Sun and other investors for their cryptocurrency mining experience. From there, the company will continue to develop and launch its own mining business. In fact, The9 will establish a wholly owned subsidiary NBTC Limited for its blockchain and crypto businesses.
Clearly, NCTY stock investors like the news. That is likely because of the potential The9 sees in this deal. In the press release, the company outlined how it will work with its new investors to purchase mining machines and build up a team that specializes in the crypto space. From there, The9 says it hopes its machines will contribute 8%-10% of the global hash rate of bitcoin (CCC:BTC).
Why the NCTY Stock News Matters for The9
But why does this really matter? Well, it is no secret that recent weeks have been powerful for bitcoin and its cryptocurrency peers. Bitcoin has set a series of all-time highs recently, including setting a new record above $34,000 over the weekend. These highs come as many crypto bulls watch the macroeconomic picture align in favor of the space.
Essentially, the novel coronavirus created the perfect setup for crypto. Covid-19 sparked panic, driving many people to cryptos as safe-haven assets. Then, Congress and the Federal Reserve embarked on a variety of stimulus measures. To believers in the crypto space, these stimulus measures are likely contributors to future inflation. Therefore, to hedge against that inflation, many are turning to bitcoin and its peers. Further boosting this case is a series of moves by banks, fintech companies and regulators to bring cryptocurrencies into the mainstream.
While The9 has a long way to go until it becomes a major player in the world of crypto, the news has certainly grabbed attention on Monday. That speaks to the excitement right now in the space. As always, it is important for investors to do their own research. If NCTY stock still appeals to you, its crypto plans may just make it sparkle.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
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