A Roslyn shipping company has unveiled a plan to mine bitcoin, sending its stock soaring and echoing a 2017 move by Long Island Iced Tea Corp.
The stock of Sino-Global Shipping America Ltd. more than doubled to open at $10.30 on Wednesday after the company issued a news release before the stock market open.
Shares later moderated, closing that day at $7.44, still a gain of 57%. On Thursday, the stock continued its climb, adding 12.4% to close at $8.36.
Another Long Island company, Farmingdale-based Long Island Iced Tea Corp. sought to hitch a ride on a rally in cryptocurrencies in December 2017.
That company’s shares soared after it announced it was changing its name to Long Blockchain Corp. and shifting to businesses related to cryptocurrencies like bitcoin and blockchain, a technology that tracks transactions.
Sino-Global’s announcement said that newly appointed chief operating officer Lei Nie and chief technology officer Xintang You would spearhead the bitcoin mining initiative.
“The management team is ready to take our business to the next level by executing this expansion strategy,” chairman and chief executive Lei Cao said in a statement.
If successful, the strategy could provide a new revenue stream in the form of new bitcoin awarded to successful miners.
Sino-Global executives did not respond to emails and calls seeking comment. There was no response at the company’s office suite in Roslyn.
The price of bitcoin peaked at almost $20,000 in December 2017 before retreating for several years. The cryptocurrency, however, has rallied from about $5,000 in March 2020 to about $37,500 in trading Thursday afternoon.
David Sacco, who teaches finance and economics at the University of New Haven, said gyrations in the stock price of GameStop, a retailer of computer games, signals the market’s appetite for high-risk securities.
“People are trying to capitalize on that,” said Sacco, a former Wall Street executive. “It seems that companies are trying to take advantage of the frenzy. I suspect a lot of people are trying to create value by uttering the word: ‘Bitcoin.’ “
Sino-Global plans to continue operating in shipping and logistics, the company said. In addition to Roslyn, the company has offices in Los Angeles, Beijing, Hong Kong, Fremantle, Australia, and Verdun, Canada.
In a filing with the Securities and Exchange Commission, the company said that the COVID-19 pandemic has interrupted its business operations and reduced customers’ demand for its services.
Revenue for the three months ended Sept. 30 fell by approximately $600,000, or 36.4%, compared with the prior year’s period, the company said.
In March 2018, HBO’s “Last Week Tonight With John Oliver” lampooned Long Blockchain in a segment about companies that added “blockchain” to their name in an effort to get a boost in their stock prices.
In Thursday afternoon trading, shares of Long Blockchain were trading down 8% to 23 cents.
Bitcoin is a digital store of value that operates without a central bank or overseer. Transactions are recorded in a ledger known as a blockchain.
New bitcoins can be created, or “mined,” by computers that solve complex math problems and verify transactions in the cryptocurrency.
Mining requires high-powered computers and the creation of new bitcoin becomes increasingly complex until the system reaches its maximum of 21 million bitcoin.
About 18.5 million have been created so far, according to Investopedia.