Crypto Mining Giant Bitmain Is Going Public With a $40 to $50 Billion Valuation

Cryptocurrency mining giant Bitmain Technologies Ltd. filed an initial public offering (IPO) in September 2018. Although Bitmain closed its pre-IPO round with $1 billion (valuing the company at $15 billion after the deal), the company ultimately failed in his attempt. make public the Hong Kong Stock Exchange (HKEX). The company’s application expired in March 2019 and it has not been refiled.

The Beijing-based company had been valued at $40 billion to $50 billion before its IPO, potentially making it one of the largest public offerings ever had it been successful.

Key points to remember

  • Cryptocurrency mining giant Bitmain Technologies Ltd. which filed an initial public offering (IPO) in September 2018 ultimately failed.
  • It was reported that the company confidentially filed an initial public offering (IPO) with the United States Securities and Exchange Commission (SEC) in late 2019.
  • Bitmain is a dominant player in the mining equipment sector

The company had raised approximately $450 million from investors between 2013, when it was founded by Jihan Wu and Micree Zhan, and 2018, and it was valued at $12 billion in private markets during its funding round in 2018. June 2018. The failed bid was underwritten by China International Capital Corporation.

In late 2019, it was reported that Bitmain had confidentially filed an initial public offering (IPO) in the United States. Security and Exchange Commission (SECOND). However, as of January 17, 2021, Bitmain is still privately owned.

In November 2019, Canaan Creative, the Chinese manufacturer of bitcoin mining machines, became the first cryptocurrency company to list on Nasdaq. Canaan, a Cayman Islands-registered company, is one of the largest manufacturers of application-specific integrated circuit (ASIC) devices used to mine cryptocurrency. Since both Canaan and Bitmain filed for IPOs with the SEC around the same time, Canaan’s successful listing was seen as something of a “coup” by some members. of the cryptocurrency community.

How does Bitmain make money?

Coindesk, which claims to have seen filings for the IPO, said Bitmain made a total of $2.3 billion in profits in 2016, 2017 and the first quarter of 2018. cryptocurrency markets generated a profit of $1.1 billion for the company in 2017.Industry analysts have a more optimistic view of Bitmain’s outlook. In February of this year, Bernstein Research estimated that Bitmain generates profits of up to $3 billion per year.

Bitmain is a vertically integrated company. It manufactures its own chips for mining rigs, which are sold to end customers. He also uses them in equipment for cryptocurrency mining farms.

Bitmain is a dominant player in the mining equipment industry.It has been estimated that Bitmain controls up to 80% of the bitcoin mining equipment market.The company’s Application-ASIC chips are the industry’s favorite cryptocurrency mining workhorses.

In fact, any announcements from Bitmain regarding the development of ASICs for specific cryptocurrencies are generally seen as indicators that the number of coins in the market will multiply in the coming months.The company also operates two of the largest bitcoin mining pools in the world, BTC.com and Antpool. Together, these pools represent between 42% and 51% of bitcoin’s total mining capacity.

What future for Bitmain?

Cryptocurrency markets exert a strong influence on Bitmain’s revenue. A spike in crypto prices in 2017 had a positive impact on Bitmain’s revenue. Indeed, this resulted in increased demand for its machinery and greater profits from its mining operations. During the crypto market boom in 2017, Bitmain raised the prices of its mining machines. Conversely, a drop in prices means a drop in demand for Bitmain’s machines and a drop in the profitability of its mining operations.

To that extent, Bitmain has diversified its revenue base. He announced a major foray into artificial intelligence in 2018: the Sophon BM1680, a chip that promises to accelerate machine learning algorithms. In an interview with Bloomberg in May 2018, Wu said that up to 40% of Bitmain’s revenue would come from AI chips in 5 years.

That’s not all. The researchers predicted that ASIC chips will be the building blocks of ASIC clouds that can “offer a glimpse into the future of computing on a planetary scale.” According to Michael Bedford Taylor of the University of Washington in Seattle, ASIC chips herald the next wave of distributed computing. In one article, he described the concept of bespoke silicon, a custom form of silicon that leverages specialization to outperform high-volume general-purpose systems-on-chips (SoCs) from industry giants. As a major player in the ASIC chip industry, Bitmain is well positioned to benefit from these predictions.

According to Coindesk, Bitmain outlined its plans to take on the US and Chinese semiconductor giants in its investor prospectus. “In half a decade, Bitmain captured 8% of the national chip design market where Huawei HiSilicon took 14 years to reach 17%. At this rate, Bitmain could very soon approach or defeat Huawei’s local stronghold HiSilicon.

In 2020, Coindesk included Bitmain in its Coindesk 50 list, an annual selection of the most innovative and consequential projects in the blockchain industry. Coindesk called Bitmain the “Behemoth of Bitcoin Mining” and asserted that Bitmain remains at the center of the crypto economy.

Investing in cryptocurrencies and other initial coin offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the author to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decision. Investopedia makes no representations or warranties as to the accuracy or timeliness of any information contained herein.

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