Bitmain — the dominant Bitcoin mining giant — has been the subject of a flurry of recent news following its rumored Hong Kong IPO estimated to be worth $3 billion. Following a release (intentional or not) of Bitmain’s financial data, swirling rumors have been abundant.
More concrete analysis has been provided by the likes of BitMEX Research whose interpretation of the financial data offers some useful insights behind the scenes of the cryptocurrency giant.
The Bitmain IPO
Speculation of the Bitmain IPO started in early August after closing a pre-IPO funding round at a valuation of $15 billion. Subsequently, Bloomberg cited Bitmain co-founder Jihan Wu’s planned listing with the Hong Kong stock exchange for an IPO as early as September, with the actual offering expected to be completed by the end of the year.
Rumors of high-profile investors have been prevalent and controversial, with Singapore-based investment firm Temasek officially denying rumored involvement in the IPO. Further, prolonged and increasing downward pressure on the cryptocurrency markets has coincided with revelations of Bitmain’s gamble on Bitcoin Cash that led to a reported $328 million loss.
Speculation of Bitmain’s dominance during a time of continued downward market pressure has also come into question, especially considering emerging competition from mining companies Canaan Inc and Ebang International. Canaan and Ebang filed plans for IPOs in May and June, respectively, with Ebang expected to formally face the Hong Kong listing committee this month.
All of the recent news surrounding Bitmain comes at a time of a bizarre release of sensitive financial information on the company that was analyzed extensively by BitMEX Research. BitMEX’s conclusions are high on the potential of Bitmain while iterating some crucial qualifiers in regards to future management and funds allocation.
Importantly, BitMEX clarifies their belief in the authenticity of the released documents before diving into their conclusions. Some of the insights derived include:
- Bitmain is the dominant player in ASIC design, mining, machine assembly, and distribution accounting for an 85% cryptocurrency and 77% Bitcoin market share.
- Bitmain has a dominant position as a mining pool operator, owning both BTC.com and Antpool — the two largest pools — with its investments accounting for a 48% market share.
- Bitmain has significantly scaled back as a mining farm operator since 2016, with revenue percentage falling from 18.4% in 2016 to 3.3% in Q1 2018.
Bitmain is the largest player in the blockchain space, pegged to be one of the most dominant technological areas over the coming years. As a result, many investors are likely to be attracted to its IPO. However, BitMEX concludes that Bitmain has made some mistakes concerning purchasing too many speculative altcoins and producing too many units during the bull market. Overall, Bitmain is considered to have the potential to become a “legendary crypto company.”
Bitmain attracts an enormous amount of attention due to its sheer market dominance. On top of that, it represents the first large-scale IPO for a cryptocurrency-focused company, bringing with it expectations and intrigue. How the Bitmain IPO plays out over the next few months will provide a unique barometer to investor interest in the cryptocurrency space.