Bitmain Files for IPO in Hong Kong after $1 Billion Net Profit
Bitmain Technologies which is the largest producer of bitcoin mining chips has officially filed for Multi-Billion Dollar Initial Public Offering (IPO) on the Hong Kong Stock Exchange (HKEX) and could raise as much as $3 billion according to sources.
The Beijing based company which was co-founded in 2013 by Jihan Wu and Micree Zhan, went on to release its financial statements which showed a revenue of a whopping $2.8 billion till June 2018, and gross profits of more than $1 billion according to Bloomberg. This despite the market value of Bitcoin and other cryptocurrencies having dropped by more than 75% from early this year. Bitmain also reported that it holds $886.9 million worth in Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash.
The draft which was posted by HKEX doesn’t clarify on how much the firm will be valued at as details remain redacted which also didn’t clarify the total number of shares being offered and the timeframe for the public offering.
— Jon Russell (@jonrussell) September 26, 2018
Cryptocurrency Mining Hardware Giant
Bitmain which controls as much as 80 percent of the market for cryptocurrency mining hardware saw its revenue touch $2.6 billion this year which was just $107.8 million in 2015. They also sold close to 2.56 million miners as reported by Cointelegraph. They also diversified from Bitcoin-only hardware products to also include Bitcoin Cash.
Bitmain despite its monumental growth is still struggling with the current scenario of cryptocurrency mining.
The company wrote that because it anticipated a “strong market growth for cryptocurrency mining hardware” moving into 2018, Bitmain placed a large order for new hardware from its production partners. Now, according to the firm, “the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018.”
However, an IPO helps the Mining company to look beyond cryptocurrencies and expand into other fields like Artificial Intelligence. The influx of cash from the IPO will play a crucial role in their business expansion. According to speculation, Bitmain aims to raise as much as $18 billion in the IPO.
The Mining hardware business is clearly lucrative for Bitmain which shows no signs of stopping. Bitmain is also planning to expand into Artificial Intelligence which shows the high ambition of the company, however, the mining industry is growing with a lot of new companies who will compete with Bitmain for market share.
Some people in the industry like Samson Mow of Blockstream have even criticised Bitmain for trying to build a monopoly in the Bitcoin network and supporting Bitcoin Cash.
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