When the cryptocurrency mining giant, Bitmain announced that they will be having an IPO, the cryptocurrency community took it as a good sign for the community. The IPO is expected to bring Bitmain around $18 Billion of cash and could be one of the biggest IPO’s in the world. But all’s not well in the Beijing based mining giant.
Trouble started when Blockstream’s CSO (Chief Strategic Officer) Samson Mow, tweeted an image of what appears to be the leaked investor deck of Bitmain. It revealed that Bitmain sold around 70% of their Bitcoin holding for Bitcoin Cash.
Samson Mow also pointed out that Bitmain only showed the Q1 numbers and not Q2 numbers. According to Samson, the reason is that in Q2 Bitmain suffered losses of around $600-700 million.
According to Twitter user Vijay Boyapati ( @real_vijay ), Bitmain traded BTC for BCH to pump the price of the alt-coin. Bitmain’s decision to shift towards Bitcoin Cash was due to the fear of introduction of Lightning Network, which would decrease miner’s profits. According to Vijay, Bitcoin Cash was created as a miner controlled alternative to Bitcoin.
Bitmain’s solution was simple, replace Bitcoin with Bitcoin Cash. Bitmain and a small group of influential people in the cryptocurrency space have started a campaign calling Bitcoin Cash as the real “Bitcoin”. According to Vijay, Bitmain also propped up the price of Bitcoin Cash, to attract more investors.
Bitcoin Cash hasn’t performed as Bitmain would have hoped. Currently, Bitcoin Cash is being traded at $490, a $1200 dip from May 2018. That means Bitmain is sitting on paper losses of hundreds of millions of dollars from this botched trade. But even worse, they have no ability to exit their billion dollar position in BCash without a complete collapse in its price.
Moreover, a few days back a Bitcoin Core developer, Cory Fields had discovered a huge security vulnerability on the Bitcoin Cash blockchain, which if exploited could have crippled the entire Bitcoin Cash blockchain.
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Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.
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