Jen van Lier - August 1, 2018
Blockchain mining giant Bitmain Technologies has reportedly earned more than $1.1 billion USD in the first quarter of 2018. This is a staggering result considering all the market fluctuations and the fact that its entire profit for the same period in 2017 was $1.2 billion USD. There are rumours about a Bitmain IPO later in the year in Hong Kong, and these numbers will certainly help Bitmain’s valuation. The company currently controls the most significant portion of mining hash rate on Bitcoin and controls substantial hashing power on Bitcoin Cash, adding to its hardware sales business. The company is reportedly worth $12 billion USD.
Founded in 2013 Bitmain is a privately-owned company based in Beijing. It is a leader in ASIC mining. With products like the S9, Bitmain has gained a commanding lead in the development, production, sale and deployment of ASIC miners around the world.
The contentious Bitcoin Cash fork that happened last year further helped Bitmain to cement its position in the industry. Now it seems that Bitmain’s management is looking to capitalize on its position with an IPO. A top Bitmain executive recently revealed that it intends to hold an initial public offering in Hong Kong, or in an overseas market with U.S. dollar-denominated shares. Sequoia Capital, IDG Capital and other early investors would then have the opportunity to liquidate their investment.
If Bitmain’s IPO is successful, it could push the company’s valuation to around $14 billion USD. Furthermore, Bitmain is set to invest in Opera LTD by buying $50 million USD worth of its shares on the IPO under the name of Tospering Technology Ltd. This would allow Bitmain to diversify and be less dependent on its cryptocurrency mining business.
Bitmain earned anywhere between $3 to $4 billion USD in 2017, matching or even surpassing Nvidia’s 2017 profit of $3 billion USD (Nvidia is a leading GPU manufacturer and an indirect competitor for Bitmain). Bitmain’s dominance is rooted in Jihan Wu’s role as the financial master mind behind the venture, teaming up with the technical know-how from his lesser-known partners to set up the company. Bitmain is also active through its mining pools, BTC.com and AntPool, which bring more revenue to the company. This, and its plans should be quite attractive to investors thinking about participating in the Bitmain IPO.
Co-founder and co CEO, Jihan Wu has plans to grow Bitmains share of the market by diversifying into the prosperous field on AI or Artificial Intelligence. He reckons that Bitmain may be as close to releasing an AI chip as early as 2018. Furthermore, as an influential player in the market Bitmain owners are using their connections to work with regulators. Wu stated, “We see in the future that negotiating and working with regulators is quite important,” Wu tells Fortune. “We need to push those heavy regulations back a little bit. But we need to work with them, not just try to get around it.”
Apart from Bitmain’s IPO plans, Wu plans to steer the company towards mining rig R&D to keep its edge in the market. AI products will play a larger role in the future, and so will Bitmain’s investments in other companies.