Mining hardware giant Bitmain lost about $500 million in the third quarter of 2018 due to the current bear market according to reports, potentially putting its planned IPO in jeopardy.
The Beijing-based company recently provided an update on its financial results to the Hong Kong Stock Exchange (HKEx), which is reviewing Bitmain’s application for an initial public offering (IPO).
The update showed Bitmain earned around $500 million in the first nine months of last year, on slightly over $3 billion of revenues, according to reports in CoinDesk. The filing, which is not public, does not break down the results by quarter. However, when considering it had grossed profits of $1 billion in the first half of 2018, a simple calculation shows that it had a $500 million loss in Q3.
However, Bitmain has refuted the claims. According to a Chinese publication, Caijing, an unnamed representative for Bitmain said: “The rumours are not true, and we will make announcements in due course in accordance with the requirements of relevant laws and regulations.”
In January at Davos, HKEx CEO Charlies Li said of the Bitmain IPO:
“For the IPO, HKEx’s core principle is the market suitability. The exchange would assess whether the business model proposed by the listed company to investors is suitable for listing.
Let’s say a company has made billions of dollars in business A, but suddenly turns to do business B without any achievements. It insists that the business model B is better, then I would consider whether the business model A filed for listing is not sustainable.
In addition, from the regulatory perspective, we are wondering if mining firms could still make a profit under a robust regulatory framework,”
If the reports are correct, it would suggest Bitmain’s business is not sustainable and therefore the planned IPO on HKEx is unlikely.