Major miner Bitmain goes to market with $14bn IPO valuation

After months of speculation, Bitmain Technologies has finally filed to list shares on Hong Kong’s stock exchange.

Having already raised $1.3bn in so-called Series B private investment during 2018, mining equipment and hashing giant Bitmain has filed for its wider Initial Public Offering via the Hong Kong stock exchange.

The valuation of the company has been subject of rumour and conjecture for months, with initial estimates saying it would exceed Facebook’s $16bn valuation when it went public. There has also been a lot of talk regarding what it would reveal about the internal finances of the world’s biggest Bitcoin miner, and integral party in the creation of Bitcoin Cash.

In the end, though, the figure Bitmain attached to its value appears to be slightly more conservative. Though the valuation is redacted from the release of the 400+ page IPO documentreports at the start of September cited a presentation to potential investors as valuing it at around $14bn.

The official filing itself cites revenues of $2.84bn for the six months up to June 2018. Previous documentation had cited Q1 profits as being $1.86bn, however, indicating a significant drop-off in revenue as the crypto markets have continued to struggle through the year.

As information regarding Bitmain’s intention to float itself and raise capital has slowly leaked out, commenters have become increasingly fascinated with the inner machinations of the company. For example, the IPO documentation says the company holds $886.9m – calculated at cost, a methodology that deserves more investigation – as of June. However, many eyebrows had been raised by the apparent revelation in leaked documents that it sold most of its Bitcoin (BTC) reserves to buy into Bitcoin Cash (BCH) – which the company’s co-founder, Jihan Wu, has been a prominent supporter of. No confirmation of that appears in the official filing, however, with crypto-assets cited as a whole. Thus, all we have to back up those claims is this slide.

During the time that Bitmain has been apparently accumulating its stash of BCH – which, by the leaked doc’s figures amounted to about 5% of the Bitcoin fork’s total circulation, at least $840m-worth by mid-August estimates – its Antpool mining concern announced it would ‘burn’ (dispose of) 12% of all the Bitcoin Cash it earned through its activities. Despite that attempt to maintain its value – which initially caused a significant spike in the price – the currency has lost over 2/3rds of its value since May, and is now worth around 1/6th of what it was in January.

Despite being ultimately unsuccessful, it was a move that still led to accusations that Bitmain was concerned with propping up or inflating the price of the currency it had invested in unwisely, and couldn’t fully divest itself of due to the market simply not having the liquidity to support a sell-off of that size. Indeed, some believe the attempts to support BCH’s price included artificial price support via markets like BitFinex (though those allegations remain speculative and unproven) before its tactic switched to slowly getting rid of what it could manage to and allowing the price to fall accordingly.

In totally unconnected news, we’re sure, Bitcoin Cash’s price has risen by around 19% since the news, according to CryptoCompare.

Also under the spotlight has been Bitmain’s loss of ground in terms of mining technology, despite the recent release its Antminer S9-Hydro, and announcing details regarding its next generation 7nm chips. The reason for that focus is that selling such equipment is an area of the Bitmain business that has been responsible for around 94% of its revenue in 2018, as crypto prices and thus the money made by its own mining activities, have slumped.

Problems it faces in this area include increasing technical and price competition from other manufacturers, and growing interest in creating resistance to Application Specific Integrated Circuit (ASIC) technology that it has championed for the activity, and that some believe to be contributing to centralisation in mining.