Bitmain, the largest manufacturer of Bitcoin and cryptocurrency mining rigs, is aiming for a USD 18 billion initial public offering (IPO) when it launches on the Hong Kong stock exchange in Q4 2018 or Q1 2019. This would be by far the largest cryptocurrency IPO in history.
In general, there aren’t many cryptocurrency or Bitcoin-related stocks and those that do exist have very small capitalization. Bitmain will be the first major Bitcoin- and cryptocurrency-related stock, with a projected opening market cap of USD 40-50 billion, which is actually nearly half of the total Bitcoin market cap at USD 108 billion as of this writing on 12 August 2018. This will be on a similar scale of the some of the biggest IPOs in history, such as Facebook which had a market cap near USD 90 billion during the launch of its stock.
Bitmain just successfully completed a USD 1 billion pre-IPO funding round in rapid fashion, pumping its valuation up to USD 15 billion. This is on the heels of its Series A and Series B funding rounds which pulled in USD 50 million and USD 400 million respectively. These rounds have seen Bitmain’s valuation progressively and rapidly grow in less than a year.
The reason Bitmain has such a high valuation is it is pulling in tremendous profits, after cornering the Bitcoin and cryptocurrency mining markets. Bitmain sells the most equipment for mining, the mining pools Bitmain operates control nearly half of Bitcoin’s total hash rate, and Bitmain has a tremendous stash of Bitcoin’s from its massive in-house mining operation. In total, since 2016 Bitmain has profited USD 2.3 billion, but it is expecting USD 2 billion in profit during 2018 alone.
Bitmain’s best chips released to the public so far are 16 nm, but it has an arsenal of 12 nm, 10 nm, and 7 nm chips for mining it is ready to release to the public. These more powerful chips will increase the efficiency and power of their cryptocurrency mining rigs, reinvigorating sales and dominance over the mining manufacturing market. It can plan this release to be in a slow succession, so it can keep its dominance and profits long term. Its 7 nm chips are approaching the quantum tunneling limit, and it will be difficult to make transistors smaller after that point due to the fundamental nature of physics, so 7 nm Bitmain miners could be the most powerful Bitcoin mining rigs possible.
Bitmain stock will provide a way for investors to invest in the infrastructure of cryptocurrency, an indirect way to invest in Bitcoin.
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