Bitmain has officially filed for its initial public offering (IPO) with the Stock Exchange of Hong Kong. The application is heavily redacted; redactions include the estimated size of the IPO and timetable, but there is still plenty of information in the 300-page report on its earnings and business model. Past reports, based on pre-IPO funding rounds, suggest the Bitmain IPO will net USD 18 billion, and overall, this will be a milestone for the crypto space.
Bitmain is the largest manufacturer of crypto mining equipment in the world, and getting publicly listed on the stock exchange would make it one of the obvious ways for people to invest in crypto infrastructure. According to the filing, Bitmain accounted for 74.5% of global application specific integrated circuits (ASICs) crypto mining rig sales in 2017, and it has only been growing since then. In 2017, its net profit was USD 952.6 million, and profits have nearly doubled since then to USD 952.2 million in the first half of 2018 alone. Revenue was USD 2.518 billion in 2017, and the first half of 2018 outpaced this at USD 2.846 billion of revenue.
In the first half of 2018, most of Bitmain’s revenue, USD 2.684 billion, was from the sale of mining hardware. Its in-house mining operation produced USD 94 million of crypto. Bitmain runs two of the largest Bitcoin mining pools, Antpool and BTC.com. These pools account for over a third of Bitcoin’s mining hash rate and generated USD 43 million of revenue in the first half of 2018. Bitmain also manages mining farms for clients, and this has generated USD 22 million of revenue in the first half of 2018.
Additionally, Bitmain is one of the few companies in the world developing artificial intelligence (AI) chips, with its primary competitors being Google and NVIDIA. It is unclear if this is producing them any money at this point though. Bitmain’s combination of blockchain technology and AI technology could be very profitable long term.
Bitmain has USD 3.16 billion of assets according to the filing but also USD 1.55 billion of liabilities. At the end of the first half of 2018, Bitmain had USD 886.9 million of crypto assets, including Bitcoin, Litecoin, Bitcoin Cash, Ethereum, and Dash. This puts the company in a strong position long term to profit from increasing crypto prices, and makes its stock an indirect way to invest in the crypto markets.
The Securities and Futures Commission has to approve Bitmain’s application before an IPO occur, and when the decision finally comes that will certainly be major news that could cause movements in the crypto market. It is generally expected that the application will be approved and the IPO will occur by Q1 2019 at the latest.
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