Bitmain, the world’s largest Bitcoin mining equipment manufacturer and operator of some of the largest Bitcoin mining pools, is looking to raise another USD 1 billion of funding. If successful, this would bring its valuation up to USD 15 billion. Bitmain’s valuation is already USD 12 billion after a successful USD 400 million funding round led by Sequoia Capital in June 2018.
Bitmain is looking to complete this large funding round before its initial public offering (IPO). It is expected to submit an application to be listed on the Hong Kong Stock Exchange in August 2018 and if accepted, its stock would go public before the end of 2018.
This would be the largest Bitcoin- or crypto-related IPO in history by far. Bitmain stocks would give investors a direct way to invest in Bitcoin and crypto infrastructure, since investing in the company is akin to investing in Bitcoin mining. If Bitcoin’s mining hash rate continues to grow, then more equipment will be purchased by miners, most of it from Bitmain. In such a scenario, Bitmain would make profits, publish their positive profit reports, and its stock would rise. Also, if its mining hash rate would slow down, then Bitmain profits would drastically drop, and traders could short Bitmain stock.
Bitmain mines a tremendous amount of Bitcoin and profits from that, more so if Bitcoin’s price goes up. Therefore, Bitmain stock will provide an indirect way for traders to bet on Bitcoin’s price going up or down. Mining equipment sales is also related to Bitcoin’s price, since a higher Bitcoin price accelerates the growth of the network hash rate.
Bitmain is actually diversifying into artificial intelligence (AI) as well, since the application specific integrated circuits (ASICs) it produces for Bitcoin mining can be modified for AI computations. With the amount of money and over 2,000 employees at Bitmain’s disposal, this could end up producing cutting-edge AI technology that has the potential to be just as profitable as Bitcoin mining rig manufacturing.
Ultimately, the launch of Bitmain stock will open up a major channel for institutional investment to pour into the crypto space, since Bitmain heavily invests in the crypto space. Since 2013, Bitmain has made USD 2.5 billion of profits.
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