Bitcoin Mining Juggernaut Bitmain Plans To Launch IPO

Bitmain Technologies Ltd, the world leader in cryptocurrency mining chips is planning on launching an IPO. The company, which was founded by Micree Zhan and Jihan Wu in 2013, designs and manufactures ASIC chips. ASICs are particularly effective at brute-force number-crunching as is required in crypto mining to verify transactions. Bitmain also operates Antpool, one of the biggest bitcoin mining pools in the industry.

Bitmain is reported to have raked in an estimated $2.5 billion in revenues last year, mostly boosted by the Bitcoin craze. Wu revealed the figures during an interview with Bloomberg in May. Much of Bitmain’s success has been attributed to its near-monopoly of the bitcoin mining business, a situation that goes against the basic principles of decentralization.

It holds an estimated 70 to 80 percent of the ASIC cards and bitcoin mining market. The company also generates significant revenues from mining pool management fees and renting out mining power.

In 2018, however, the company has had to contend with the declining demand for bitcoin miners as cryptocurrency prices hit new lows not witnessed in the past nine months. The increase in mining difficulty, not to mention the spike in mining hardware prices has led to a significant dip in mining profits.

The Bitmain IPO

Bitmain reportedly hit quarterly revenues of $2 billion at the beginning of the year, and is apparently set to become the first blockchain-focused company to achieve $10 billion in annual revenue.

According to a company overview obtained by TechCrunch, it is also looking into an IPO valuation of between $40-50 billion, which is a considerable uptick from its most recent one. Bitmain has yet to formally comment on the issue.

In July, the company was able to raise between $300 million and $400 million from Sequoia Capital, Coatue (a U.S. hedge fund), and Singapore-based, EDBI. It was at the time valued at $12 billion after the Series B round of funding. In September last year, it received $50 million from IDG Capital and Sequoia Capital in a Series A round of funding. This is according to a Caixin report.