Bitmain has recently announced plans to launch an IPO on the Hong Kong Stock Exchange, but its recently revealed Bitcoin Cash holdings have displeased more than just a few cryptocurrency insiders.
Bitmain Currently Interested in Launching IPO
Bitmain is currently pursuing a traditional IPO with the hope of raising $18 billion at a valuation of $40-50 billion on the Hong Kong Stock Exchange. It may be fair to ask why Bitmain doesn’t look to its obvious audience and do an ICO instead. The ASIC manufacturer earns about 90% of its gross revenue by selling mining rigs.
Bitcoin Cash Holdings May Be a Factor
Its recently released financial reports also indicate that it has respectable cryptocurrency holdings, including more than 1.02 million Bitcoin Cash as of March 2018, up considerably from 841,866 BCH in December 2017. From December 2016 to December 2017, Bitmain’s Bitcoin stash dropped from 71,560 to 36,577, and still further, to a relatively small holding of 22,082 units by March 2018.
While Bitmain would have received some free Bitcoin Cash like everybody else who held Bitcoin at the time of the heavily contested Bitcoin/Bitcoin Cash fork, the drop in its Bitcoin holdings and subsequent rise in Bitcoin Cash holdings indicates that the mining giant may be dumping its Bitcoin in favor of Bitcoin Cash.
This move may make it unpopular with members of the cryptocurrency currency who are adamantly opposed to the existence and continued development of Bitcoin Cash. In fact, many opponents reacted unfavorably to the news that Bitmain holds more Bitcoin Cash than Satoshi Nakamoto, if the pseudonymous Bitcoin creator was still around that is. A popular cryptocurrency influencer who goes by the handle @Excellion, for instance, had this to say about Bitmain’s Bitcoin Cash holdings at a time when the price of a majority of cryptocurrencies, including Bitcoin Cash, are tumbling to year-to-date lows:
According to the Bitmain pre-IPO investor deck, they sold most of their #Bitcoin for #Bcash. At $900/BCH, they’ve bled half a billion in the last 3 months. If Bitcoin Core devs didn’t disclose the Bcash vulnerability, it could’ve wiped a billion dollars off their balance sheets.
Instead of convincing a community that seems to find Bitcoin Cash such a contentious issue to invest in an ICO, Bitmain may have an easier time convincing traditional investors to invest in a company that has seen a rapidly increasing profit figure over the past three years, including $1.06 billion in Q1 2018 alone.
Rivals’ Newer Hardware May Make Things Tougher for Bitmain
Bitmain’s most recent release in the cryptocurrency mining hardware niche is the Antminer S9, which was released two years ago and has dropped in price from a hefty $4,400 to $536 today. The aforementioned financial reports indicate that Bitmain currently has $1.24 billion worth of product in inventory.
Meanwhile, one of the firm’s primary competitors, Canaan Creative, has recently announced the release of the AvalonMiner A9 for Bitcoin mining, AvalonMiner L for Litecoin mining, and a TV and heater that can operate as a household appliance and a Bitcoin miner. The AvalonMiner A9 is more energy-efficient at 60-70 W/Terahash (TH) as opposed to the Antminer S9’s 110 W/TH. So those who do not want to ramp up their electricity bill by too much, or feel just a smidge of guilt over the reported amount of electricity that cryptocurrency mining consumes worldwide, should choose an Avalon ASIC over one produced by Bitmain.
Bitmain has reportedly been developing a newer, more efficient version of the Antminer without much success. Therefore, it may now need the influx of cash it is looking for with this IPO to continue its development on new mining rigs and to potentially bolster its cryptocurrency holdings.