Chinese Crypto-Mining Chip Company Bitmain Considers IPO
Bitmain – one of the largest and most established developers of cryptocurrency-mining chips – is considering an IPO, or initial public offering. This could potentially open the company’s books to the public, and allow the stock market to assign the company real-time value.
What Would an IPO Do?
The company’s 32-year-old founder Jihan Wu says he’s predominantly looking at the possibilities of a listing in Hong Kong, or in an “overseas market with U.S. dollar-denominated shares.” This, he says, would give early investors a chance to cash out.
“Bitmain is trying very hard to maintain its advantage,” he explained, commenting that the company has been dominating the mining scene since it first came to fruition. “The challenge is advancing our technology beyond what we’ve already achieved.”
Wu says a public share sale would be a “landmark” for the company and the general cryptocurrency space. He says that miners, venture capitalists, and developers alike are trying desperately to appease global regulators and are thus opting for less privacy and more transparency to prove digital assets are not fraudulent, but rather legitimate forms of currency.
Getting the Brand Name Out There
He went on to say that an IPO would also help raise Bitmain’s profile, as the company is eagerly looking for ways to branch out into alternate arenas of technology, such as artificial intelligence, which has garnered solid support from the Chinese government.
One of Bitmain’s primary competitors, Canaan Inc., has already filed for a Hong Kong IPO. The offering is slated to raise approximately $1 billion USD in initial funding, a pittance compared to what Bitmain has managed to accomplish.
Wu explained that Bitmain’s revenue for 2017 alone was nearly $3 billion, and that he and co-founder Micree Zhan own more than 60 percent of the business, making them the primary shareholders. He says Bitmain is valued at $12 billion, while he, himself, has a net worth of approximately $5.3 billion.
Power Through Market Dominance
Per a February report by Sanford C. Bernstein & Co., Bitmain holds as much as 80 percent of today’s crypto-mining gear, and that units from its most popular series – the Antminer – typically sell for anywhere between a few hundred to a few thousand dollars each. Professional mining operators with access to low-cost electricity have been known to purchase these units in bulk.
Despite the positive effects an IPO could have, Mizuho Securities Asia analyst Kevin Wang was critical of Bitmain’s plans, saying the only reason Hong Kong investors would be drawn to an IPO like this is because there are very few options to choose from in the Chinese mining arena.
“They’ll have a premium for their valuation because there are very few stocks like Bitmain in Hong Kong. It’s the sustainability of the business that’s the real question mark.”
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