A Deeper Look at Bitmain Filing for Long-Awaited IPO
One of the loudest conversations in the financial technology world surrounds Bitmain, the largest manufacturer of the ASIC chips used for bitcoin mining, and their future business plans. Bitmain is widely considered to be the ‘king’ of bitcoin mining, as their devices own the majority of the hash rate on the bitcoin mining network, which also causes some concern amongst the community. For a number of years now many have wondered whether Bitmain would host an ICO or IPO.
Rumors began to surface in early 2017, and then the idea of an IPO became almost a no-brainer when Bitmain saw nearly a 936% increase in profit according to their recently opened accounting books. After a long wait, Bitmain has finally announced that it has filed an application to publicly list its company with the Hong Kong Stock Exchange.
The controversy surrounding Bitmain’s dominance in the hash rate centers around the trust that is placed with them; although bitcoin aims for decentralization by distributing hash rate to different peers, if a peer controlled over 50% of the hash rate it would almost have the ‘authority’ to make decisions by itself (something that is not supposed to be possible in the bitcoin network).
Since Bitmain devices have recently surpassed the 50% mining participation rate in the bitcoin network, researchers and computer scientists have stated their concern for the legitimacy of bitcoin’s peer-to-peer and decentralized aura. By launching an IPO and opening its books to the general public, it might almost appear that Bitmain is looking to do away with these allegations.
Bitmain’s revenues surged nearly 936% over the course of 2017–2018, to approximately $2.84B. According to the report released to the public by Bitmain’s internal team, however, current operating cash flow is still negative. Many attribute the slide in cryptocurrency prices to the decline in the company’s cash flow.
“The Bitmain IPO has remained an ominous topic for many years now. At first, rumors were swirling of an ICO, then the company’s announcement of an impending IPO made it clear that Bitmain still believes in the core values that the cryptocurrency market can bring to the forefront of the global economy,” says Dima Zaitsev, International PR Lead and Chief of the Business Analytics Department at ICOBox. “Both methods are ways of enabling the public to get involved with their company. Bitmain opening their books was a big step for them. Being a cryptocurrency related company, allowing the general public to see their financials goes a long way toward eliminating the speculation and uncertainty that surrounded Bitmain as an entity. This will be great for cryptocurrency, blockchain, and chip-manufacturers alike.”
Bitmain’s IPO will be the most anticipated event since Telegram’s ICO, being that it is one of the largest companies in the cryptocurrency space to seek out public offerings. Telegram’s ICO, which was initially intended to be public, was reverted to a private offering, claiming to have raised over $1.7B in funding in the form of SAFTs. Seeing that Bitmain is a billion-dollar company, their total fundraising may even exceed Telegram’s, which would put it amongst the most successful IPOs of the year in funds collected.