Even though the Chinese government is cracking down on crypto entities, its homegrown crypto giant Bitmain continues to flourish. Bitmain, the largest crypto mining company in the world, released its public disclosures on Wednesday, Sept. 26, for the first time. The secretive company’s public disclosures reveal profits and an IPO plan even as the digital currency market is taking a beating.
First Disclosure in Five Years
Bitmain Technologies was established five years ago by Jihan Wu and Micree Zhan and has since remained very secretive about its profits, even though it is widely regarded as the largest crypto miner in the world. KPMG audited the statements which reveal the overall value of assets and the profits of the company.
Though the price of Bitcoin and other cryptocurrencies have decreased by over 50 percent in 2018, Bitmain earned $742.7 million in profit during the first half of the year. This portrays a 9x increase from the previous years’ figures. On the other hand, the company’s revenue has increased 10x. It earned $2.8 billion by the end of June, and its adjusted return on equity was 58.8 percent.
Brian Kelly, founder, and CEO of BKCM, an investment firm specializing in global macro and currency investing, commented:
“Clearly by the numbers; they’re quite profitable.”
He noted that profitability was a concern for participants in the crypto market. Some experts predicted that if Bitmain is not profitable, it would likely have to sell its holdings to keep funding its operations. Such an event would negatively pressure crypto prices further.
Bitmain Isn’t Selling Anything
Kelly is positive:
“They [Bitmain] won’t have to sell any of their crypto holdings, that’s really positive for cryptocurrencies.”
About 28 percent of the company’s assets are in cryptocurrencies totaling up to $886.9 million. The most interesting case here will be of Bitcoin Cash. The exact amount that Bitmain invested in Bitcoin Cash is still not known, but CoinMarketCap data shows that BCH experienced a 20-percent rally in its price post the document’s release.
As the company holds a huge amount of cryptocurrencies, a bearish market is clearly bad for its balance sheets. The company has more than 40 investors. Most of them are Chinese firms and China-based subsidiaries of Sequoia Capital, Phillip Laffont’s Coatue Management and CAS Investment Management.
On Bitmain’s IPO Plans
In the public disclosure, Bitmain confirmed the filing of an IPO. And it plans to go public on the Hong Kong Stock Exchange. Since its application is yet in its draft form and still awaiting listing hearings from the exchange, it is not clear how much the company will be valued at after the IPO.
But according to the company, the proceeds of the said IPO will go to research and development and will be used to expand its production output.