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Bitmain Financial Details Expose Massive Bitcoin Dumped for Bitcoin Cash

As the world’s largest crypto mining giant Bitmain is filing for an initial public offering (IPO) hoping to raise $18 billion on Hong Kong Stock Exchange with a market capitalization of $40 to $50 billion, investors are able to have a glimpse at the financial numbers of this mining giant.

It could be world’s largest IPO in history if Bitmain makes it. Its founder and CEO Jihan Wu said this June that the company booked $2.5 billion of revenue in 2017. According to public information, of the $2.5 billion, 90% came from miner sales; Bitmain’s net profit in 2016, 2017, and 2018 Q1 are $97 million, $1.18 billion and $1.06 billion, respectively.

While according to its financial statement disclosed in the past weekend, the company has included cryptocurrencies in its “other current asset” at cost price.

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As figures shown, as of December 2017, Bitmain held about 841.8k BCC(BCH), 36.8k BTC, 925k LTC, 312k DASH, 747 ETH; while the following three months saw a big change in its BTC and BCH holdings – 1.02mln BCH and 22k BTC.

That means, in the first three months of 2018, Bitmain has sold (or given away) more than 14.8k BTC, and increased its BCH holding by over 179.2k.

Samson Mow, the CSO of Blockstream, tweeted that “Bitmain 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.”

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It indicates that the company might use its bitcoin inventory to prop up bitcoin cash, a fork coin pushed by Jihan Wu. Except for those strong BCH believers, average investors show no increasing interest about holding bitcoin cash, especially in the bear run. Nevertheless, some bitcoin whales are increasing their BTC holdings, according to bitinfocharts.

Back to the company’s financial state, Samson continued to elaborated on his findings saying “the Bitmain IPO is incredibly risky for any investor to buy into. The potential for massive losses is just around the corner as they have no idea how to maintain BCH, but are all-in. Play stupid games, win stupid prizes.”

As its rivals are competitive to roll out their next generation miners like Avalon’s 7nm 30T miner, Bitmain, who still counts on its Antminer S9 released two years ago, is technically falling behind.

2018 Q1 figures disclose inventory and other assets contribute almost 70% of the total asset for Bitmain. The company is sitting on a massive $1.24 billion in inventory while S9 price has dropped by almost 85% from highs at $4,400 to $536.

All these are sending some potential red flags.

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