Bitmain To Receive $1 Billion In Pre-IPO Financing
The slowdown in the manufacturing of crypto mining equipment doesn’t seem to have bothered Chinese mining company Bitmain as they as they reportedly are going to receive a cash injection close to $1 billion.
The most valuable crypto company is looking at a new round of financing – its biggest yet – near the end of July that would see firm valued just a peg below semiconductor giant AMD, with a current market cap of $15.5 billion. The funding round is valuing Bitmain at $14 billion pre-investment, a 16.5% increase from the company’s $12 billion valuations just last month after it closed a $400 million financing round. Altogether, Bitmain could be valued at $15 billion before the end of July if it completes its reported nine-figure funding round in the coming days.
Founded in 2013, Bitmain is the world’s largest cryptocurrency mining hardware manufacturer. It currently controls the majority of the market and has a market share that is three to five times higher than Canaan, its closest competitor. The company is behind almost 50% of all BTC mining pools and will more than likely see its ASIC (application-specific integrated circuit) dominance continue following the recent funding round.
Earlier this year, the company’s CEO Jihan Wu revealed the company would strategize a marked foray into designing ASIC chips for applications in artificial intelligence (AI) technology. With an established product line under its AI chip brand ‘Sophon’, Wu estimates that Bitmain’s AI division could be responsible for up to 40 percent of the company’s revenues within five years. The 32-year-old Wu is leaning toward the HKSE for the IPO, but has said he is also considering “an overseas market with U.S.dollar-denominated shares.” Through the latter options, early investors would have an easier opportunity to cash out.
Notably, Bitmain is also carving an entry into the traditional technology industry by rubbing shoulders among Silicon Valley’s elite with a new 20,000 square foot office in San Jose, California. The company is also expanding its research and development center in Israel, tripling its employee ranks in the country.
The success of Bitmain might seem lucrative for possible IPO investors, many e industry analysts aren’t convinced that it’s the right move. Mizuho Securities Asia’s Kevin Wang has been critical, stating that investors will only be attracted to the offering because there aren’t many options in the mining space. He questions the sustainability of their business.