BitMEX Research Examines Bitmain’s Recent Losses Yet Highlights Colossal IPO Potential
Bitmain, one of the most important virtual currency companies in the market, may be losing money according to a new report from BitMEX Research. The intention is to provide an in depth analysis on Bitmain’s planned initial public offering (IPO).
At the moment, there is not much information about the IPO that Bitmain is trying to launch. The company could raise $18 billion dollars and increase Bitmain’s market capitalization to $50 billion dollars before 2019.
But there are other experts that say that the company will be raising just $3 billion dollars and a market capitalization that will represent $14 to $15 billion dollars.
Due to the bearish market that we have since the beginning of the year, Bitmain has lost hundreds of millions of dollars. This is also due to the fact that it has made risky bets on Bitcoin Cash (BCH), the fourth largest virtual currency in the market.
If that was not enough, BitMEX Research says that all these reports are accurate. Bitmain may have lost around $328 million dollars after investing in Bitcoin Cash. In this way, the giant company has erased the massive profit figures during the first quarter.
Another important thing that the report made by BitMEX Research is that three successive generations of chips build by the company have failed. That means that the firm lost hundreds of millions of dollars. During the same time period, other competitors released other miners that were much better than the Antminer S9, in performance, price and consumption.
In addition to it, and to make everything even worse, the former director of design, Dr. Yang Zuoxing, decided to leave and found a new company to rivalrize with Bitmain.
As per the report, the decision taken by Bitmain to go public may be a strategic move that prevents rivals Canaan Creative and Ebang Communication get a funding advantage in their future IPOs.
Although there are several challenges that Bitmain is currently facing, the company is one of the most important in the industry. Bitmain has the strongest position of any ASIC manufacturer.
The report explains:
“Bitmain can be a legendary crypto company, generating strong shareholder returns for decades to come, but in order to achieve this (and it’s a lot harder than it sounds) the Bitmain management team may need to improve their management of company resources. Once the company goes public, capital allocation decisions in this volatile and unpredictable market will be difficult enough, letting emotions impact too many investment decisions may not be tolerated.”
Bitmain is also trying to expand its economic activities. The company is moving towards artificial intelligence to reduce its dependence to cryptocurrencies.