Posted on Thursday, Dec 13th 2018
According to a Coherent Market Insights report published earlier this year, the global cryptocurrency mining market is estimated to grow at 30% CAGR from $610.91 million in 2016 to $38.38 billion by 2025. The market is dominated by China’s Billion Dollar Unicorn Bitmain, which recently filed to go public.
Beijing-based Bitmain was founded in 2013 by Wu Jihan. It has been focused on building technology within the cryptocurrency, blockchain, and artificial intelligence segments. The company operates three key businesses: providing cryptocurrency mining tools, supporting blockchain, and managing a fabless operation to drive AI growth. Its biggest segment, though,, is cryptocurrency mining.
According to Frost & Sullivan, Bitmain is the world leader in ASIC-based cryptocurrency mining hardware with a nearly 75% market share. Its cryptocurrency mining products are offered under the Antminer label. Today, it is known for its two key tools BTC.com and Antpool, one of the world’s largest Bitcoin mining pools in terms of computing power.
Through its fabless operation, Bitmain manages the chip design process and can deliver higher computing power for cryptocurrency mining tools at lower costs. Besides chip-design for the cryptocurrency market, Bitmain has also expanded its fabless operations within the AI industry. Last year, it launched its first AI deep learning chip under the Sophon brand. Its AI chips are used for developing cloud systems as well as object, image, and facial recognition purposes.
Bitmain recently filed its IPO prospectus to list on the Hong Kong Stock Exchange. Its revenues have grown from $137.3 million in 2015 to $277.6 million in 2016 to $2.52 billion in 2017. For the six months ended June this year, Bitmain saw revenues grow 937% to $2.85 billion. The company has been profitable. Profits grew from $48.6 million in 2015 to $113.6 million in 2016 to $701.4 million in 2017. For the six-month period ending June this year, profits grew 795% to $742.7 million. Adjusted EBITDA for the six-month period grew from $101.8 million to $1.12 billion. The company is targeting revenues of $10 billion for the year.
Bitmain has been privately held so far with $765 million in funding raised from investors including Sequoia China, Temasek Holdings, Crimson Ventures, Jumbo Sheen Group, CAS Investment Management Co., HuangPu River Capital, and Newegg. Most of its funding round was held in July and August this year when it raised $715 million at a valuation of $12 billion. Valuation for a $50 million round held in 2017 was estimated at $1 billion. Analysts believe that Bitmain is seeking an IPO valuation of $18 billion.
While Bitmain’s financials may seem impressive, there is still skepticism about Bitmain. During the current year, Bitcoin’s valuation itself has fallen by nearly half. The decline in Bitcoin value will not only affect Bitmain’s users but Bitmain directly as it is estimated to lose between $330-$500 million on its own Bitcoin assets.
Additionally, competition in the mining industry is heating up. For instance, there are other players like Canaan Inc. and Ebang International Holdings, who are lining up to list at the Hong Kong Stock Exchange. Additionally, technology conglomerates in Japan and government officials in Russia are also looking toward Bitcoin mining themselves. GMO, one of Japan’s leading technology and Internet giants, announced that it would soon launch its own line of ASIC miners and the next-generation 7 nanometer semiconductor chip, and will operate a large-scale bitcoin mining center in Northern Europe.
I would like to know from users what their views are about cryptocurrency? Have you used Bitmain’s tools, and how does Bitmain fare against its competition?
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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