Bitmain opens its books for the first time

ONE OF THE cryptocurrency world’s most powerful, controversial and secretive companies just opened its books for the first time.

Bitmain Technologies, the virtual currency mining firm co-founded by billionaires Jihan Wu and Micree Zhan, released its first public financial statements in a Hong Kong regulatory filing late on Wednesday.

The disclosure, which also confirmed Bitmain’s intention to pursue an initial public offering (IPO), follows months of speculation about the company’s listing plans and its potential vulnerability to a more than $600 billion (R8.55 trillion) rout in digital assets since January.

Here are some highlights from Bitmain’s filing:

Founded in 2013, Bitmain is one of the biggest companies to emerge from the boom in digital assets that propelled Bitcoin to a 15-fold gain last year.

As both the largest operator of Bitcoin mining collectives and the dominant supplier of virtual currency mining machines, the firm has enormous influence over the global crypto ecosystem – a role that has troubled members of the community who disdain anything resembling a centralisation of power.

Yet questions over the sustainability of Bitmain’s meteoric rise have been multiplying in recent months. The 2018 tumble in virtual currency prices threatens both the profitability of Bitmain’s mining operations and demand for the custom chips it sells to other miners. Meanwhile, competition in the mining-gear business has grown more intense.

Two of Bitmain’s biggest rivals – Canaan and Ebang International Holdings – are also pursuing IPOs in Hong Kong as they seek funding for a technological arms race. Bitmain risks losing its competitive edge, Sanford C Bernstein & Co analysts wrote in a report last month.

For now though, Bitmain is still the industry bellwether, with a market share in crypto mining gear estimated by Frost & Sullivan at nearly 75 percent. If the company proceeds with the IPO, it will represent a major test of whether investors view virtual currencies as a temporary fad or an innovation with staying power. A Bitmain listing – with its myriad public disclosure requirements – may also help reduce the opacity of an industry that sceptics say is under-regulated and prone to misbehaviour.

The company has yet to disclose a target valuation or say how much it wants to raise from its IPO. People familiar with Bitmain’s plans said last month that the share sale may raise as much as $3bn. The company has repeatedly declined to comment when asked for details of its listing plans.

Bitmain’s main product is called the Antminer. These are filled with dozens or hundreds of high-powered chips, known as Asics, that perform the brute-force number crunching