Industry

Crypto Mining Giant Bitmain’s CEO Is Considering an IPO

Thomas Delahunty | June 7, 2018 | 10:00 pm
IPO
Industry

Crypto Mining Giant Bitmain’s CEO Is Considering an IPO

Thomas Delahunty | June 7, 2018 | 10:00 pm

Jihan Wu runs Bitmain Technologies Ltd., the world’s largest producer of custom cryptocurrency mining chips. Financially speaking not much is known about the Chinese company, though Wu has hinted at the possibility of holding an initial public offering (IPO), which would force Bitmain to reveal more.

What an IPO Would Mean for Bitmain

Given the uncertainty surrounding digital assets and the limited public information currently available about Bitmain, any estimate of the company’s value ‘inevitably involves a lot of guesswork,’ according to reports from Bloomberg.

When compared with publicly traded chipmakers (and competitors) Nvidia Corp. and MediaTek Inc., Bloomberg predicts the company has a valuation of about $8.8 billion. Wu, though he declined to share details of his net worth, has previously said that the company is worth $12 billion.

This ‘guesswork’ might be set to change if the company does decide to hold an IPO. A public offering would not only force Bitmain to open its books, but it would also allow the stock market to assign the company a value in real time.

An IPO would also help boost Bitmain’s profile as the company branches out into areas including artificial intelligence, a field that, unlike cryptocurrencies, has the full backing of Chinese financial authorities. While Wu said he has no specific plans at the moment, he’s open to a listing in Hong Kong — a favored location for crypto companies facing Beijing’s crackdown — or in an overseas market with U.S. dollar-denominated shares.

Bitmain and ASICS

Bitmain designs custom chips for cryptocurrency mining called application-specific integrated circuits, or ASICs. ASICs are developed to run the high-powered computers necessary for cryptocurrency mining, but are also useful for the heavy workloads associated with certain forms of AI, like machine learning, which, as noted, is a technology Bitmain are interested in pursing.

The problem for many in the cryptosphere, though, is that Bitmain controls as much as 80% of the market for crypto mining gear, according to a February report from Sanford C. Bernstein & Co. Roger Ver, the cryptocurrency enthusiast known as Bitcoin Jesus, has called Bitmain the industry’s ‘800-pound gorilla.’

While the company gets most of its revenue from mining equipment sales, it also runs some of the biggest mining collectives, in which members combine their processing capacity and split the rewards. In fact, Bitmain’s AntPool and BTC.com collectives control more than 40% of the world’s Bitcoin mining power, according to Blockchain.info. This has lead to a mining centralization that, to many, is antithetical to cryptocurrency’s people-first philosophy.

As might be expected, this outsized role has prompted a backlash from many digital currency enthusiasts, who strongly disagree with anything that hints at a concentration of power in the crypto ecosystem. In the face of this apprehension, Wu brushes off the naysayers, claiming that Bitmain’s rivals are in close pursuit:

“Bitmain is trying very hard to maintain its advantage,” he said.

Featured image from Shutterstock.
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