Bitmain, the Beijing-based cryptocurrency mining equipment behemoth, has officially filed to go public, riding a wave of mind-boggling revenue growth toward its highly anticipated IPO.
The company is going public on the Hong Kong Stock Exchange (HKEX), but its prospectus is still highly redacted, which means there are still plenty of questions about its offering. As CoinDesk notes, Bitmain’s IPO application still needs to undergo additional listing hearings from the HKEX before the redactions are cleared.
This means that at the moment it’s not yet known how many shares Bitmain is going to be offering, how much the company will be valued at once it starts trading, nor how much it’s looking to raise. However, what the application does show is Bitmain’s insane growth over the past few years.
Here are some of those numbers:
- Bitmain’s revenue increased from US$137.3 million in 2015 to US$2.5 billion in 2017.
- Its revenue for the first six months of this year has surpassed an astounding $2.8 billion.
- It claims $701 million in net profit in 2017, up from $104 million in 2016.
- Bitmain is claiming a gross profit of $743 million for the first half of this year.
However, the holes left in its redacted prospectus does open up questions about how much the precipitous decline in crypto prices this year has impacted Bitmain’s growth numbers.
Per TechCrunch:
Margins are down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively.
Bitmain is trying to bat away those concerns by using H1 2018 figures, rather than splitting that period into two quarters. That’s important because the crypto market has plunged massively since January, losing more than half of its value. That has impacted most crypto companies — whether it is exchanges seeing less trading or wallets less traffic — and it is sure to have had a toll on Bitmain.
Here is how Bitmain explains the impact of the volatility in the digital coin market.
Following June 30, 2018, there has been significant volatility of the market price of cryptocurrencies. As a result of such volatility, the expected economic return from cryptocurrency mining has been adversely affected, which in turn may require us to make significant provisions with respect to our inventories and the cryptocurrencies we held and lower the selling prices of our mining hardware, and our profitability, business, results of operations and financial condition may be materially adversely affected.
In early 2018, we anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies price in the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there had been significant market volatility in the market price of cryptocurrencies in the first half of 2018. As a result of such volatility, the expected economic return from cryptocurrency mining had been adversely affected and the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018. Going forward, we will actively balance our business growth strategy, inventories and cryptocurrency asset levels to ensure a sustainable business growth and a healthy cash flow position, and we will adjust our procurement and prediction plan to maintain an appropriate liquidity level.
Photo: Bitmain