BitMEX: Bitmain has a chance to become a legend of the cryptocurrency industry, but the resource management system leaves much to be desired
A research unit of the bitcoin exchange BitMEX have analyzed the financial performance of the worlds largest manufacturer mining equipment Bitmain.
Analysts have come to the conclusion that in 2017 the company was extremely profitable, however the majority of operating funds has been invested in Bitcoin and Cash at the moment the enterprise can be unprofitable. According to their estimates, the loss Bitmain reach $328 million
However, BitMEX believe that the IPO could be quite successful, but further management of the attracted capital may be not so smooth.
Documents highlight some of the issues:
* Investing too much in BCH
* Too much inventory
* Loss-making sales
However, Bitmain shipped 3 million miners & produced $1.3 billion of cashflow in 2017, demonstrating a strong execution capabilityhttps://t.co/VH0uHsYWjZ pic.twitter.com/CeoAzD0360
— BitMEX Research (@BitMEXResearch) 30 Aug 2018
According to some reports, the mining giant has attracted several hundred million dollars in the preliminary round of financing, and its market capitalization has reached $14 billion Based on these data, BitMEX believe that the company intends to collect another several billion dollars, and the goal of capitalization is just over $20 billion.
Note that information about the investors of the company posted a Twitter user BTCKING555, which are registered in the social network in August 2018. However, BitMEX said that they have reason to believe that the documents are genuine.
Breaking#2: investors in current $14bln round. No original investors (always a good sign right ? @sequoia @IDGCapital @sinovationvc 😭) Hwr info we have there is revolt, investors wanting money back as Jihan @KPMG lied on the 2018 numbers! #bitmainipo pic.twitter.com/SLhSXgsv4D
— BTCKING555 (@btcking555) 29 Aug 2018
The researchers also concluded that Bitmain has a dominant position in the market of design, production and supply of ASIC miners. At the same time, the company owns the largest mining pools: BTC.com and AntPool, as well as shares in the pool ViaBTC. Over the past six months, the three named pool established control over 48% of the market.
Analysts have pointed out that in 2016, the industry giant has also been the dominant market operators mining farms, but in profit for the first quarter of 2018, the share of mining was only 3.3%. However, in absolute terms the income from mining in 2017 has increased by 250%. The best indicators of the company demonstrated only in the sale of equipment — 948%.
It is worth emphasizing that the only area in the mining industry, in which Bitmain does not dominate and is not even present, the production of chips for miners. This niche is fully controlled by TSMC, Samsung, Global Foundries and SMIC.
According to representatives of BitMEX, Bitmain is probably the largest and most profitable enterprise in the blockchain industry. Many investors in the field of innovative technologies used to invest in the company №1 on the market and for them, the mining giant looks that way, according to analysts. Therefore, due to the network effect, upcoming IPO could be quite successful.
For 2017, the company has sold more than 1 million ASIC devices S9, and in the first quarter of 2018 — about 0.7 million, earning $2,329 billion and $1,829 billion, respectively.
Based on the data about the gross margin in 2017, BitMEX has calculated the cost of some devices. This, in turn, allowed to approximately calculate the gross margin at this point, using quotations from the official shop Bitmain.
So, analysts believe that the company suffers losses; the negative gross margin in S9 is on the order of 11.6%, and L3 — more than 100%.
Bitmain have no debt, but the Deposit of $866 million for the chipmaker TSMC in 2017, was hit hard on operating cash. In addition, the company has not sold goods (miners) for $1.2 billion, which represents a very substantial surplus, and has directed significant funds in altcoins (more than $1 billion).
BitMEX to believe that a large part of all operating funds of the company were invested in Bitcoin Cash.
The report also stated that Bitmain comes out on the IPO for two reasons: to combat competitors who also intend to raise funds from the stock markets and strengthening of balance sheets of capital, because in March 2018 available funds totaled only $105 million
Experts exchange have come to the conclusion that Bitmain has all chances to become a legend of the cryptocurrency industry, but the company is vital to improve policy management and distribution of corporate resources.
Earlier, Tencent, SoftBank and DST Global has denied participation in the financing of Bitmain.
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