IPO

Crypto Chip Maker Bitmain Eyes $18B IPO

Bitmain, the world’s largest producer of cryptocurrency mining chips, is planning to file for an initial public offering (IPO) in September, which could turn out to be one of the largest IPOs in history. According to documents obtained by CoinDesk, Bitmain hopes to raise $18 billion on the Hong Kong Stock Exchange at a market capitalization of $40 billion to $50 billion.

Founded five years ago by 32-year-old Jihan Wu, Bitmain has become one of the world’s most valuable cryptocurrency companies. In the first six months of 2018, the company made $2.5 billion in revenue. It has attracted investors such as Sequoia Capital, GIC, and IDG Capital.

Earlier this year, it was reported that Bitmain raked in between $3 billion and $4 billion in profits in 2017. A report from Bernstein Research noted that Bitmain’s profits come from different parts of the bitcoin mining supply chain, and estimates that Bitmain controls 70 percent to 80 percent of the market share in bitcoin miners and ASIC chips. The report noted that most of its revenue last year came from selling miners powered by its semiconductors.

“The rest was largely generated by mining itself and, to a much lesser extent, by collecting management fees from the mining pools it operates and renting out the mining power of its mining farms through cloud services,” the report said.

While it’s unclear what the longer-term prospects will be, given the Chinese government’s crackdown on bitcoin mining in the country, Bitmain has already taken steps to mitigate the impact. According to the report, it launched a mining pool unit in Israel in April, and is opening mining farms in Canada and Switzerland.

In addition, the company recently began to manufacture chip hardware for the artificial intelligence (AI) industry, according to Business Insider. And in May, Circle announced a new partnership with Bitmain, which is also leading a $110 million Series E equity investment in the FinTech company.

Bitmain did not immediately comment on reports of an impending IPO.

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