The world’s largest crypto mining equipment manufacturer Bitmain has finally filed an initial public offering (IPO) with the Stock Exchange of Hong Kong.
Bitmain, which has demonstrated absolute dominance over the lucrative Bitcoin mining market for many years, is yet to disclose its target valuation. But, local analysts have stated that the success of the Bitmain IPO will represent the demand for the cryptocurrency market by both retail investors and institutions in the Hong Kong market.
74.5% Market Share
The merit of purchasing equity of Bitmain through its IPO is quite clear; as its official IPO document explicitly emphasized, Bitmain has over 74.5 percent market share, accounting for the vast majority of crypto mining equipment shipments in the global market.
“According to Frost & Sullivan, we are the largest global ASIC-based cryptocurrency mining hardware company in terms of sales revenue in 2017, accounting for a market share of 74.5%. We offer a variety of mining hardware equipped with proprietary ASIC chips under our Antminer brand,” the IPO filing read.
The dominance of Bitmain over the crypto mining sector is already a solid selling point to investors. But, since 2015, Bitmain has managed to record an impressive 328.2 percent yearly revenue growth, as it saw its revenue increase from $137.3 million in 2015 to $2.5 billion in 2017.
In early 2018, the mining giant doubled the profit margin of Nvidia, the largest graphics card manufacturer in the technology sector, generating more than $1.1 billion, demonstrating a profit margin that is twice as large as that of Nvidia which recorded a quarterly profit of $550 million.
“Bitmain reportedly brought in $1.1 billion in net profit just in the first quarter of 2018. According to the email, a conservative estimate of what the company could earn in net profit for the full year hovers at approximately $2 to $3 billion,” a report of Fortune read.
The $1.1 billion quarterly profit of Bitmain is admirable, given that the conglomerate generated $2.5 billion in 2017. In the first quarter of this year, Bitmain nearly recorded 50 percent of the profit it obtained throughout the 12 months prior to that.
Alongside its lucrative crypto mining equipment manufacturing business, Bitmain operates 11 mining centers in China and two major mining pools BTC.com and Antpool. According to the IPO document, as of August 2018, BTC.com and Antpool account for 37.1 percent of the hashrate of the Bitcoin network, which is more than one-third of the computing power of the Bitcoin network.
“As of June 30, 2018, we had opened 11 mining farms in the PRC, located in Sichuan Province, Xinjiang and Inner Mongolia, with an aggregate capacity to store approximately 200,000 sets of mining hardware. We also primarily operate two mining pools, BTC.com and Antpool, currently the world’s largest and second largest Bitcoin mining pools in terms of computing power,” read the document.
Several research groups including BitMEX Research have also revealed that Bitmain has intentionally lowered its profit margin to place pressure on its competition. That means, subsequent to the IPO, Bitmain could redirect its focus on maximizing the profitability of its ventures that may lead to higher profit margins and revenues.