Throughout July, Bitmain, the Chinese crypto and blockchain corporation, touted its plans to initiate an IPO valued at $15 billion. It invested in multi-billion dollar cryptocurrency exchange Circle and major Internet browser Opera leading up to the IPO, publicly disclosing its intent to expand into the venture capital and investment sector.
The $18 billion valuation of Bitmain was secured after the firm closed a $1 billion funding round by Tencent and SoftBank Group, two of the most influential companies in the global technology market. As China’s most valuable technology company, Tencent has led the development of massively popular mobile games, smartphones, payment systems, internet services, social network platforms, and web portals.
Increasing hype and demand surrounding Bitmain have been supported by the company’s exponential increase in revenues. Last year, Bitmain recorded a revenue of $2.5 billion, in a period in which infrastructure in the cryptocurrency sector was not well established.
In the past 12 months, Bitmain has seen a four-fold increase in its revenues, recording a $10 billion revenue in 2018. More to that, despite the 80 percent correction of major cryptocurrencies in the past eight months, Bitmain has recorded a larger revenue than Nvidia, the chip manufacturing giant which dominates the graphics card and artificial intelligence (AI) industries.
Bitmain’s business model is mainly based on three components: bitcoin mining equipment manufacturing, mining equipment rentals, and mining pool. Bitmain’s clients can directly purchase ASIC miners to mine cryptocurrencies, rent their existing machines to immediately start mining cryptocurrencies, and become a part of their pools to mine digital currencies with minimal hashrate.
An interesting aspect about Bitmain’s revenues is that the company’s income does not depend on the performance of the market, unlike cryptocurrency exchanges, which remain as the only multi-billion dollar companies apart from Bitmain and blockchain network creators such as Ripple Labs and Block.one.
Moreover, in the public finance sector, outside of early-stage technology companies similar to Facebook and Google in their early days, it is rare for investors to find companies that can grow at the pace demonstrated by Bitmain over the past two years, and its expansion into venture capital and AI could appeal to public investors that intent to commit to the cryptocurrency sector.
Bitmain is set to conduct the first ever IPO initiated by a company within the cryptocurrency industry, with a valuation of over $18 billion. If Bitmain goes public with a $18 billion offering, one of the largest offerings to date, it will lead investors to acknowledge the cryptocurrency sector as a legitimate and a rapidly evolving industry with the potential to compete against other multi-trillion dollar sectors.
More to that, an influx of capital into Bitmain through the public market may also lead funds in the traditional finance sector to flow into emerging blockchain projects and companies, as Bitmain has recently focused on the development and sustainability of its investment arm.
As CCN reported, Bitmain has also employed an aggressive expansion strategy earlier this year, establishing a factory in the US with over 400 employees. Increasing presence of cryptocurrency conglomerates on the international stage will play a vital role in establishing the cryptocurrency industry.
“Bitmain is truly honored to announce this news and is excited to work with local partners, government and stakeholders in realizing this vision, throughout the initial set-up phase, operations and beyond,” said Jeff Stearns, executive vice president and direct of operations for Bitmain’s North America division.