All that glitters is not gold; and not all is sunshine and roses at the world’s biggest Bitcoin mining company.
Based in Hong Kong Bitmain is a company that designs, manufactures and sells mining devices for cryptocurrencies. Additionally operates mining farms and mining pools. It is expected to apply for public listing since it is Currently privately-owned, on the Hong Kong Stock Exchange in near future with a valuation of $14 billion approximately.
Bitmain claims net assets of $2.6 billion according to the leaked document.
Since it is written in Chinese, the leaked documents were translated by Bitcoin Mercantile Exchange (BitMEX). Based in Seychelles, this Bitcoin/dollar mercantile exchange claims to process almost $5 billion worth of trades daily. They also have also a research division, which was responsible for the analysis. The report notes: “We have reason to believe the authenticity of these documents, which forms the basis for this report.”
Between 2017 and the first quarter of 2018, the research shows, that Bitmain’s mining device sales fell to 1.9 million from 2.5 million, that is a drop of $500 million in revenue. And all this, despite Bitmain’s payments to its microchip supplier, Taiwan Semiconductor Manufacturing Co., reaching a peak of $866 million in 2017.
Of the aforementioned net assets, $1.2 billion is “inventory”, or in plain translation, crypto mining devices (ASICs) waiting to be sold. And this according to BitMEX, means that Bitmain has a glut.
The report indicates that the value of the company’s cryptocurrency holdings dropped between March 2018 and late August from $1.7 billion to $823 million.
We may identify partly responsible for this drop the shift in focus of the company from Bitcoin to Bitcoin Cash. The document reveals that the company used 67 percent of its 2017 cash flow to purchase the latter, and now holds $558.7 million worth of the stuff, as compared to $153 million in Bitcoin proper.
At the beginning of August, it held approximately 5 percent of all the Bitcoin Cash in circulation. That figure is now 6 percent.
BitMEX estimates that the drop in the value of Bitcoin Cash over that period has caused Bitmain to lose $299.2 million.