- China’s mining equipment manufacturer is going to list its shares in Hong Kong.
- The company warns investors about high volatility.
- Market reaction is muted, and only BCH is on fire.
Chinese manufacturer of cryptocurrency mining equipment Bitmain Technologies officially filed for IPO with the aim to raise financing of $18M.
The company claims to be a success as more than half of all Bitcoins was produced with Bitmain’s ASIC-based cryptocurrency mining kit, while the revenues surged ninefold to $2.84bn in the six months to the end of June 2018.
However, some industry experts find this business decision controversial as tumbling Bitcoin prices tend to cool down demand for mining equipment. Bitcoin, the most popular digital cryptocurrency, has lost over 53% since the beginning of the year, and the consequences for Bitmain’s sales are already here: second-quarter revenues dropped to $1B from $1.8B in the first quarter, while operating cash flow switched to negative, according to the information submitted to investors in the pre-IPO funding round.
The global market for ASICs will reach $17bn in 2022, according to the estimates of research consultancy Frost & Sullivan, but Bitmain warns investors about “significant volatility” that may influence the financial results of the company.
“The expected economic return from cryptocurrency mining has been adversely affected, which in turn may require us to make significant provisions with respect to our inventories. and lower the selling prices of our mining hardware, and our profitability, business, results of operations and financial condition may be adversely affected”.
This is confirmed by the recent data: Shenzhen retailers have been selling ASIC kits for just one-tenth of December 2017 prices.
The news might have fuelled the upside trend in Bitcoin Cash (BCH): the 4th largest coin by market value gained over 21% to trade at $527 by press time. Bitcoin (BTC) turned a deaf ear to the announcement, staying within a narrow range with marginal gains day-on-day. BTC/USD is changing hands at $6,453.
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