Reports are swirling in the crypto world that Bitmain is down $740 million following this extended bear market and liquidators are dying to move in. While this is currently just speculation, it comes from a reputable source of leaked information in the crypto industry. It’s well known that Bitmain held a lot of its assets in the form of Bitcoin Cash, and the combination of hash war devastation and prolonged bear market has wiped the value of BCH back to levels we haven’t seen since early 2017.
We got leak of Bitmain Q3 numbers! COMPLETE DISASTER. The company lost $740 Million including losses on inventory and bitcoin cash! And this is not accounting for hash war costs! #bitmainipo @HKEXGroup
— BTCKING555 (@btcking555) December 4, 2018
America-China Trade War Hitting Sales
Unfortunately for Bitmain, an America-China trade war has hit the firms exports rather hard. Trump increased import tariffs on Chinese technology by 25%, meaning that buying Bitmain mining rigs is now a very expensive luxury. Miners are opting for the more power efficient Bitfury Clark as they come with lower import taxes and help firms run at a better level of profitability.
ASICBoost Removes Miners Confidence
On top of the America-China trade war, Bitmain has been accused of locking out miners from using the ASICBoost function. It has been an option on all mining rigs, but it’s been greyed out, meaning miners cannot use it. Rumor has it that Bitmain in fact uses this feature then disables it when it ships the mining rigs out to customers. Recently it released the ASICBoost firmware to all miners, but it blocked numerous miners from using certain mining pools.
Pending Court Case
In California, Bitmain is being sued for illegally mining cryptos using miners’ hardware. Due to the fact that Bitmain “tests” all miners before shipping, when a miner is powered on for the first time it automatically connects to the Bitmain mining pool and mines for Bitmain. Some miners who bought Antiminers didn’t know this and have decided to sue the firm for not wiping all settings. How this case will pan out is yet to be seen, but Bitmain apparently has a fighting chance of winning the case on a technicality.
IPO on the Rocks
If this leaked data turns out to be true, Bitmain’s IPO could be in real danger. Previous estimates of the firm’s value are around the $4 billion mark, but if the firm really did lose $740 million in 2018 alone, then its share price could be extremely cheap. It recently submitted a draft application to the Hong Kong Stock Exchange to test the waters, but if huge losses are reported then it could be game over for the IPO.
Bitmain has looked like it’s circling the drain for a number of months now, and this could be the final nail in the coffin. While Bitmain is still the leading mining pool on the Bitcoin network, the reduction in price of Bitcoin will severely damage its ability to run at a profit. As more news about Bitmain drips out in the coming weeks, we will keep you updated. Until then, all eyes on Bitmain for an official announcement regarding its ongoing troubles.