Bitcoin (BTC) vs Bitcoin Cash (BCH)
Bitmain Encounters Headwinds From Competitors, Bear Market
Chinese crypto mining manufacturer Bitmain benefited strongly from the run-up in crypto prices in 2017 and is now rumored to be planning an IPO in Hong Kong. But with crypto markets down, prospects are looking less certain for the firm, and recent reports indicate that the company is under pressure from competitors like Canaan Inc. and Ebang International Holdings.
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The latest piece of news about Bitmain, though unconfirmed, came from Samson Mow, CEO of Bitcoin development company Blockstream, who tweeted on Sunday:
Three Bitmain teams abandoned the company in recent weeks: one group from operations and manufacturing, & two groups from their chip design division. One of those groups is actively trying to raise capital to compete with Bitmain. They approached a friend of mine.
The substance of the tweet has not been confirmed or denied by Bitmain,
in September on the Hong Kong Stock Exchange (HKSE). But if true, it would signal a level of disorganization within the firm that might raise red flags for investors. Mow also published on his blog an
entitled “Bitmain: IPO and Technical Challenges” that was written by Allen Guo from 2048 Capital.
It should be noted that Blockstream has repeatedly taken issue with Bitmain over the latter’s support for bitcoin cash. A
that Bitmain has been selling its bitcoin (BTC) holdings and buying bitcoin cash (BCH). At the time the document was filed, the company held 1.02 million BCH and 22,082 BTC,
Blockstream is one of the companies developing the Lightning Network, which is a second-layer solution to the bitcoin scaling problem. The Lightning Network is being designed to work with the BTC chain, which kept the original 1MB block size. By contrast, which is a second-layer solution to the bitcoin scaling problem. The Lightning Network is being designed to work with the BTC chain Bch To Btc Exchange , in line with the philosophy that scaling is better done on the main chain.
it was “burning” BCH by sending 12 percent of all BCH mining rewards into a “black hole” address. This led to accusations that Antpool was attempting to artificially increase the price of BCH.
However, Mow’s tweet, though unconfirmed, seems to be in accord with recent news about Bitmain, which has gone from bullish to less positive over the course of 2018. Bitmain started the year strong, with multiple reports of new investments in the company, which is now reportedly valued
In early August, a WeChat user named “Uncle C” reported that Bitmain had closed a $1 billion pre-IPO investment round funded by the China International Capital Corporation (CICC), Tencent Holdings, and SoftBank Group. Yet both Tencent and SoftBank later told the press that they had not participated in the round, while CICC wouldn’t comment on the matter.
from Sequoia Capital China, Singapore investment fund EDBI, and American hedge fund Coatue. That came after a
seed round from Sequoia Capital China, IDG Capital, and Sinovation Ventures in September 2017.
The rapid rise in cryptocurrency prices has padded Bitmain’s bottom line in 2018, with
that in the first quarter, the company had revenues of $2 billion. Additionally,
that the company had reached $1.1 billion in profits during the same quarter. An investment research firm Bernstein
the company had $3-4 billion in operating profits in all of 2017.
Bitmain has been well-placed to capitalize on the run-up of the crypto markets during the past year, and its Antminer line of mining machines is
of the global market. Yet, despite this, increased competition has made investors question the bullish narrative that has up till now surrounded the company.
which suggested that Bitmain competitors Canaan, Inc. and Ebang International Holdings were catching up with the company on a technical level. The report called the competitiveness of Bitmain’s chips into question, and recommended that suppliers like Taiwan Semiconductor Manufacturing Co. (TSMC), which manufactures the chips for Bitmain, should not add new capacity for chips destined to be used for cryptocurrency mining applications.
Canaan and Ebang have both filed for IPOs on the Hong Kong Stock Exchange. Caanan’s
, which came in May, while Ebang Bch To Btc Exchange , while Ebang,
, is attempting to raise $1 billion. Canaan recently
which doubles as a mining rig that can do up to 2.8 trillion hashes per second. It’s also notable that unlike Canaan and Ebang, Bitmain is still yet to officially file a listing application with the Hong Kong Stock Exchange.
The main issue for all three firms is the fall of cryptocurrency markets in 2018, which has seen the price of BTC decline by around 65% since the start of the year (though most altcoins have seen much deeper losses). The future prospects of these companies depend on the continued strength of crypto markets, something which doesn’t appear to be assured, though BTC is up around four percent over the last seven days.
Have your say. Is there something going on behind the scenes at Bitmain?
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Ian Edwards is an independent journalist who closely follows developments in the cryptocurrency, blockchain and fintech industries. He lives in the United States. Follow him on Twitter: @ianedws.
Bitmain Encounters Headwinds From Competitors, Bear Market
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