In an interview with Bloomberg, Jihan Wu, chief executive officer and co-founder at Bitmain, said that he is considering an IPO for his company, which operates the world’s biggest mining farms. He did not provide a timeline or a location for the offering. An IPO would make Bitmain the first major crypto firm to open itself to public scrutiny. Despite intense media spotlight and headline-grabbing scandals, the cryptocurrency industry’s operations still remain shrouded in mystery. Bitmain’s revenues and business model could provide indicators for its health and operations. (See also: Who Is JIhan Wu And Does He Basically Control Bitcoin Today?)
Wu offered other important statistics related to his company’s makeup during his conversation with Bloomberg. Bitmain generated $2.5 billion in revenue last year. For context, NVIDIA Corp. (NVDA), which also manufactures processors used for bitcoin mining, had yearly revenues of $6.91 billion in 2017. (See also: NVIDIA's Crypto-Mining Bonanza Is Ending.)
The difference in revenue figures may seem massive. But it masks the fact that NVIDIA was founded 24 years ago and Bitmain is less than five years old (It was founded in 2013). Along with his co-founder Micree Zhan, Wu owns 60% of Bitmain. Bloomberg extrapolated NVIDIA’s valuation multiple and came up with a figure of $8.8 billion for Bitmain. An IPO would also provide a significant opportunity for Bitmain investors IDG Capital and Sequoia Capital to cash out. Both venture capital firms have invested approximately $100 million into the company, per Crunchbase.
Bloomberg states that an IPO will also enable Bitmain to expand and incorporate artificial intelligence into its slate of offerings. “The challenge is advancing our technology beyond what we’ve already achieved,” Wu said. Within the crypto mining industry, at least, Bitmain has achieved a lot. It has approximately 80% share of the overall mining market. Last year, it became a pivotal player in the drama that resulted in a fork off bitcoin’s blockchain into bitcoin cash. It has also benefited from the surge in cryptocurrency prices by hiking prices of its products as bitcoin went mainstream and attracted new converts and businesses interested in mining.
As the Bloomberg article points out, other bitcoin mining firms have also filed for IPOs. Canaan Inc., another Chinese company that is Bitmain’s closest competitor, has already filed for a Hong Kong IPO. While he did not disclose a venue for the IPO, Wu indicated that he might not be averse to an overseas IPO. That decision might be a wise one. Canaan attempted an IPO in China’s mainland but faced “regulatory deadlock” and delays.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.01 bitcoin.