Business 19 February 2019

Erik Gibbs

Bitmain continues to post revenue losses

Cryptocurrency mining equipment manufacturer Bitmain is still grasping to hope that it will be able to pull off its initial public offering (IPO). On top of the Hong Kong Stock Exchange (HKSE) already asserting that Bitmain might not have a sustainable business model, the company recently reported its third-quarter profits and they don’t paint a bright picture. According to a filing with the HKSE, Bitmain lost around $500 million during the quarter.

The filing, which didn’t break down the revenue by quarter, shows that Bitmain earned about $500 million over the first nine months of 2018 against revenues of a little more than $3 billion. Previously, though, the company indicated that it had gross profit for the first half of the year of $1 billion. Subtract that from the $5 million in profits over the first nine months and the remainder is about $500 million for the third quarter.

Bitmain also started last year that it had revenues of $2.8 billion for the first half. If the $3-billion figure is accurate for the nine-month period, the revenue for the third quarter would be around $200 million. The numbers are only relative, as the company is not required to provide full-year results at this time per HKSE rules.

Bitmain has seen a steady and quick fall from the perch upon which it sat at the beginning of last year. After rapidly expanding to open new offices throughout the world, it began closing them just as quickly. Over the past couple of months, it has been forced to shutter its offices in Israel and Amsterdam, and to significantly cut back the workforce of its data center in Rockdale, Texas.

In spite of having ousted company co-founder Jihan Wu as its CEO, Bitmain has remained confident that it can move forward with the IPO. For that to happen, the HKEX would have to give its approval on or before March 26. This is becoming less of a possibility as the company certainly doesn’t seem to have a sustainable business model.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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