As quickly as it rose to become the leading cryptocurrency mining rig manufacturer of the space, Bitmain began to experience major problems. It dumped its CEO, Jihan Wu, closed several global offices, lost important technical experts and couldn’t follow through with a planned initial product offering (IPO) – all in the same year. If it expected things to turn around in 2019, it has been greatly disappointed, as the company lost $310 million in the first three months. The China-based company hasn’t given up hope yet, though, and expects things to turn around sometime this quarter.
According to Chinese news outlet QQ, Bitmain lost $345 million in January and $280 million in February for a total loss of $625 million. March brought a little relief to the company, with Bitmain posting profits of $315 million. The losses came as the company was forced to let its 16-nanometer (nm) mining rigs go at extremely low prices.
Now, Bitmain is banking on its new 7nm rigs to turn things around. It asserts that these machines will offer a gross profit margin of about 30% after they were released on April 9. It has already placed a substantial order for 7nm chips with its major supplier, Taiwan Semiconductor Manufacturing Company, provided it can stay current with its payments.
Those rigs have a lead time of around three to four months, which means profits won’t be coming in until sometime during the third quarter. Of course, if the rigs underperform, like most of the previous releases have done, those profits will be short-lived.
Bitmain also expects to try again with its IPO. Its previous attempt, which would have been launched on the Hong Kong Stock Exchange, fizzled for a number of reasons, including concerns over allegations it had falsified its earnings data in the IPO paperwork, and is expected to introduce a second IPO in the US. It’s already behind in the race, though, as Canaan has reportedly already filed for an IPO and Bitmain is facing lawsuits from investors over its last attempt. If it moves forward, Bitmain expects to raise somewhere from $300 million to $500 million – not the $3 billion it originally sought with its Hong Kong IPO.
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