Cryptocurrency mining company Bitmain has officially filed its initial public offering (IPO) with the Hong Kong Stock Exchange. The IPO was submitted last Wednesday in its draft form, meaning that it still has to face hearings by the exchange. Since many of the details in the application are redacted, it is still unknown what the firm’s value will be when, and if, the IPO is accepted.
According to the grossly redacted IPO application (in pdf), Bitmain earned over $2.51 billion in revenue in 2017, up from the $277,612 reported a year earlier. After adjusting for expenses and costs, the company’s net profits were $113.5 million in 2016 and $952.5 million last year. It also reported a net profit of $952.1 million in the second quarter of 2018, according to the filing.
Bitmain has been embroiled in a fair amount of controversy over the past few months, the majority of which stems from apparently false assertions by the company. In a funding round this past summer, the company said that it had received funding from Japanese banking giant Softbank and China’s Tencent, both of which were found to be false. Additionally, it has repeatedly discussed its strong financial position in public, but released internal documents painted a different, much bleaker financial position.
Those concerns have led many to question the credibility of the company, especially as it has been preparing to go public. There have also been concerns raised about support by Bitmain, and its co-founder, Jihan Wu, of changes to Bitcoin BCH mining protocols. Specifically, the introduction of the canonical transaction ordering rule (CTOR), which was created by Bitcoin ABC and backed by Bitmain, could result in a complete network alteration.
Bitmain has sided rigorously and publicly with Bitcoin ABC on the topic, which is forcing the network to accept what the developers want, and not what the community wants. However, as Bitmain says in its IPO, the members of the mining community need to support the idea for it to be accepted. It’s another example of Bitmain’s sneaky and misleading tactics—offering one story in public and then hiding behind a façade to force their internal objectives.
The IPO seems to indicate strong support for the Nakamoto consensus and the ability for miners to decide the direction in which the blockchain heads. However, this is precisely the opposite of the position stated openly over the past couple of months.
There also seems to be an indication that the amount of hash controlled by Bitmain isn’t as significant as the company would like everyone to believe, and that it may not even be owned by Bitmain. This could lead to mining operators jumping over to other mining code implementations, such as Bitcoin SV, to escape the mindless and reckless off-chain networking that Bitmain has supported. Along those same lines, since the IPO provides the idea that Bitmain doesn’t control a significant amount of hash, the current Bitcoin BCH “hash war” that some pundits suggest could lead to a new split might be nothing more than a bluff—Bitmain doesn’t have the resources to back up its fight.
The IPO could do more harm than good for a company that is already reeling from a series of setbacks. It hasn’t been able to produce quality products that can compete against other miners on the market and the majority of its “cash” is tied up in inventory that sits in a warehouse unsold. While many IPOs are joyous events, this feels like a desperate gasp.
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