Cryptocurrency mining firm Bitmain, reportedly one of the largest in the world, has issues. This has been supported by a number of publications recently that have called into question its financial stability—which, apparently, virtually doesn’t exist—and certain public statements regarding backing by major companies that also didn’t exist. As the company has been supposedly preparing for a September initial public offering (IPO), many expect Bitmain’s second-quarter financial report to be a huge disappointment and are now wondering if the IPO is simply an attempt to create an exit scam.
A Twitter user recently posted, “BREAKING: Rumors – recent investors threatening to sue Bitmain for misrepresenting financial info & MATERIAL OMISSION. Warrantors in the Agreement defined as Jihan Wu and Ketuan Zhan. Also Liable – Group Companies: Bitmain Technology, Blocktrail, Hashnest, Tospring (to name few).”
It’s no secret that Bitmain’s founder, Jihan Wu, had traded a serious amount of Bitcoin Core (BTC) for Bitcoin BCH. Some estimates put the amount as high as half a billion dollars. That level of movement is the type of financial decision that should cause alarms to go off. It is possibly also the reason that the markets crashed at the beginning of the year, as Wu was apparently playing around with industry.
Bitmain reportedly has most of its cash tied up in assets that it can’t move. As Bloomberg reports, a mining company out of North Carolina, MGT Capital Investments Inc., owned or operated somewhere around 6,800 Antminer S9 rigs three months ago, but posted a loss of $6.5 million for the second quarter against revenue of only $409,000. With that type of upside down finances, Bitmain cannot be in a good position to move more equipment.
The sum of all the troubles doesn’t equal a bright future for the company. Add to the equation that Bitmain has never publicly refuted any of the claims and a very bleak picture emerges for Bitmain’s future.
That dim future makes a recent announcement much more puzzling. On its Facebook page, Bitmain announced that it had signed a sponsorship deal that makes its AntPool subsidiary an “official partner” of the NBA’s Houston Rockets. While many financial experts indicate that the company is running out of money—based on internal documents that have been released—the move begs the question, how is a sponsorship probably worth millions even possible?
As Calvin Ayre so aptly put it, “In light of all their problems…this is just stupid.”
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