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Bitmain Lost $395 Million Last Quarter!

#Bitcoin mining #behemoth #Bitmain likely posted a net loss of nearly $400 million last quarter, the #China-based firm’s recently-filed public offering #documents reveal.

Two days ago #Bitmain had filed offering #documents with the Stock Exchange of Hong Kong (HKEX), ahead of the long-awaited #initial #public #offering (IPO) that promises to be the largest in the cryptocurrency industry’s #history.

Much #information about the company is redacted in the public versions of those filing #documents, but, according to a thorough #analysis published by #BitMEX Research, there is enough data to glean that #Bitmain likely had a historically-abysmal quarter.

bitmain profit loss chart
Source: BitMEX Research

Per the filing, #Bitmain turned a $742 million net profit during the first half of 2018, extending a #rampage that saw the firm rake in $1.2 billion in 2017. What those figures mask, however, is that — according to a leaked #investor deck — the firm posted a net profit of $1.1 billion in Q1 alone. Consequently, #Bitmain would have had to have posted a net loss of $395 million in Q2 to reduce its six-month returns to $742 million — assuming the leaked #investor deck is genuine, that is.

Bitmain appears to allude to these poor quarterly #results in the filing, stating that the firm had placed large orders during the early part of the year, anticipating that cryptocurrency #prices would continue to #increase, along with demand for mining rigs.

“In early 2018, we anticipated strong #market #growth for cryptocurrency mining hardware in 2018 due to the upward trend of #cryptocurrencies price since the fourth quarter of 2017, and we placed a large amount of orders with our production #partners in response to the anticipated significant sales growth. However, there had been significant market #volatility in the market price of #cryptocurrencies in the first half of 2018.”

This poor #performance would explain why Bitmain conducted two funding rounds in quick succession over the summer, raising $442 #million in August after raising $293 million just two months prior in June. Those funding rounds enabled #Bitmain to significantly increase the amount of cash on its balance sheet, which had reportedly taken a #multi-hundred million dollar hit due to the large #amount of #bitcoin #cash that the BCH-promoting firm is holding in reserve.

Despite these setbacks, #BitMEX Research alleges that Bitmain remains in a strong position relative to its competitors, several of whom have in recent days unveiled a new generation of miners. While #Bitmain has not announced the follow-up to its #wildly-successful #Antminer S9, CEO Jihan Wu has said that the firm has developed a new #ASIC #chip that should allow its bitcoin mining hardware to at least remain competitive with upstart #mining #rig #producers, none of whom are as #flush with cash as #Bitmain.

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