Is Bitmain Circling the Drain?

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For a long time now, Bitmain has been the king of the crypto mining world – the envy of all other miners. However, it appears as if the mining giant has fallen on tough times and could be circling the drain. The anti-crypto sentiment in China isn’t helping the mining firm either. Earlier in the year it commanded almost half of the Bitcoin network hash rate, and today Bitmain is down to a meager 32%. This figure is slowly decreasing with every passing week, a sign that the mining giant simply can’t afford to keep up. Younger, cheaper and more agile competitors – such as Bitewei – are popping up and their tech appears to be much better. This is leading sales of Bitmain’s equipment to tumble, therefore R&D budgets are getting slashed for the next generation of ASIC mining chips.

IPO in Danger

Bitmain has long been rumored to be launching an IPO in Hong Kong, but in order to do so, it needs to reveal its financial report for the year so far. Several months ago, Bitmain sold off a lot of its Bitcoin holdings into Bitcoin Cash, a process that cost it an estimated $500 million in losses. In addition to this, its earnings report is expected to be rather gloomy, given the fact that its entire business model revolves around the value of Bitcoin – or Bitcoin Cash – increasing in value. As the price has tanked this year, so too has the value of its crypto holdings and sales of its mining rigs. This uncertainty and reduction in earnings, along with its recent run of bad luck, will likely scare away sensible investors. If its IPO does go ahead, there is a very good chance it will be undersubscribed and will leave it no choice other than to call it a day.

Tough Times for Crypto Miners

Crypto miners are having a tough time lately, the increasing difficulty level and decreasing value of Bitcoin has led a number of mining firms to shut up shop due to unprofitability. HashFlare has been one of the most prominent crypto mining ventures to shut its operations, but Bitmain could be about to take that accolade. The increase in mining difficulty is due to more miners finally receiving their rigs following orders placed during the crypto price boom in December 2017. There is around a six to eight-month delay between orders placed and the delivery of rigs. Usually difficulty and price rise fall together, but crypto mayhem from last year has impacted this metric and crippled miners.

Hut 8 Steaming Away

It’s not all doom and gloom in the crypto mining world. Hut 8 is happily mining away over in Canada thanks to its low-cost energy deals and technology partnership with Bitfury. Hut 8 has already launched an IPO which was successful and actually oversubscribed. In an exclusive interview with BitStarz News, Andrew Kiguel – Hut 8 CEO – said, “our first fundraiser at Hut 8 was $38 million CAD, but attracted close to $1 billion of interest from around the world just for that round.” This highlights the importance of a strong product combined with a great team.
Time might be up for Bitmain, and more big names are beginning to jump ship. While the network hash rate will take a fair hit when the Bitmain bubble bursts, it will help to realign the network hash rate with the price of Bitcoin. All things considered, this should make mining more profitable and simpler for all the remaining miners.