The leading manufacturer of mining equipment, Bitmain, recently applied for an IPO – an initial public offering. The 438-page document , laid out by the company this week, details the company's business with historical data since 2015.
It is worth noting that in 2017, the miner received $ 2.5 billion in revenue and $ 2 billion in the first quarter of 2018. In an application for an IPO, the company's business looks even more impressive. Both profits and costs are large-scale. The report shows how much the company invests and how unpredictable the results of deposits are due to the volatility of the crypto currency.
The dominance of Bitmain is well known – the miner occupies 75% of the market, according to the document. The financial balance shows how profitable it is to be such a leader in the field. In 2015, sales amounted to $ 137.3 million, and by 2017 they increased by 328%, to $ 2.5 billion. The results for the first half of 2018 have already surpassed the results of the previous period.
Profit after taxes and fees has also increased – from $ 48.6 million in 2015 to $ 952.6 million in 2017, 280% growth annually. The profits until June 2018 are approximately equal to the results of the previous year.
For comparison, Nvidia earned $ 3 billion with a total revenue of $ 9.7 billion for 2017. Intel received $ 9.6 billion from revenue of $ 62.8 billion.
The company's report also details the sources of Bitmain's profits. The bulk of the money comes from sales of mining equipment, namely ASIC. In many markets, the production of the techno-giant replaced the GPU. The share of profits from this direction in the overall structure of income also changed – from 79% in 2015 to 94% in the first half of 2018. That is, Bitmain is even more focused on hardware.
Profits from other sources include income from mining, maintenance of farms and pools. As a percentage, incomes decreased, and in absolute terms – also increased compared to 2015. This reduction in the shares of various sources can raise questions about whether the company is worsening its diversification. Diversification is important, because with its help, the company can survive the turmoil in the market more stable.
On the other hand, Bitmain's mining equipment now includes not only Bitcoin and Bitcoin Cash ASIC, but also other hardware options. Diversification mainly occurs in the field of "iron".
"We focused on the development of mining equipment with various algorithms related not only to MTC and VSN, but also to Ether, Litecoin, Dash, Zcash. We are one of the few manufacturers offering mining solutions for various crypto-currencies. "
At the same time, the report shows: revenue is growing at a significant pace, and profit growth does not keep pace with it. This may mean that the company either re-invests in the business, or incurs higher costs. In fact, Bitmain does both. Significantly increased costs for materials and production, which the company wrote in its report. In 2015, the costs were $ 93.7 million, in 2018 – $ 1.5 billion.
In 2017 and 2018 the company suffered significant losses, about a quarter of a billion. In the report, this is described as "costs for improper inventory and prepayments to suppliers". The costs are associated with the unpredictability of prices of crypto-currencies: "The fluctuations of certain crypto-currencies have caused some types of equipment to be sold at a price lower than the costs of their production."
By the end of June 2018, Bitmain held $ 886.9 million in BTC, BCH, ETH, LTC, Dash and other currencies – twice as much as in Fiat. Although crypto assets account for 28% of the company's total assets.
It is noticeable that the Bitmain Miner is almost entirely dependent on the crypto-currency market and the behavior of consumers on it. To maintain billions of profits, he will have to make more efforts in the years to come.
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