Bitmain Technologies, the world’s top crypto mining firm, has reportedly roped in Chinese tech giant Tencent Holdings among other big league investors for its $1 billion financing round. This round, which will precede Bitmain’s application to go public in Hong Kong, is expected to close this week.
According to a report by media outlet Asia Crypto Today, the financing round will also include the participation of Singapore-based investment firm EDBI, Abu Dhabi Investment Authority and Canadian pension funds. This new round of funding could bring the total value of the company to $15 billion, the report added.
Bitmain is reportedly planning to apply for an initial public offering (IPO) on the Hong Kong stock exchange next month and complete the listing by the end of this year. According to a Chinese media report, Bitmain is expected to be valued at more than $30 billion after it goes public.
Bitmain may rake in profit of over $2 bn in 2018
The company seems to be doing exceptionally well in the crypto mining space. Fortune’s Term Sheet on Monday reported that the company had earned $1.2 billion in net profit last year, with an approximate 50 percent net margin.
The report cited an email from a source close to the firm, which attributed the figures to a KPMG audit of the business.
The report added that the company earned a net profit of $1.1 billion in the first quarter of this year alone! Judging by these numbers, the company could earn around $2 billion-$3 billion in net profit this year.
Bitmain rival takes the IPO route
Canaan Creative, the world’s second biggest crypto mining firm and Bitmain’s smaller rival, had submitted an application in May for an IPO in Hong Kong that could raise about $1 billion, Bloomberg had reported citing people familiar with the matter.
The company, which sells bitcoin mining machines under the Avalon brand, had reportedly brought in revenue of about $204 million last year.
It is important to note that Bitmain is the biggest player in the crypto mining space. According to a report by Sanford C. Bernstein & Co in February, Bitmain controls about 80 percent of the market share for crypto mining gear.
Is Bitmain overvalued?
But there are many sceptics who believe this business may be overvalued, especially since competition is on the rise in the industry.
Mark Li, a senior analyst at Bernstein, told Bloomberg that Bitmain is likely worth less than $10 billion.
“They’ll have a premium for their valuation because there are very few stocks like Bitmain in Hong Kong. But the sustainability of the business is the question mark,” Kevin Wang, an analyst at Mizuho Securities Asia, told Bloomberg.
Overvalued or not, this IPO will definitely mark a new wave for the cryptocurrency world. Bitmain’s Co-CEO Jihan Wu, who was recently featured in Fortune’s “The Ledger 40 Under 40” list, told Fortune that the company is focused on diversifying its AI portfolio and plans to release an AI chip product later this year.
“My priority is, first, that we will continue to invest a lot of resources into the research and R&D of mining rigs to make sure we maintain an advantage over other competitors, like Avalon,” he said in an interview with Fortune.
Wu, along with co-CEO Micree Zhan, jointly own about 60 percent of the company.
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