Crypto Unicorn Bitmain weighs $ 18 billion IPO, one of the largest in the world

Bitmain Technologies, Ltd. is about to become public.

According to documents obtained by CoinDesk, the cryptocurrency mining company is depositing for a potentially high initial public offering (IPO) of up to $ 18 billion in September with a market capitalization of $ 40 to $ 50 billion. It will be underwritten by China International Capital Corporation and listed on the Hong Kong Stock Exchange in the fourth quarter of 2018 or in the first quarter of 2019, among a wave of Chinese unicorns hitting public markets, including the competitors of the Canaan Creative bitcoin and Ebang Communication.

The most important cryptocurrency companies, Bitmain closed a $ 1 billion pre-IPO financing round with a valuation of $ 15 billion on July 23, almost twice the valuation of $ 8 billion of Coinbase, reported in April .

Now, the possible $ 18 billion IPO price places Bitmain to move the social giant Facebook as one of the biggest public offers in history. It is expected that SoftBank Group and Tencent Music will surpass Alibaba and Spotify for the number one and two IPOs of all time in the same fiscal period.

Tencent Holdings, Ltd., Softbank Group, China National Gold Group and a sovereign sovereign wealth fund that managed $ 15 billion in assets participated in the pre-IPO cycle. A minimum commitment of $ 5 million has been extended by July 18 and signed at Bitmain Technologies Holding Company, the Cayman Islands offshore holding group that has been linked to Chinese technology billionaire Lei Jun, founder of consumer electronics company Xiaomi , Inc.

Prior to this funding, Sequoia Capital China brought Bitmain to $ 50 million in series A and $ 400 million in series B with the help of IDG Capital in San Francisco, Coatue Management of Menlo Park, DST Global of Russia and EDBI and GIC of Singapore. The A Series accounted for 5% of the shares with a post-mortem valuation of $ 1 billion and the B series rounded the company to $ 12 billion.

The price and volume of the planned shares are not disclosed, but investment banks close to the IPO are calculating the P / E ratio to be 20 within the first year publicly listed. Financial numbers supporting this multiple indicate that Bitmain has profited $ 3.2 billion in total between 2016, 2017 and Q1 2018, with revenues of $ 2.5 billion in 2017 and $ 2 billion in Q1 2018. Bitmain expects profits for $ 2 billion by the end of the year

A diversified cryptographic strategy

Five years ago, Jihan Wu approached Micree Zhan with the aim of engineering advanced ASIC chips (Application-Specific Integrated Circuit) to extract the bitcoin more efficiently. That work established Bitmain, the market leader in the cryptocurrency mining industry. Since then the operations have expanded to alternative cryptocurrencies cash, liquidecoin, dash, siacoin and ethereum.

With the IPO, the joint holdings of the co-founders could amount to about $ 30 billion, assuming they have together kept 60% of the company, for a Bloomberg interview in January 2018.

A prospectus for investors for the IPO it shows exactly how significant the mining business of Bitmain has been. Last year, Bitmain machines accounted for 66.6% of the total extraction volume and the cryptocurrency mining pools operated by Bitmain covered 40% of the total data mining network.

When the prospectus was drafted, BTC.com, the world's largest mining pool, had over 560,000 machines extracting around 11,200 out of 36,000 total bitcoin blocks. The second largest pool of mining activities AntPool has served more than 440,000 machines for bitcoins and alternative cryptocurrencies.

In addition to revenues generated by hardware costs and pool pool expenses, Bitmain earned $ 1 billion, $ 11 billion and $ 10 billion of its 2016, 2017 and 2018 holdings of bitcoin Q1, respectively, revealed to the public for the first time here. Some funds were set aside for the support of 30 blockchain companies for a blockchain research division, which hired Blocktrail for the blockchain data analysis service as early as 2016.

It is said that investments external ones represent a wider effort to transform Bitmain into a conglomerate of cryptocurrency infrastructures, and this has seemed to be increasingly true in recent months. Since May, Bitmain has invested in the BizKey point-of-salt cryptocurrency system, has exchanged the decentralized exchange DEx.top, funded the Circle cryptocurrency payments system, added an & etan extension to the Opera web browser and has collaborated with Huawei Mobile Services on a mobile cryptocurrency application.

Bitmain is also using these technologies to build a portfolio, an exchange and exchange platform that will facilitate the bitcoin liquidity ecosystem, a spin-off of the original bitcoin cryptocurrency that the Chinese company sees as probable householder. The investor's statement states that Bitmain is "strategically developing" bitcoin liquidity by investing, investing and trading the currency and its peripheral technologies to achieve substantial returns across the board. Yesterday, Bitmain revealed an investment in tribeOS, a bitcoin advertising network.

Calculation of chips

In 2013, the progenitor of Bitmain BM1380 graphics chips used the 55-nanometer process, a mode of dimensionality of the circuit considered to be the most cutting-edge at the time. The company then mixed the 28-nanometer BM1382, BM1384 and BM1385 chips from 2014 to 2015, before moving to the 16-nanometer BM1387 chip in 2016 to keep up with the competition.

Today, it is the old generation of chip manufacturers who have struggled to catch up. Bitmain surpassed Spreadtrum Communications, a 17-year-old company, according to the largest integrated circuit manufacturer in China, according to the investor's prospect.

Huawei HiSilicon, the world leader in Chinese chips, is also slipping. [19659002Adicembre2017BitmainhaabbinatoHuaweiHiSilicona16nanometridivenditedichipmentreTaiwanSemiconductorManufacturingCompanyLtdlapiùgrandeaziendaalmondodisemiconduttoriperibenidiconsumocomeAppleInchafornitounamaggiorequantitàdichipa10nanometriperBitmainrispettoalchipequivalenteKirin970perHuaweiHiSiliconIlchipineditoda10nanometrisiunisceaunanuovaclassedichipda7nanometrie12nanometricheBitmaindistribuiràentrolafinedell'year[19659002] In half a decade, Bitmain caught the & # 39; 8% of the domestic chip design market where Huawei HISILICON took 14 years to reach 17 percent. Bitmain could approach or overcome the local stronghold of Huawei HiSilicon very early at this rate and, as the investor's prospect suggests, make a direct comparison with the US chip industry.

The Chinese market is already pushing the US market into the chip economy world, although Intel continues to lead the group.

Silicon Valley has felt the pressure. In February it was reported that Bitmain was as profitable as 24-year-old Nvidia, who had lowered his share price target along with AMD in April.

Analysts have indicated a likely decline in Nvidia and AMD chip orders due to Bitmain's upcoming mining ethereum facility. They feared that cryptocurrency miners would be less likely to buy from Nvidia and AMD. Bitmain would outperform them at a lower cost and Ethereum was the last great cryptocurrency not to be touched by its ASICs.

Aiming at the IA

Still, the US chip makers have not bothered. AMD, 32 years senior from Nvidia, has assured investors that personal computers, games and data centers will support the business, with or without cryptocurrency.

But logic applies in both directions. When almost every conceivable electronic device is powered by a graphics chip, it is also possible for Bitmain to fill the accounts outside of cryptocurrencies, and the geopolitical incentive in China is stronger than ever.

Bitmain seems to be fully aware of this fact. The investor's prospectus outlines the ambitions to enter other technology fields, partly to "cope with the Chinese government's ban on ICO, cryptocurrencies and mining activities", and partly to grow the company into a titan of supercomputing with artificial intelligence.

The internal artificial intelligence arm is expected to generate 40% of revenue over the next 5 years for this reason. Bitmain is betting that the neural network machine learning methods will increase the processing capacity in graphics chips for cryptocurrency and non-cryptanalysis applications, such as the BM1680 processor-based tensor processing board, the acceleration board for deep learning and # 39; intelligent server unit.

tests have even shown that its AI chips have accumulated over the computing power of Google's AI products.

With a team of "nearly 500 people" working on "R & D, platform architecture, algorithm development, software and hardware development," Bitmain quickly attracted new and existing research from academic institutions and technology companies to experiment with artificially intelligent software and hardware, well beyond the cryptocurrency mining tools.

At the moment, the first move is robotics: the acquisition of intelligent robotics company Luobetec and the production of the robotic pet Luo Xiaodou.

Jihan Wu image there a CoinDesk archive


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