Bitmain, Bitcoin (BTC) Mining Rigs Manufacturer, Reported Losses In Q2 2018

The Chinese Bitcoin (BTC) mining equipment manufacturer Bitmain introduced an Initial Public Offering (IPO) application on the Hong Kong stock exchange, in which it confirms losses of $395 million in the second quarter of 2018, after almost surpassing its net profit for the whole of 2017 in Q1.

In the application for the IPO, Bitmain reveals its business figures until the second quarter of 2018

After doubling its sales in 2016 compared with 2015, and almost multiplying them by 10 in 2017, the Chinese manufacturer obtained more revenue in the first half of 2018 than in the whole of 2017, as shown.

The losses are attributed to the drop in the price of Bitcoin (BTC) in 2018, about 67%, from its January 2018 peak of $19,608, to its current value of around $6,500. This notorious decrease affects the profitability of Bitcoin (BTC) mining, although it is known that miners, in general, do not stop investing in better equipment.

Bitmain was already preparing its IPO, with some incidents such as leaked documents about its assets in cryptocurrencies, or support publications from other companies that were later rejected, although it finally formalized the IPO request this Wednesday.

The drop in Bitcoin (BTC) price affected Bitmain revenues in Q2 2018

The sharp rise in the price of Bitcoin (BTC) in 2017, which led to an increase in Bitmain sales at the beginning of this year, also led to the rise in the price of Bitcoin (BTC) mining equipment as demand exceeded supply. In the second quarter of 2018, that dynamic is reversed, as Bitmain had acquired a large inventory of ASIC chips and components to increase production and much of the equipment was not sold.

Bitmain confirms the decline in prices in 2018, comparing the average price of its equipment sold in the first half of 2017 with the average price in 2018, from $1,191 to $972. The cause of the decline, Bitmain says, is the decline in the expected return per unit of one mined Bitcoin (BTC).

As for its cryptocurrencies holdings, the Bitmain IPO filing does not specify the amounts for cryptos the Bitcoin (BTC) mining equipment manufacturer has, but it points out that it fell from $1.172.4 million in T1 to $886.9 million in T2, possibly linked to the decline in the price of BCH in that period.

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About the Author: Anna Galvez

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