Bitmain’s initial public offering (IPO) scheduled for this month may never have a chance to get going. Apart from recent revelations of questionable announcements, the current state of the market might have a detrimental impact on the company’s ability to launch the IPO.
The current volatility in the cryptocurrency market has been accompanied by a downward trend in the sale of crypto mining equipment. Recent analysis of Bitmain’s financial data, some of which wasn’t released to the public, revealed that the majority of its money sits in assets that it hasn’t been able to distribute. Virtually all companies, including NVidia and AMD, have seen a substantial decline in sales of chips that are used in almost all mining equipment.
Future lack of demand for the chips could cause investors to stay away from the IPO, which has been expected to attract as much as $3 billion to Bitmain. 96% of the company’s profits stem from the sale of crypto mining rigs, while only 3% comes from direct mining operations. If the market grinds to a halt, Bitmain won’t be in a position to offload its current stock to generate profits that would make the IPO valuable.
Bitmain is also seeing renewed competition in the sale of chips. According to Sanford Bernstein analyst Mark Li, a recent report shows that rivals such as Canaan Inc. and Ebang International are catching up, eating away at the market control Bitmain has enjoyed.
