On Tuesday, March 26, 2019, Bitmain’s IPO application on the Hong Kong Stock Exchange expired. The Chinese bitcoin mining giant filed an application on September 26, 2018, and the Hong Kong Stock Exchange had six months to review. The inaction of the exchange means that the order has been canceled. In his blog, Bitmain writes:
We understand that, despite the huge potential of the cryptocurrency industry and the blockchain, it remains a relatively young industry that proves its value. We hope that regulators, the media and the general public will be able to participate more actively in this young industry. In the future, we will resume listing on the Hong Kong Stock Exchange.
Further, Bitmain says that the IPO preparation process “made the company more transparent and standardized”. At least, the preparation showed the financial condition of the company, which, however, could be the very reason why the IPO did not advance further than the application.
According to published information, despite a profit of $ 700 million in 2017, Bitmain lost $ 400 million in the second quarter of 2018 and about $ 500 million in the third quarter of 2018 (thus, the company not only lost all profits for 2017, but and suffered serious losses). Antminer S9, Bitmain's ASIC miner, which sold for $ 5,000 on ATH, now sells for only $ 220.
The fall in prices on the crypto market, and the company's decision to accumulate reserves in Bitcoin Cash (BCH) are the main causes of losses. In March 2018, Bitmain kept more than 1 million BCH and actively sold bitcoin in favor of forcoin. This information became public in August 2018, when BCH was trading for about $ 550, but after the fork of Bitcoin SV it now costs about $ 160. Thus, the assets that used to cost $ 550 million now cost about $ 160 million.
Nevertheless, in its press release, Bitmain remains optimistic. The company notes that, along with greater transparency, it has also improved its mining equipment. The company also announced a change of management - now the company is headed by Haychao Wang, who previously led several departments in Bitmain. The co-founders Cihan Wu and Mikri Zhang will remain on the board of directors and will be responsible for the strategic development of Bitmain.
As Bitmain’s dominance in the market decreased, competitors had a chance to catch up. For example, Ebang, a Chinese competitor to Bitmain, plans to produce 400,000 ASIC miners in 2019.