According to Fortune the world’s largest cryptocurrency mining company, recently revealed plans to conduct an initial public offering in Hong Kong, or in an overseas market with U.S. dollar-denominated shares. The IPO would give early investors, including Sequoia Capital and IDG Capital, an opportunity to cash out.
Term Sheet has obtained an email from a source close to the company, which includes some of Bitmain’s latest financials ahead of its planned IPO.
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Bitmain Could Earn $3 Billion Profit in 2018
Based on a KPMG audit, Bitmain reportedly earned a 50 percent net margin in 2017. The company is projected to make anywhere between $2billion to $3 billion in profit.
The Bitcoin mining behemoth is also mulling the possibility of an IPO. Recently, company CEO, Jihan Wu, spoke about the company’s plans to conduct an ICO in Hong Kong. If the plan does go through, the company would be following in the footsteps of Canaan Creative, another Bitcoin mining firm.
One of the major driving forces for the IPO plan is to desire to provide an opportunity for company investors such as IDG Capital and Sequoia Capital to recoup their investments. Bitmain finished its latest funding round in June 2018, raising about $400 million which increased the company’s valuation to $12.
Bitmain is raising further cash in addition to a $400M round reported in early June. The new funding would value Bitmain at approximately $14 billion, implying a 10 to 11x earnings multiple, according to the email. This is a 16.6% increase from the company’s most recently reported $12 billion valuation.
The email cites a KPMG audit of the business and reports that Bitmain produced $1.2 billion in net profit and an approximately 50% net margin in 2017.
— Bitmain reportedly brought in $1.1 billion in net profit just in the first quarter of 2018. According to the email, a conservative estimate of what the company could earn in net profit for the full year hovers at approximately $2 to $3 billion.
— The email also says that “Bitmain plans to file for an IPO very soon.”
Bitcoin Mining Monopoly
In June 2018, reports began to emerge of Bitmain reaching 51 percent control of the Bitcoin mining hashrate. At the time of writing this article, the company controls 31.7 percent over the last 24 hours. However, despite the decline, the company still controls a significant part of the entire network hashrate. The company recently opened a new 20,000 sq. foot office in Silicon Valley.
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