Bitcoin mining hardware giant Bitmain Technologies is reportedly looking to resurrect plans for its initial public offering (IPO). This move comes amid a bullish recovery in the bitcoin price, rising by more than 150% since the start of 2019.
Given the increase in hash rate and mining difficulty, it appears bitcoin miners are once again enjoying significant profits hence the decision by the Chinese mining behemoth to revive its aborted IPO.
Bitmain Eyes US IPO This Time Around
According to Bloomberg, Bitmain is looking to attempt another IPO listing. Inside sources say the company will apply for a stock sale in the United States and is already liaising with experts on how to go about filing with the Securities and Exchange Commission (SEC).
There are even reports that the IPO filing could happen as early as July 2019 with sources saying the company is keen on riding the current wave of positive sentiments in the cryptocurrency market. Bitmain’s reported target from the IPO is, however, materially smaller than its previous attempt at the Hong Kong Stock Exchange (HKEX).
Though not yet official, insiders say the company is targeting total share sale in the $300 million to $500 million region. The 2018 Bitmain IPO filing with the HKEX had a $3 billion share sale target.
Bitmain’s HKEX IPO listing elapsed in March 2019, putting an end to the company’s efforts of going public. The result wasn’t surprising given the many troubles Bitmain faced in 2018.
Apart from Bitmain, Canaan Creative, another player in the mining scene also saw its IPO filing with HKEX elapsing. Like Bitmain, the company is also rumored to be pursuing a fresh IPO in the U.S. stock market.
2018: A Year to Forget for Mining Giant
On the whole, 2018 proved to be a forgettable year for Bitmain as it faced troubles on multiple fronts. Despite blazing to massive revenue earnings in 2017, the year-long bear market in 2018 coupled with some missteps by upper management meant the company likely incurred huge losses.
Most of Bitmain’s problems appear to have come about due to its decision to bet on Bitcoin Cash – a move that saw the company incur a loss of more than $500 million for Q3 2018 alone. The Bitcoin Cash civil war of late 2018 also didn’t help matters as the hash war over dominance of the Bitcoin Cash network caused further losses running into millions of dollars.
In response, the company went on a downsizing spree, firing employees of multiple departments. Bitmain also abandoned expansion plans, shutting down proposed mega mining projects in places like Texas.
Bitmain also lost its dominance of the bitcoin mining arena thus making the venture a lot more decentralized. At the height of its dominance, Bitmain almost controlled 51% of the network hash rate leading to fears of possible mining centralization.
Good Times Rolling in for Miners Again
The timing of Bitmain’s reported attempts to revive its IPO coincides with a period of positive price action for bitcoin and cryptocurrencies in general. Bitcoin is up more than 150 percent since the start of the year with most of the growth occurring with the last 82 days
The top-ranked cryptocurrency looks set to reach $10,000 – a price level last seen early March 2019. Tom Lee, Senior Market Analyst at Fundstrat believes that a move above $10,000 for BTC will cause full-blown hype that will drive the price to reach as high as $40,000 which would be a new all-time high for BTC.
With this positive price trend, it is inconceivable to think that miners are once again operating in the green after a bleak period at the latter part of 2018. Last November, when BTC began to tumble below $6k, there were fears of a mining death spiral as several nodes went offline causing the hash rate to plummet significantly.
Presently, the hash rate is at an all-time high with difficulty soon to follow. The network is at its most secure with more mining nodes looking to earn block rewards for validating transactions.