Chinese bitcoin mining company may have made as much money as Nvidia last year

[alyssa85]

https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html

Based on conservative estimates of gross margin of 75 percent and operating margin of 65 percent, Bernstein analysts calculate that Beijing-based Bitmain made $3 billion to $4 billion in operating profits in 2017.

In contrast, Nvidia's operation profit was $3 billion during the same period, according to Bernstein's U.S. semiconductor team estimates.

Bernstein's analysis also indicated that "Bitmain shrewdly adjusts the prices of miners according to bitcoin prices."

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[stompix]

The analysts estimate that most of Bitmain's revenue was generated by selling miners powered by the company's chips. "The rest was largely generated by mining itself and, to a much lesser extent, by collecting management fees from the mining pools it operates and renting out the mining power of its mining farms through cloud services."

Bitcoin hashrate is around 22 000 Petahashes  or 22 000 000 Terahash.
The S9 is making 14 Ths.

That would mean the entire network is around 1.5 million S9 mining or equivalent.
Last batch was 1450$, before they doubled their price but that happen too late in December.
So, saying that all the miners mining now were produced by Bitmain and all of them in this last year alone, AND all of them sold, they would still have made only 2.2 billions in sale (not profit).

Even with a gross margin percent of 75%, that still fall way behind the prediction.

But I doubt the model.
I'm pretty sure that most of their profits come from actual mining rather than selling miners.
They are known for doing stuff like that.

What I find far more scary is how much they might have made in profits just by "hodling" their coins.

[dothebeats]

Bernstein's analysis also indicated that "Bitmain shrewdly adjusts the prices of miners according to bitcoin prices."

Wouldn't be surprised since the last batch shipped was almost half of what the current price is. That's actually a smart yet tricky approach considering that they're the only ASIC manufacturer all over the globe currently, with Samsung joining late in the game. It would be interesting to know the figures once Samsung started shipping out their first batch of hardware and how will it pan out for the miners in terms of pricing.

I'm pretty sure that most of their profits come from actual mining rather than selling miners.
They are known for doing stuff like that.

Most spikes in the difficulty are attributed to these mining manufacturers "stress-testing" their hardware first before shipping it out. Surely they also got some profit on that aside from selling the machines as is. If I have such a company,  there'd be no doubt that I'd be using my machines first to get some little coins before sending it out to those who ordered.

What I find far more scary is how much they might have made in profits just by "hodling" their coins.

That's not scary at all. If that is how their business model works then it's a win-win situation for them. Many players in the bitcoin game have also profited off of holding their coins since it's a no-brainer, and for a company with close ties on majority of the Chinese whales, they could use that insider information to maximize profit.

[jseverson]

Ridiculous. If anyone has been wondering how shady actors are spamming the Bitcoin network despite the large amounts of money involved, this may help shed a light on the answer. Hi Jihan Wu!

It also kind of shows why companies that add blockchain related terms to their name get a surge in stock prices. Everyone wants to ride the wave.

[Pursuer]

I'm pretty sure that most of their profits come from actual mining rather than selling miners.
They are known for doing stuff like that.

good job on the numbers, it was interesting.
I also believe they made most of their profit from actual mining, and let us not forget how they created free money for themselves out of thin air when they went ahead and single handedly forked bitcoin and created their own coin to mine called bitcoin cash.
additionally by gaming the Emergency Difficulty Adjustment of BCH they made a lot more money than normally would have been possible.

[stompix]

That's not scary at all. If that is how their business model works then it's a win-win situation for them. Many players in the bitcoin game have also profited off of holding their coins since it's a no-brainer, and for a company with close ties on majority of the Chinese whales, they could use that insider information to maximize profit.

Yeah, it is scary because their business model would not have been tolerated if the names would have been Samsung or Sony.
There is a thread about companies that are scary, and everybody talks about Google and Facebook but those pale in comparison. None have come even close to what bitmain has done, from selling used miners, taking you money and delivering it 6 months late, spamming the chain and at the same time cashing on fees, attacking the coin and pumping their altcoin.

How would you feel if Toyota would require you to pay in yen even tough you live in the the EU?
Or selling you a used car they have used for taxi at the price of a new one and at the same time monopolizing the taxi business in your town and charging you while you sit in a cab blocked in traffic by their own employees.

[jseverson]

That's not scary at all. If that is how their business model works then it's a win-win situation for them. Many players in the bitcoin game have also profited off of holding their coins since it's a no-brainer, and for a company with close ties on majority of the Chinese whales, they could use that insider information to maximize profit.

Yeah, it is scary because their business model would not have been tolerated if the names would have been Samsung or Sony.
There is a thread about companies that are scary, and everybody talks about Google and Facebook but those pale in comparison. None have come even close to what bitmain has done, from selling used miners, taking you money and delivering it 6 months late, spamming the chain and at the same time cashing on fees, attacking the coin and pumping their altcoin.

How would you feel if Toyota would require you to pay in yen even tough you live in the the EU?
Or selling you a used car they have used for taxi at the price of a new one and at the same time monopolizing the taxi business in your town and charging you while you sit in a cab blocked in traffic by their own employees.

Well I'd say Google and Facebook are still scarier, but only because they operate on a much larger scale. If we go by per capita though, I do agree that Bitmain can do much more damage.

It makes me wonder though, how are they getting away with these? I know Chinese regulators are pretty lax when it comes to copyright stuff, but do they also turn a blind eye to shady selling practices?

[squatter]

What I find far more scary is how much they might have made in profits just by "hodling" their coins.

That's not scary at all. If that is how their business model works then it's a win-win situation for them. Many players in the bitcoin game have also profited off of holding their coins since it's a no-brainer, and for a company with close ties on majority of the Chinese whales, they could use that insider information to maximize profit.

Yeah, it is scary because their business model would not have been tolerated if the names would have been Samsung or Sony.
There is a thread about companies that are scary, and everybody talks about Google and Facebook but those pale in comparison. None have come even close to what bitmain has done, from selling used miners, taking you money and delivering it 6 months late, spamming the chain and at the same time cashing on fees, attacking the coin and pumping their altcoin.

But you said it was scary how much they profit from "hodling." It shouldn't be. It's rational for miners to withhold coins from the market -- that's about the only thing that doesn't bother me about Bitmain.

Mining chip manufacturers have always been shady; Bitmain beat out the competition by engaging in the same pre-sale shenanigans as everyone else but offering better production timelines and prices. Regarding their shady practices -- we should be glad that companies like Samsung are now Bitmain's competitors. Let the market sort it out.

[stompix]

What I find far more scary is how much they might have made in profits just by "hodling" their coins.

That's not scary at all. If that is how their business model works then it's a win-win situation for them. Many players in the bitcoin game have also profited off of holding their coins since it's a no-brainer, and for a company with close ties on majority of the Chinese whales, they could use that insider information to maximize profit.

Yeah, it is scary because their business model would not have been tolerated if the names would have been Samsung or Sony.
There is a thread about companies that are scary, and everybody talks about Google and Facebook but those pale in comparison. None have come even close to what bitmain has done, from selling used miners, taking you money and delivering it 6 months late, spamming the chain and at the same time cashing on fees, attacking the coin and pumping their altcoin.

But you said it was scary how much they profit from "hodling." It shouldn't be. It's rational for miners to withhold coins from the market -- that's about the only thing that doesn't bother me about Bitmain.

Mining chip manufacturers have always been shady; Bitmain beat out the competition by engaging in the same pre-sale shenanigans as everyone else but offering better production timelines and prices. Regarding their shady practices -- we should be glad that companies like Samsung are now Bitmain's competitors. Let the market sort it out.

Oh, I see now, it was my fault for a bad choice of words, and I owe dothebeats one apology also in this case

What I was trying to point out was that not only have they made a fortune but with the price increase they in term of $ have already multiplied their already stinky profits by a magnitude of ten, giving them such advantage that probably to few are now able to compete with them.
It's one thing to know bitmain has 30 millions at its disposal and another one 300 millions.

And since they are known for their shady practices I wonder how they are going to use a part of those....

[bigdude]

With crypto mining some hardware company earned huge profit than ever. And their middle man too.
That bring problem to other such as film makers and designers etc who needed strong graphic cards have to pay much more than it gpu normal value.
And with price of crypto market in Dec all miners and mining company especialy Bitmain made huge money too

[eaLiTy]

Yeah, it is scary because their business model would not have been tolerated if the names would have been Samsung or Sony.
There is a thread about companies that are scary, and everybody talks about Google and Facebook but those pale in comparison. None have come even close to what bitmain has done, from selling used miners, taking you money and delivering it 6 months late, spamming the chain and at the same time cashing on fees, attacking the coin and pumping their altcoin.

These sort of shit happens when you are the monopoly and there is no other competitor in front of you and mostly when major chip manufacturing companies ignore innovation and new business structure and look elsewhere .Bitmain took advantage of all these things and made a run and made some fortune which can be compared to major corporates ,despite all that ,this is just a speculative analyses about how much profit they have made till now as you cannot compare to the current hash rate as they had many versions of hardware and taking the burned out ones into account it is hard to come up with any estimates,but one thing is sure that they had made a lot of money with it.

[mk4]

"you can mine for gold or you can sell pickaxes."

Assuming that Bitmain actually made most of their profit from selling the S9 mining hardware and not from mining bitcoin itself, then this is a good example for that quote.

[tomahawk9]

Regarding their shady practices -- we should be glad that companies like Samsung are now Bitmain's competitors. Let the market sort it out.

I don't think Samsung is going to be Bitmain's competitors since the korean company will not release a miner using their own brand. I read the news about Samsung developing ASIC/mining chips but, it's possible that they're not going to sell them to the public since they're just fabricating the chips for a "chinese company" that will supply the chips to meet demand (the name of the company wasn't disclosed).

So, either there's another chinese company (not Bitmain) getting ready to sell mining equipment, or the dominance from Jihan and his mining cartel will keep growing, as well as their revenue.