Mining Giant Bitmain Posts $500 Million Loss in IPO Financial Filing

[mich]

Mining Giant Bitmain Posts $500 Million Loss in IPO Financial Filing

https://www.coindesk.com/mining-giant-bitmain-posts-500-million-loss-in-ipo-financial-filing

Mining hardware giant Bitmain lost about $500 million in the third quarter of 2018 amid an overall bearish market for cryptocurrency, CoinDesk has learned.

The Beijing-based company recently provided an update on its financial results to the Hong Kong Stock Exchange (HKEx), which is reviewing Bitmain’s application for an initial public offering (IPO) first filed in September.

The update showed Bitmain earned around $500 million in the first nine months of last year, on slightly over $3 billion of revenues, according to a source familiar with the situation. The filing, which is not public, does not break down the results by quarter.

However, Bitmain previously disclosed it had grossed profits of $1 billion in the first half of 2018. Subtracting that from a $500 million profit for the first nine months leaves it with a net loss of roughly $500 million for the third quarter.

The company had also previously reported $2.8 billion of revenues for the first half, so the $3 billion figure for the first nine months works out to third-quarter revenues of just about $200 million.

(Bitmain only needs to provide the nine-month figures at this stage under HKEx rules, which say that listing applicants can be no more than six months behind on reporting.)

These are the first precise figures to show the company’s reversal of fortune following the significant growth in revenues and profits over the past several years documented in the IPO application filed in late September.

Bitmain declined to comment for this article, citing its pending IPO application.

However, Bitmain had already signaled it had fallen on harder times with layoffs and office closures around the world beginning at the end of the last year that affected almost every unit of the company. Its main businesses are manufacturing mining equipment and operating mining farms and pools – activities that have broadly suffered from the slump in crypto prices.

Hit to portfolio

Further, the update provided to HKEx showed Bitmain’s crypto holdings dropped in value from more than $800 million as of June 30 to less than $700 million at the end of the third quarter, the source said. This decline of more than $100 million over three months reflected the overall drop in market prices over that period.

The company’s IPO application, filed in late September, indicated that Bitmain mainly held bitcoin, bitcoin cash, ethereum, litecoin and dash, although it did not provide a breakdown of how much it held of each asset.

Since Sept. 30, all of the cryptos mentioned in that filing declined by more than 50 percent, according to CoinMarketCap.

In particular, the price of bitcoin cash, which forked off the original bitcoin network in 2017 with Bitmain’s support, declined by over 70 percent.

The nine-month financial update will not be revealed to the public unless Bitmain can proceed to a listing hearing with approvals from the HKEx before the six-month window closes on Mar. 26, the source said.

And it remains an open question whether that will happen, since, as previously reported, the HKEx is hesitant to approve applications from cryptocurrency mining equipment makers due to uncertainties about the sustainability of their profits.

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[romero121]

Loss is true, because the market of each and every cryptocurrency got affected with the bear market. Bitmain being the giant in the mining equipments production they also might have faced with the problem. Once the market turned bearish the demand for mining dropped big and the same might have reflected in their business revenue apart from the revenue they made through the market capitalization and IPO. As they are the sole supporters of bitcoin cash hard fork the market fall would've affected the revenue large scale.

[pooya87]

well keeping a dying shitcoin (ie. bcash) takes a lot of money. they need to throw man power, hashing power, money at exchanges for pumping purposes,... and it may not look it but all of these things cost a lot of money. and they have been doing it for over a year now and with bitcoin price declining their main source of revenue has also been decreasing so they didn't have as much money to cover those costs.

[Steamtyme]

Maybe I'm reading this wrong but it appears to be a bit misleading.

At the end of the 9 months are they not still ahead by 500 Million. So while it was a loss of 500 in that quarter they are still posting a profit up to that point. Something else to note about these numbers is, they were pushing a lot of R&D costs at the time. This can be seen with the launch and delivery of the S15 and T15 models that have been shipped out and delivered.

They have also recently announced the next chip design for their S17 and T17 models. These initial up front costs will hurt the bottom line everytime. All of this coupled with this

well keeping a dying shitcoin (ie. bcash) takes a lot of money.

Makes sense why they would have had a couple rough quarters.

[miningd]

I heard their IPO application was canceled, are they still doing this?

[darklus123]

I don't know if I should be happy about the news or not lol. It is because I am actually thinking that if the bearish market will continue then it will cause more damages to bitmain that they have to cure every single day. Then they will start to shutdown by that said this can be a great opportunity to small time miners as they might be able to step in to the holes that the bitmain are currently facing

[dothebeats]

I heard their IPO application was canceled, are they still doing this?

No news or official statements were released from Bitmain itself, so [/i]I think[/i] they might proceed with the IPO still even with the 'bad luck' they've faced on 2018.

Maybe I'm reading this wrong but it appears to be a bit misleading.

At the end of the 9 months are they not still ahead by 500 Million. So while it was a loss of 500 in that quarter they are still posting a profit up to that point. Something else to note about these numbers is, they were pushing a lot of R&D costs at the time. This can be seen with the launch and delivery of the S15 and T15 models that have been shipped out and delivered.

They have also recently announced the next chip design for their S17 and T17 models. These initial up front costs will hurt the bottom line everytime. All of this coupled with this

R&D really takes a huge price off of a company's profit, though once complete and applied on next products with improved capabilities and specifications, it pays off big time. This is true on every company on the tech industry and not just Bitmain, so I guess their newer line of miners are the reason for a huge chunk of losses on 2018, but see this getting turned around once the first batches are shipped.

[RamBahadur.Gurung]

well keeping a dying shitcoin (ie. bcash) takes a lot of money. they need to throw man power, hashing power, money at exchanges for pumping purposes,... and it may not look it but all of these things cost a lot of money. and they have been doing it for over a year now and with bitcoin price declining their main source of revenue has also been decreasing so they didn't have as much money to cover those costs.

Too early to blame everything on BCH. That coin is getting so insignificant nowadays..

[Steamtyme]

R&D really takes a huge price off of a company's profit, though once complete and applied on next products with improved capabilities and specifications, it pays off big time. This is true on every company on the tech industry and not just Bitmain, so I guess their newer line of miners are the reason for a huge chunk of losses on 2018, but see this getting turned around once the first batches are shipped.

Agreed, with their current Miner already back on top for efficiency they'll be raking in the BTC/Cash pretty quick. If this next Chip design hits specs as well, they'll be back to flooding the market. Obviously time will tell on the reliability of those machines but at least in the short term their investment in the design is over, and it's time to show some strong returns. It would be interesting to see how things look after Q1 2019, this way even if Q4 2018 was shit (likely with the BCH drama), they'll have some hardware sales helping offset this. I'm guessing this time they'll report right up to the day as opposed to leaving a quarter for the next time. That is if they want the IPO to gain traction.

Not to mention they pulled in a bunch of people with their re-branded cloud mining.

[stompix]

Maybe I'm reading this wrong but it appears to be a bit misleading.

At the end of the 9 months are they not still ahead by 500 Million. So while it was a loss of 500 in that quarter they are still posting a profit up to that point.

September ended with BTC at 6500 and Bshit at (lol, had to double check ) at 550$.
So if they did lose 500 in the 3rd probably it's way above 750 or even 1 billion for Q4.

What matters is the long run and if they did start loosing that much probably the entire profit has evaporated till now.

Something else to note about these numbers is, they were pushing a lot of R&D costs at the time. This can be seen with the launch and delivery of the S15 and T15 models that have been shipped out and delivered.

The s15 was announced in November and it took Bitmain more than two years to launch a new miner, so I really doubt they had spent most of the money on research and development just 4 months earlier.

Probably they had it ready for production even at the start of the year.

Second, I doubt the booming sales for it, the hash rate shows that prices have made a serious dent in miner sales (we're at August levels right now).

[e-coinomist]

The company’s IPO application, filed in late September, indicated that Bitmain mainly held bitcoin, bitcoin cash, ethereum, litecoin and dash, although it did not provide a breakdown of how much it held of each asset.

That's not true I've seen a breakdown of these asset somewhere, has been a huge discussion, but cannot locate website inside browser's history right now. Damn technology!

[bitfocus]

I thought Bitmain postponed their IPO! and the loss is a real big amount!

[BrewMaster]

I don't know if I should be happy about the news or not lol. It is because I am actually thinking that if the bearish market will continue then it will cause more damages to bitmain that they have to cure every single day. Then they will start to shutdown by that said this can be a great opportunity to small time miners as they might be able to step in to the holes that the bitmain are currently facing

Bitmain is not some investment company, portolio crap or something like that to be damaged because of "bear market"!!! Bitmain is selling mining equipment, has mining farm and mining pools and a couple of other ways of earning money and they don't exactly rely on market being bull or bear!

and they won't shut down! it is always the small miners with higher electricity cost that shut down and leave the room for big mining farms. and don't forget that bitmain is mainly a mining POOL that these small miners are connecting to.

[btyco]

That is their own fault for supporting a pointless fork to create 2 shitcoins. Always stick to bitcoin, that is not just for investors but miners as well. Bitmain found out the hard way

[BitBustah]

This really isn't a huge deal, look at all the mega companies that have posted huge losses only to become stronger.  Amazon went years without having a profit and now they are one of the biggest companies in the world.  I know people make fun of bitmain for going heavy into Bitcoin Cash but they are still the dominant force in this business.

[X7]

It's a sad state of affairs, to be honest. One of the largest mining operations on the planet is now in this unfortunate position. The social game theory elements which have played out have shown bitcoin to be quite resistant though.

Even under the harshest conditions, with one of its largest players securing the network turning somewhat rogue. It still going strong no downtime.

[kxz1498]

Bitmain can blame themselves for trying to get BCH to the next level. They sold off 70% of their BTC stock just to stay above water and held the BCH. Thank you bitmain for this crypto winter.

[prasad87]

Bitmain can blame themselves for trying to get BCH to the next level. They sold off 70% of their BTC stock just to stay above water and held the BCH. Thank you bitmain for this crypto winter.

You can be an angry zealot all you want, but Jihan's support for Bitcoin as originally intended by the whitepaper has nothing to do with Bitmain's losses. Bitmain is a mining company, nobody is buying miners during a bear market and their personal mining operations are also significantly less profitable. They were overleveraged on crypto - that's the main issue. But cutting down staff should be sufficient.

Here's some more news - https://chainbulletin.com/bitmain-announces-its-new-and-improved-7nm-mining-chip/
TL;DR - old mining machines will become obsolete, and Bitmain will make enormous profits again this year - since the new miners will be 100% their creation, the competition is pathetic and Bitmain whether we like it or not (I don't) is a monopoly in a huge niche.

[Artemis3]

With the announcement of the S17/T17, and the sales from current S15/T15, if they stick to selling machines and stop with the nonsense (Ie. BCH) which is apparently their intention by moving Jihan Wu out of his position, they could recover and then be in a better position to try the IPO again.

They saw some competition from the likes of MicroBT, whom I'm still waiting to see if they deliver their promise of a 7nm asic.

There is also their involvement in computing asics for AI applications, not sure where that will lead to.

And they also made their own SoC

Bitmain SoC Support Coming To Linux 5.1 - Sophon ARMv8 + RISC-V Chip For Deep Learning

[franky1]

first of all profits and losses sheets of revenue do not declare unsold investments
they would however declare income from goods services / sold shares/sold investments

so numbers of revenue has nothing to do with coins HELD. but more so to do with fiat generated through mining/selling asics and costs of doing such

so talking about coin HOLDINGS is irrelevant

also. seems the article cant do maths

"However, Bitmain previously disclosed it had grossed profits of $1 billion in the first half of 2018. Subtracting that from a $500 million profit for the first nine months leaves it with a net loss of roughly $500 million for the third quarter."

2018 q1: +500 selling s9
2018 q2: +500 selling s9
2018 q3:  -500 designing s15
= still + 500

i would say with selling s9's in q4 and s15 in q4 the q4 would be a + number too

so article and forums topic seems to want to subtly imply a loss (subliminally hinting/worded) as an overall loss
but.. where reality is they just used SOME income of q1-2,  to spend on outgoings in q3 and still had money left over

think about it.
imagine you get $500 one week. $500 second week. then you have to buy groceries and rent the third week. would you go to your spouse and say "i declare a $500 loss." or would you say "i stil have $500 after 3 weeks"

as for the s17 next range of asics.
in q2-3 i was expecting that q4 to show high hashrate rise. but yea doing some maths on the mining cost of s15 vs s9 ther wasnt much between them so when they sold off most their s9 and replaced them with only a moderate amount of s15 that didnt show a large hashrate rise. butif these s17's are going to show a significant difference compared to s9's then maybe 2019's future will show sharper hashrate rise upon release of s17. as it appears that people were more interested in s9's in 2018.