Thread by @katherineykwu

Just had the chance to skim the (400+ page) Bitmain IPO document. Some interesting stats:

+ In the first half of 2018, Bitmain’s revenue was $2.845 billion, with a net profit of $1.123 billion. 95% of revenue comes from the sale of 2.56 million (!!) mining rigs.

More below ⬇️

(Bitmain stats, cont.)

+ 3.3% of their revenue in 2018 thus far comes from self-mining.
+ Bitcoin currently has 11 mining farms in China, including Sichuan, Inner Mongolia, etc. Each mining farm can hold ~20,000 mining rigs.

Details on the actual IPO:

+ The Bitmain IPO plans to be listed on the Hong Kong Stock exchange via a weighted voting right structure.

+ Two largest shareholders: Micree Zhan & Jihan Wu. Also: The CEO of Sogou (Chinese search engine) is among the largest shareholders.

🕵️‍♀️ Brief interlude: source link here hkexnews.hk/APP/SEHK/2018/…

+ More specifically: Micree Zhan owns 36% of the current Bitmain shares, while Jihan Wu owns 20.25%.

+ Bitmain credits the increasingly popular crypto market for its own growth. It points to Coinbase’s growing user base as a statistic: Coinable users grew from 500,000 in 2013 to over 20 million users as of June 2018. (Even includes a nice chart for @coinbase here)

ON US REGULATION:

+ Bitmain addresses U.S. regulations (loosely translated): “We do not know of any U.S. federal laws that forbid the import of mining rigs from any natural persons or entity, nor the selling or manufacturing of the mining rigs within its borders...

(cont. from above) However, the position of Bitcoin and other crypto assets are constantly changing under U.S. federal law and the various state laws. Jurisdiction of each cryptoasset is decided by the relevant U.S. regulatory agency, depending on the characteristics and usage."

Back to Bitmain:

+ As of June of 2018, Bitmain has a team of 840 (!!) full-time engineers. That is ~30% of its entire team. The focus: chip design, algo dev, platform design, software, and hardware development.

Bitmain's strategy:

+ Continue to invest in the research & development of chips— specifically, in ASIC chip design for crypto mining in order to increase computation efficiency while decreasing power watt usage. As such, Bitmain plans to hire aggressively towards that direction.

+ Bitmain also plans to increase its foothold in the blockchain ecosystem through increased partnerships as well as ramping up its own investment arm (I don’t know how much $$ they plan to pour into crypto startups, but probably a sizable amount).

+ Bitmain want to continue to invest in AI and push AI development and application by way of their advantage in ASIC chip design. Areas of focus: augmented reality, facial recognition, and big data analysis.

(ok to be continued later my brain is melting i need a break)

Bitmain’s business lines:

+ ASIC chips for crypto mining and AI applications; the hardware that accompanies those, mining farms and operations, and other related crypto services.

+ The core of Bitmain’s crypto mining services is in the front end + back end design of the ASIC chips and thus will be the major link to the ancillary businesses. Bitmain is currently in the process of developing the next generation of 7nm ASIC chips.

+ On pricing: “When pricing mining rigs, we consider the currency’s market price, competitive pricing, the forecasted revenue, the product model, and the need for the mining rig. We also employ a sliding pricing strategy, which is the norm for the industry."

Bitmain’s mining farms outside of China:

+ There are three mining farms currently underway in the U.S.: Washington, Texas, and Tennessee. Expected operational date is 2019 Q1, and a maintenance/repair center will also be set up in Washington state.

Bitmain is currently considering setting up a mining farm in Canada’s Quebec province, which will operate on hydroelectric power.

+ Taiwan Semiconductor Manufacturing Company (aka Taiwan Semiconductor) is Bitmain’s single largest supplier, accounting for 59.2% of Bitmain’s total supply in the first half of 2018. ( & 58.6% in 2017!)

Bitmain’s physical storage management:

+ As of June 2018, Bitmain has 7 garages located in Shenzhen, China. Those garages can store up to 1.5 million (!!) mining rigs. Inventory includes mostly conductor components.

(FYI accountants: inventory is accounted using FIFO.)

Bitmain’s customer base:

+ From 6,000 customers in 2015 to 80,000 customers in just the first six months of 2018.

+ 48.2% domestic sales, 51.8% international sales.

TO CONCLUDE: I mean, personal opinions aside, Bitmain is one hell of a fucking company. These IPO documents contain an incredible wealth of information. Happy to answer anything specific if you have burning questions and I can look through the docs for you- otherwise, enjoy!

Just for fun: Hong Kong employs a slightly different written form ("traditional Chinese") than the written form that is used in mainland China ("simplified Chinese").

Ex. the left and right characters are the same ones, but depending on which type, is written differently. 🙃

👩‍💻 PSA I consolidated this whole Bitmain tweetstorm and turned it into a full-length post w/ additional edits + commentary from @twobitidiot.

Read (+ subscribe) here: messari.substack.com/p/bitmain-sani…