The Chinese mining equipment manufacturer Bitmain is preparing for an initial public offering (IPO) in Hong Kong in September, finalized the first round of financing today. In the pre-IPO round, Sequoia Capital invested $400 million.
According to regional sources, Sequoia Capital spent $ 400 million in exchange for 3.33% of Bitmain’s shares. The total estimate of the mining device manufacturer is currently at $ 12 billion. However, it is a prefatory valuation, since the initial public offer will be made in September on the Hong Kong stock exchange. The local news hinted that the total market capitalization will rise between 30 and $40 billion.
Bitmain co-founder Jihan Wu said that his company would expand its mining equipment business to stay competitive. In January 2018, Bitmain declared that it will set up its regional headquarters in Singapore and expand its operations in the US and Canada.
The main Chinese competitor of Bitmain, Canaan Creative boosted its earnings by 28 times and its profits 43 times between 2015 and 2017. All thanks for applying toward listing on the Hong Kong stock exchange.
However, Bitmain’s financial data shows that it has surpassed its competitor, with a return on investment ten times higher and 20 times higher in net earnings in 2017.
Other sources estimate that Bitmain’s sales in 2017 were eight times those of 2016, but profits grew 15 times from 2016 to 2017. In the first quarter of 2018, the revenues are similar to those in 2017, with a gross margin of 60 percent.
In the financial analysis of the mining market, the earnings per each quarter are associated with sales made two months before, because the big customers pay for the equipment in advance. In other words, the price increases of the mining equipment were defended during 2017, as bitcoin increased in the last quarter of 2017.
Being influenced by the price of bitcoin, at the moment the mining market has seen a decrease in the first quarters on 2018. Bitmain’s revenues in 2017 reach $ 2.3 billion according to 8BTC.