Bitmain wants to complete its gigantic IPO (IPO) later this year. An estimated the US $18 billion is to be taken, which would drive it to a market capitalization of nearly US $50 billion, making it one of the highest tech IPOs of all time.
For many but even more amazing is a detail that was hidden in the pre-IPO documents. The leaked documents show that Bitmain held more than 1 million Bitcoin Cash (BCH) in its balance sheet worth almost $ 600 million (at the current BCH price ) by March 31, 2018.
In December 2016, Bitmain still held 71,560 BTC. This was before Bitcoin Cash existed. According to the Pre-IPO Investors Deck, Bitmain then sold most of its bitcoin for Bitcoin Cash after the hard fork at $900. It has been observed that the company has relocated its holdings and sold 49,478 BTC to obtain 1,021,316 BCH, as the pre-IPO documents show.
After BCH was worth around 0.2 BTC in August 2017, the Bitcoin Cash value is currently 0.08 BTC. Over the past three months, Bitmain has lost half a billion dollars due to the poor performance of Bitcoin Cash.
Significantly, the share in BCH represents more than 5 percent of the currently circulating 17.3 million BCHs and more than 10 percent of the 8.4 million BCHs that have moved since the hard fork of August 2017. These impressive numbers could mean that Bitmain wanted to try as a BCH whale.
When Bitmain announced last year, that it was behind blockcoin scaling behind Bitcoin Cash during, the hard-core of the main BTC network due to irreconcilable differences, the mining giant put its money where CEO Jihan Wu propagated it. The Hard Fork is therefore considered by many to be the consequence of Bitmain’s attempt to change the Bitcoin blocksize with the failed SegWit2X fork in August 2017.
After the failure of SegWit2X, Jihan Wu pursued a policy of creating a mining-driven alternative to Bitcoin – Bitcoin Cash. The support was based on the fear that Bitmain’s profits could be reduced by mining fees if Bitcoin would be scaled using second-layer technologies such as Lightning Network.
The dilemma for Bitmain and CEO Jihan Wu now seems to be that, given the low liquidity in the cryptocurrency market, it is difficult to liquidate the BCH holdings, even if it would like to. Since this would have a negative impact on the price of BCH and possibly cause a “death spiral”, liquidation would not seem possible. Ultimately, Bitmain sells its only liquid asset: Bitcoin.
The Bitmain IPO
This is interesting because it is preparing to go public – the Hong Kong Stock Exchange. The question of why Bitmain is about to go public right now could be related to Bitcoin Cash.
Although it expects to earn more than $10 billion in revenue in 2018, compared to $ 2.5 billion last year. However, if the current bear market does not tip over before the company goes public, the BCH share could begin to weigh heavily on earnings.