Bitmain lost another $500 million in the third quarter of 2018? Bitmain: Rumors are false

Bitmain, the world's largest mining machine manufacturer, has recently experienced another round of large-scale layoffs and was reported to have lost approximately US$500 million in the third quarter of 2018. With constant layoffs, an IPO nowhere in sight, and frequent business setbacks, can this "mining machine giant" still withstand it?

Bitmain recently submitted its latest financial report to the Hong Kong Stock Exchange. People familiar with the matter revealed to CoinDesk that according to the latest data, Bitmain's profit in the first nine months of last year was about US$500 million, with revenue slightly exceeding US$3 billion.

However, Bitmain's previous prospectus disclosed that it had a revenue of $2.8 billion and a profit of $1 billion in the first half of 2018. If the profit shrank from $1 billion to $500 million, then Bitmain's net loss in the third quarter of 2018 would be about $500 million.

In terms of revenue, based on the above news, Bitmain's revenue in the first half of last year was US$2.8 billion, and its revenue in the first nine months was US$3 billion, so its revenue in the third quarter was approximately US$200 million.

(Screenshot of Bitmain’s prospectus)

Regarding the news of the company's losses, Bitmain declined to comment to CoinDesk, citing the pending IPO application. Bitmain also responded to Xiaocong, saying: "The rumors are untrue. We will strictly follow the requirements of the relevant laws and regulations on listing and make an announcement at the appropriate time."

News about Bitmain’s losses broke out one after another last year, and Bitmain’s losses may have started in the second quarter of last year.

"Bitmain's Q2 performance suffered a huge loss", "mining machines plummeted by 90%", "cryptocurrency investment shrunk by at least 50%" and other words began to appear frequently in the news, and it was revealed that the second quarter of last year was a disaster for Bitmain, with a loss of more than $600 million. However, Bitmain also declined to comment on this.

Last September, CCN stated based on a detailed analysis by BitMEX Research that Bitmain may have lost $395 million in the second quarter of 2018, and its profit for the six months should be $742 million (officially disclosed as $1 billion).

Bitmain occupies more than 70% of the market share in the mining machine industry. It was the biggest winner in the bull market. When the IPO was launched, some people said that Bitmain's valuation was as high as more than 30 billion US dollars, comparable to Xiaomi. However, in the cold winter of the crypto market where mining machines are unsalable and investment assets are shrinking, Bitmain has become like a "frost-bitten eggplant."

Moreover, several people familiar with the matter revealed to Interface reporters that Bitmain has just completed a round of large-scale layoffs, covering multiple business lines including blockchain, artificial intelligence, chips, etc. Among them, the artificial intelligence business, which was highly anticipated, has become the hardest hit area in this round of layoffs.

There are also reports that Bitmain's dual CEO management structure has also changed. Wu Jihan and Zhan Ketuan have both resigned as CEOs and only serve as directors. The new CEO is Wang Haichao, a project director within the company, but the change has not yet been officially announced in the company.

According to 36Kr, Bitmain also said: "The rumors are untrue. At the end of 2018, Bitmain made normal personnel adjustments based on business development. There have been no new adjustments recently. In the future, we will continue to welcome talents from all walks of life to join us."

Throughout history, “no comment” and “false rumors” seem to appear frequently in Bitmain’s responses to the outside world.

With layoffs continuing, an IPO nowhere in sight, and business setbacks, can Bitmain still withstand it?

Bitmain's massive layoffs began in December last year. According to several insiders, the layoffs at Bitmain at that time may have been as high as 50%. At that time, Bitmain also closed offices in Israel, Amsterdam and other places.

The rapid expansion and contraction of Bitmain’s scale is also impressive.

According to Jiemian, in mid-2017, the total number of Bitmain employees was only 300 to 500, but it increased to more than 3,000 in August 2018. This year, Bitmain has made AI chips a new business to be fully developed, and most of these new employees are technicians related to AI chip research and development.

The continuous decline in Bitmain’s revenue and the continuous reduction in its scale may also hinder the new AI business it is betting on. The old business of mining machines is difficult to do, so how can the new business develop? It is still unknown when Bitmain’s business transformation and upgrading will come.

In addition, Bitmain’s investment assets have also suffered a major decline. According to Bitmain’s previous prospectus, the company mainly holds BTC, BCH, ETH, LTC and DASH, but since September 30, 2018, all the cryptocurrencies mentioned in the document have fallen by more than 50%.

Bitmain’s highly anticipated journey to go public has never been successful, which makes people worry about it. Can this “mining machine giant” withstand it?

However, Wu Jihan, who had not updated his Twitter status for 60 days, finally retweeted yesterday. The news showed that Bitmain launched a new 7nm ASIC mining machine "BM1397". Bitmain may not have stagnated due to the flood of negative news.