Bitcoin is just a small business? Bitfury makes nearly $100 million a year

Rage Comment : Bitfury Group's main benefits come from transaction fees, mining rewards, third-party infrastructure solutions, and b2b services. Its benefits even exceed those of some mainstream companies, not to mention mining companies in this field. And its growth is obvious. In the future, the company will continue to grow with the entire industry, which fully proves the value-added ability of Bitcoin companies.

Translation: Annie_Xu

The investment documents prove that Bitfury Group’s earnings can rival those of mainstream companies, breaking the misconception that blockchain industry startups are not profitable.

The document shows that the capital-backed startup, founded in 2011, started with mining and gradually expanded to other software services, generating $93.7 million in revenue in fiscal 2017, a year-on-year increase of 70%.

Based on a 26% profit margin, earnings before interest, taxes, depreciation and amortization (EBITDA) were $24.7 million.

The company, which is headquartered in Amsterdam, the Netherlands, with offices in San Francisco, Washington, Riga, Latvia, and Hong Kong, has raised more than $100 million in venture capital, about $10 million more than previously known.

These numbers put Bitfury Group in a good position to become a mainstream industry leader when compared to the returns of venture-backed startups.

According to the latest Inc 500 survey, small business lending startup Kabbage generated slightly more revenue than Bitfury Group last year, at $97.4 million, but raised significantly more equity funding, at $239 million. Software company Yext, which went public earlier this year, generated less revenue than Bitfury Group, at $89 million, and raised $117 million.

In addition to Bitcoin transaction fees, Bitfury Group also earns 500,000 Bitcoins in protocol block rewards, which translates to $13 billion in mining revenue at the current price of $2,600, although evidence shows that some of these Bitcoins have been sold.

To understand how Bitfury Group’s mining differs from the mining network as a whole, the company listed a 9% market share in March 2016 and a 115% share a year ago. The largest mining companies by market share at the time were Bitmain, with 19%, and F2Pool, with 12%.

Predicting the future

Materials to raise additional funds included extensive forecasts of growth for the company and the industry as a whole.

Bitfury Group predicts that revenue will reach $585 million by 2021.

Of this, $302 million (52%) came from transaction fees ($163 million) and mining rewards ($139 million), $217 million (37%) came from third-party infrastructure solutions, such as the company’s Blockbox mining equipment, and $66 million (11%) came from business-to-business services, such as the just-announced Exonum enterprise-grade blockchain.

But its bitcoin transaction fee market appears to be BitFury Group’s most attractive business.

This “huge opportunity” is expected to reach $37 billion in transaction fees after the next mining reward “halving.”

Don’t Say “Mining”

Since at least 2014, Bitfury Group co-founder Valery Vavilov has been working hard to change the perception that the company is not a “mining” company.

In an interview with CoinDesk, Vavilov once made this statement, saying that he would rather focus on "knowledge areas that require a lot of computing power."

About three years later, investors appear to think the transition was a success.

Vavilov said that since the 2014 interview, Bitfury Group has grown from 70 to 250 employees, and he mentioned that the company’s help with the Global Blockchain Business Council, the Blockchain Trust Accelerator, and the Blockchain Summit all demonstrate the breadth of its mission.

“These are early days for blockchain, and we believe the future is bright for Bitcoin and the entire blockchain ecosystem.”

To this end, Bitfury Group has moved many of its Bitcoin mining descriptions to a new website, giving the Bitfury Group domain a more corporate image. Investors are firmly supporting a broader mission, painting a picture of a more “holistic business strategy” than simply mining.

While mining chips remain a large part of the future strategy (and revenue), the document also describes a “full product portfolio vision” around software licenses for the Exonum enterprise blockchain and other unannounced projects.

“Bitfury is the only provider of enterprise-grade private blockchain solutions backed by the inherent security and transparency of public blockchains, while its competitors are developing horizontal projects focused primarily on the financial services sector,” the report concluded.