Bitmain planning IPO in HK: Sources

Bitmain Technologies' core business is designing custom chips that are good for the number crunching required by cryptocurrency miners.
Bitmain Technologies' core business is designing custom chips that are good for the number crunching required by cryptocurrency miners.PHOTO: NYTIMES

HONG KONG • Bitmain Technologies, the world's biggest producer of cryptocurrency mining chips, is planning a Hong Kong initial public offering (IPO) that could raise as much as US$3 billion (S$4.1 billion), people with knowledge of the matter said.

The Beijing-based firm, whose 32-year-old co-founder Wu Jihan is one of the most powerful players in crypto, plans to file a listing application with the Hong Kong stock exchange as early as next month, according to the sources.

Bitmain closed a private funding round in the past few weeks valuing the company at about US$15 billion, one of the sources said.

If the IPO proceeds as planned, it would represent a major test of investor appetite for digital-currency companies after the market value of bitcoin and its peers tumbled by more than 75 per cent since early January.

A successful listing would be a landmark event for the crypto industry, which is increasingly trying to move from the fringes of finance into the mainstream.

For Bitmain - which is estimated to control as much as 80 per cent of the market for crypto mining gear - an IPO may also mark a step towards a future beyond crypto.

Mr Wu, who co-founded the company in 2013, has said he wants to branch out into areas such as artificial intelligence. A listing could give Bitmain the extra funding and public profile it needs to pursue other businesses.

"The challenge is advancing our technology beyond what we've already achieved," Mr Wu said in an interview with Bloomberg in May.

Bitmain's bread and butter is designing custom chips known as application-specific integrated circuits, or ASICs.

These are particularly good for the brute-force number crunching required by cryptocurrency miners, who verify virtual currency transactions and earn crypto-denominated rewards by solving complex maths problems.

ASICs are also useful for the heavy workloads associated with some forms of AI, such as machine-learning.

In the May interview, Mr Wu said Bitmain booked US$2.5 billion of revenue last year and that he and co-founder Micree Zhan together owned about 60 per cent of the business.

Details of Bitmain's listing have not been finalised, and its fund-raising target could change, the sources said.

Speculation about Bitmain's IPO plans and finances has intensified in recent days.

The cryptocurrency news site CoinDesk reported on Aug 10 that Bitmain was seeking to raise as much as US$18 billion in an IPO.

Unverified investor presentations purporting to show details of Bitmain's business have been circulating online, prompting discussions in crypto circles over the company's exposure to falling virtual currency prices.

While Bitmain gets most of its revenue from mining equipment sales, it also runs some of the world's biggest mining collectives, in which members combine their processing capacity and split the rewards.

The company's outsized role has prompted a backlash from some virtual currency purists, who disdain anything that hints of a concentration of power in the crypto ecosystem.

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A version of this article appeared in the print edition of The Straits Times on August 16, 2018, with the headline 'Bitmain planning IPO in HK: Sources'. Print Edition | Subscribe