A wise American saying States that during the gold rush it is best to sell shovels. Tim Culpan in his column on the Bloomberg website adds that pay for the shovel you should take cash, not Bitcoin Cash (pointing to the case of a company Bitmain, “the largest manufacturer of shovels for bitcoin mining”).
Bitmain wants to hold an IPO amid falling prices for cryptocurrencies. Various leaks of financial data of the company (the slides from her own presentation and study of BitMEX Research) point to a strategic mistake by selling bitcoins and buying bitcoins Cash, and the imbalance in the business model of the Chinese giant.
BitNEX Research data show that at the end of March Bitmain had about $105 million Fiat assets (3%), while assets in crypto-currencies was estimated at $1.17 billion
Moreover, 54% of the assets of the company have the equipment and the prepayment to the chip maker, Taiwan Semiconductor Manufacturing (TSM).
In turn, public comments TSM say that this year the demand for chips for mining have decreased significantly. Consequently, it is likely that Bitmain can stay with “a bunch of shovels” in the case that the cryptocurrency fever will be history.
But as they say in the conclusion of the study BitMEX Research, “cryptocurrency is here to stay.” From Bitmain has all chances to become legendary cryptomeria, but management may need to improve the management of resources (and this is much harder than it seems). If Bitmain will be released on the IPO, decisions on the allocation of capital in this volatile and unpredictable market has become more deliberate.
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