Chinese manufacturer of ASIC miners Bitmain may be on the verge of bankruptcy. About it with a difference of five days was announced by Bloomberg and QQ.com — a news portal owned by Tencent. According to calculations Bloomberg, Bitmain has invested a third of the stocks in cryptocurrency and half was sent to cover production costs.
Last Friday, September 14, QQ.com published material about the loss Bitmain based on its own analysis and the analysis of the company’s IPO experts BitMEX Research. In short, the material QQ focuses on excessively high relative to the income share of investments in Bitcoin Cash, huge advance payments the company, which manufactured the chips, Bitmain and indistinct strategy for the implementation of AI technologies.
Thus, according to QQ, Bitmain has invested 69% of operational cash flow in the Bitcoin Cash, resulting in lost $300 million because of the volatility of the asset.
According to various estimates, Bitmain paid network chip factories $660-$866 million as prepayment for the production of chips. Together with the costs of inventories, production costs of the company amount to about $1.9-$2,1 billion. For comparison, fiato-cryptocurrency reserves of the company amount to $1,277 million While Bitmain has not yet announced the start of mass production in late August, miner Antminer S9 Hydro, which, despite optimization is still inferior to the technical characteristics of the nano chip Avalon A9 production Canaan. The latter goes on sale later this month.
Monitoring and BitMEX QQ.com confirmed by data Bloomberg. Citing an analyst from Sanford C. Bernstein, Mark Lee (Mark Li), the publication writes that Bitmain are unable to bring three expensive project that probably cost her hundreds of millions of dollars and reduced the competitiveness of Bitmain on the market. Bloomberg also emphasizes that many industrial customers Bitmain — for example, MGT Capital Investments Inc. and GMO Internet Inc. — lose profit due to spending on mining and probably in the future can withdraw from this activity completely or switch to equipment from another manufacturer.
News about the possible bankruptcy of the company came after news of the completion of the IPO. We will remind that as of the end of August Bitmain capitalization reached $15 billion, helped by the successful placement of shares.