Bitmain is going public.
If all goes well, the cryptocurrency mining giant could launch a $19 billion initial public offering (IPO) this September. By then, Bitmain's company market value may be around 40-50 billion US dollars, and it will also be another Chinese "unicorn" listed on the Hong Kong Stock Exchange after Canaan Intellectual Property and Ebang Communications.
As one of the cryptocurrency companies with the highest market value at present, Bitmain has completed a pre-IPO round of financing of US$1 billion at a valuation of US$15 billion a month ago—July 23. The valuation is twice that of the U.S. cryptocurrency exchange Coinbase. Now, Bitmain, whose initial public offering price is as high as US$18 billion, is even about to replace social media giant Facebook as the third-largest IPO financing company in history. The top two are SoftBank Group-backed Alibaba (ranked first) and Tencent Spotify for music support.
It is worth mentioning that the underwriter of Bitmain's IPO is the well-known China International Capital Corporation ("CICC"), and their tentative listing time is in the fourth quarter of this year or the first quarter of next year. As a company established only five years ago, Bitmain quickly completed the magnificent transformation from a private enterprise to a "unicorn" and then to a listed company. How did they miraculously achieve this feat? Why do domestic giants such as Ma Huateng, Lei Jun, and China National Gold Group invest in this "solely owned by Taiwan, Hong Kong, and Macao legal person" company through layers of layout?
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Lei Jun surfaced?
The investors who participated in the last round of pre-IPO negotiations on Bitmain are not small, including Tencent Holdings, Softbank Group, China National Gold Group, and a sovereign wealth fund with assets of 15 billion US dollars under management (they did not disclose the name of the company) .
On July 18, an investment holding company registered in the Cayman Islands signed a minimum commitment contract of US$5 million with Bitmain. Lei Jun has an intricate relationship. According to a Paradise Papers exposed by the International Investigative Journalists Alliance, the two offshore companies controlled by Lei Jun, Colorful Mi Ltd and Red Better Ltd, have ties to two companies controlled by Wu Jihan and Zhan Ketuan (legal representative of Bitmain). associated.
Lei Jun has never publicly admitted to investing in cryptocurrency projects, but according to rumors in the market, Lei Jun was one of the angel investors when the bitcoin exchange OKCoin announced the completion of tens of millions of dollars in Series A financing.
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Sequoia Capital, which has torn face with Binance, has a soft spot for Bitmain?
Before Bitmain’s pre-IPO round of financing, Sequoia Capital China, with the help of San Francisco venture capital IDG Capital, Silicon Valley Menlo Park venture capital Coatue Management, Russia’s DST Global, and Singapore’s EDBI and GIC, and other venture capital giants, Led Bitmain’s US$50 million Series A financing and US$400 million Series B financing. Last July, when Bitmain completed its A-round financing transaction, its valuation had already reached 1 billion US dollars, and the company also successfully entered the "Unicorn Club". Sequoia Capital successfully obtained 5% of Bitmain's equity The company's equity; just one year later, the valuation of Bitmain's B round of financing has doubled by 12 times, reaching 12 billion US dollars.
In fact, the first piece of "fat" that Red Shirt Capital wanted to eat was not Bitmain, but the cryptocurrency exchange Binance (Binance). However, the two parties failed to reach an investment agreement due to various reasons such as company valuation and transaction details. Unanimous, and finally go to court. Sequoia Capital is known in the industry for its "price reduction". When it invested in Binance, it valued it at only 500 million yuan, and invested 60 million yuan to account for 10.714% of the shares. However, IDG Capital's valuation of Binance was ten times that of Red Shirt Capital, which eventually led to Binance choosing to reach an investment deal with the latter.
Now, whether Sequoia Capital’s “bet” on Bitmain will also lower the price as before is still unknown, but it is usually bought but not sold well. I believe Bitmain should have learned some lessons from Binance’s past.
Bitmain has not announced the expected stock price and trading volume at present, but some investment banks based on previous financial data - 2016, 2017 and 2018 first quarter profit of 2.3 billion US dollars, 2017 revenue of 2.5 billion US dollars, 2018 first quarter revenue It is estimated that their first public trading annual price-earnings ratio can reach 20, and the profit at the end of the year can reach 2 billion US dollars.
Calculating for Bitmain, how much can Wu Jihan and Zhan Ketuan earn by going public?
Five years ago, Wu Jihan and Zhan Ketuan met, hoping to design advanced application-specific integrated circuit (ASIC) chips to improve the efficiency of Bitcoin mining. With the continuous development of technology, the cryptocurrencies they mined have expanded to Bitcoin Cash, Wright Coin, Dash and Ethereum etc.
According to the information disclosed by Bloomberg in January this year, Jihan Wu and Ketuan Zhan jointly hold 60% of the shares of Bitmain. If the scale of the initial public offering is used, the total shareholding of the two co-founders of Bitmain will be worth— — $30 billion!
The prospectus drafted by Bitmain shows how important the mining business is to Bitmain. Last year, Bitmain’s mining equipment accounted for 66.6% of the total mining volume of cryptocurrencies, and the cryptocurrency mining pools it operates cover 40% of the entire mining network. It is said that when Jihan Wu and Ketuan Zhan were drafting the prospectus, BTC.com was already the largest cryptocurrency mining pool in the world, with about 560,000 mining equipment, and 1.12 out of 36,000 Bitcoin blocks had been mined. ten thousand. The second largest mining pool, AntPool, is also owned by Bitmain, with more than 440,000 mining equipment mining Bitcoin and other cryptocurrencies.
In addition to the income from hardware sales and mining pool transaction fees, Bitmain also owns overseas mining operations and has invested in and supported about 30 blockchain startups. It is worth mentioning that, especially since May this year, Bitmain The investment speed in mainland China has accelerated significantly, including:
Invested in BizKey, a cryptocurrency POS system development company;
Incubate decentralized cryptocurrency exchange DEx.top;
Invest in Circle, a cryptocurrency payment system;
Added an Ethereum extension to the Opera web browser;
Invest in blockchain development company block.one;
Partnering with Huawei Mobile Services to develop a mobile cryptocurrency app
Invest in bitcoin cash ad network tribeOS.
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The Future of Bitmain: Computing Chips and Artificial Intelligence
1. Computing chips - the sword refers to the United States
As early as 2013, the Bitmain graphics chip BM1380 adopted the 55nm process for the first time, and this circuit dimension mode was considered to be the most cutting-edge process at that time. From 2014 to 2015, Bitmain launched 28nm BM1382, BM1384 and BM1385 chips, and released 16nm BM1387 chips in 2016.
Today, Bitmain has thrown the older generation of chipmakers several blocks ahead of Spreadtrum Communications, China's second-largest integrated circuit design maker, which has been around for 17 years.
In addition, Huawei HiSilicon, the leader in China's chip industry, seems to be losing ground in front of Bitmain. As of December 2017, Bitmain's 16nm chip sales performance has been able to rival Huawei HiSilicon, and TSMC has contributed a lot. TSMC is the world's first professional integrated circuit manufacturing service (wafer foundry) company, providing chip products for Apple and other consumer electronics suppliers. They provide Huawei HiSilicon with the Kirin 970 chip, and Bitmain What is provided is a more advanced 10-nanometer chip. It is reported that Bitmain will launch 7nm and 12nm chips later this year.
It took only 5 years for Bitmain to occupy an 8% share of the domestic chip design market, while it took Huawei HiSilicon 14 years to gain a 17% market share. If it develops at this speed, it should only be a matter of time before Bitmain surpasses Huawei HiSilicon.
In the next step, Bitmain will confront the US chip industry head-on. Although Intel Corporation is still the "overlord" of the global chip industry, in today's global chip economy, the driving force of the Chinese market has surpassed that of the United States, and even Silicon Valley feels tremendous pressure.
According to reports, in February of this year, 5-year-old Bitmain’s profits were comparable to 24-year-old Nvidia. By April of this year, the stock prices of Nvidia and AMD fell. Market analysts pointed out that due to Bitmain's upcoming launch of Ethereum mining equipment, Nvidia and AMD's chip orders may drop sharply, because many cryptocurrency miners will not choose Nvidia and AMD's chips compared to the lower-cost Bitmain. graphics card.
Of course, U.S. chipmakers shouldn’t worry about pressure from Bitmain for the time being, as they have a large PC, gaming, and data center customer base, so their business, whether or not they have cryptocurrency mining operations, is currently unaffected. Devastating blow.
2. Artificial intelligence - pointing at Google
The domestic market is easily affected by policies, and Bitmain is well versed in this. In their prospectus, we see their ambitions to enter other technology fields. Bitmain said that the reason why they want to implement a diversification strategy is mainly to deal with domestic regulators’ bans on initial coin offerings, cryptocurrencies, and mining activities, so they hope to gradually transform into a supercomputing company with artificial intelligence technology. giant.
Bitmain believes that machine learning methods based on neural networks will accelerate the improvement of chip processing power for cryptocurrency and non-cryptocurrency applications. At the end of last year, Bitmain launched the first tensor processor BM1680 for artificial intelligence applications. This is another special-purpose chip (ASIC) dedicated to tensor calculation acceleration in the world after Google TPU, which is suitable for CNN/ RNN/DNN training and inference.
In terms of investment in technology research and development, Bitmain is not stingy at all. At present, they have a team of nearly 500 people responsible for product research and development, platform architecture, algorithms, and software and hardware development. By utilizing innovative technologies from academic institutions and technology companies, Bitmain has pioneered the combination of artificial intelligence software and hardware. .
When Bitmain rang the listing bell on the Hong Kong Stock Exchange, they were no longer the private company in Haidian District, and Wu Jihan was no longer the green onion who tried to buy shoes with Bitcoin on Taobao. Teenager.
