Editor's note: This article is from 31QU (ID: blockchain31), author Nakamoto Yu and Lin Jun, reprinted with authorization by Odaily.

Last application was 10 months ago

“This round of our IPO application will expire in the near future.” In an internal letter circulated on March 26 this year, Bitmain euphemistically announced the failure of its first IPO.

Bitmain’s first IPO application was on September 24, 2018. At that time, Bitmain submitted a 438-page prospectus to the Hong Kong Stock Exchange. According to the prospectus, as of June 30, 2018, Bitmain’s total revenue reached US$2.845 billion, its gross profit reached US$1.03 billion, and its net profit was US$743 million.

Among them, the prospectus quotes the Frost & Sullivan report stating that in terms of revenue in 2017, Bitmain has become the second largest fabless chip design company in China and the top ten fabless chip design companies in the world, and the fourth largest fabless ASIC chip in the world. Design company, and the world's No. 1 ASIC-based cryptocurrency mining machine company with a market share of 74.5%.

This is the first time the outside world has lifted the veil of this "dark horse".

However, stronger than Bitmain, the road to IPO in Hong Kong is also extremely difficult. As soon as the prospectus was issued, it was questioned from inside and outside the industry.

A Wall Street brokerage Rosenblatt report pointed out that in the context of the cryptocurrency bear market, Bitmain’s revenue is too dependent on the mining machine business, and whether it can support a valuation of nearly 30 billion US dollars requires a big question mark.

In addition, there is another view that there is no need for Bitmain to announce its listing at this time. It is because the other two listing news came out, and it was coerced by public opinion.

The external public opinion is constantly fermenting, and people inside and outside the circle also have doubts about the listing of Bitmain.

Especially when Jianan Zhizhi and Ebang International have failed successively, people generally do not have confidence in Bitmain's prospectus.

As the three major mining machine manufacturers, Ebang International launched two consecutive IPOs in June and December 2018, but both failed. Mining machine giant Jianan Zhizhi encountered Waterloo three times in a row in 2016, 2017 and 2018 respectively.

The pessimistic view of Bitmain’s listing lasted until the end of January 2019.

At that time, Li Xiaojia, president of the Hong Kong Stock Exchange, who was attending the World Economic Forum in Davos, expressed his opinion: "Is the business model introduced by the company to be listed to investors suitable for listing? For example, it has earned billions of dollars through A business in the past , but suddenly said that they will do business B in the future, but there is no performance yet. Or that the business model of B is better, then I think the business model of A that you brought to the market at the beginning will not be sustainable. And there is no regulation before , and then the supervision started to control, so you can still do this business, can you still make this money?"

"The core principle of the Hong Kong Stock Exchange is suitability for listing" is Li Xiaojia's final conclusion on the IPO of mining machine companies in Hong Kong.

Although Li Xiaojia did not directly name Bitmain, the outside world believes that the subtext is that Bitmain does not meet the suitability for listing.

To make matters worse, in addition to the main mining machine business being hit hard, Bitmain was also caught in the BCH fork war at the end of last year.

Previously, an internal investment report from IDG circulated on the Internet showed that Bitmain had exchanged all of the company’s $1.5 billion in cash for BCH, plus the Bitcoin previously held by Bitmain, and the two accounted for the majority of its holdings in crypto. The proportion of monetary assets exceeds 85%.

In other words, Bitmain and BCH are tightly bound.

The fork war caused the price of BCH to drop from the highest point of $2,500 to $80, a drop of more than 97%. During the same period, Bitcoin also fell to around $3,000. The successive shrinking of Bitcoin and BCH has caused Bitmain’s encrypted assets to shrink by nearly 3.5 billion yuan, which has shrunk by more than 60% compared with the financial data shown in its prospectus.

In the cold winter at the end of 2018, there was a frenzy of layoffs in the cryptocurrency field, and Bitmain, which was hit hard one after another, was not immune to it.

It is reported that Bitmain's layoffs involve multiple business lines including blockchain, artificial intelligence, and chips, and the AI ​​​​business is also impressive. Among the layoffs, the proportion of layoffs in the mining machine business was 30%, and the Copernicus team that led the research and development of BCH technology was completely abandoned. The proportion of AI business layoffs reached 50%. After layoffs, the total number of Bitmain employees has been reduced from more than 3,000 to more than 1,000.

More serious than layoffs is the replacement of generals.

Previously, Bitmain had been under the dual leadership of Jihan Wu and Ketuan Zhan. The industry is not optimistic about the "dual CEO" mechanism, and rumors about the "separation" of the two have been circulating.

The rumor was confirmed on March 26. At that time, Bitmain issued an internal letter announcing the adjustment of the organizational structure, with Wang Haichao as the company's CEO, Zhan Ketuan will continue to serve as the company's chairman, and Wu Jihan will continue to serve as the company's director.

secondary title

Once went to Qionglin Banquet, once played in front of Ma Yujie

The failure of the IPO is undoubtedly a heavy blow to Bitmain, but in fact, unlike the low-key Bitmain after the failure of the listing, the former Bitmain was open, tolerant, and fierce.

Bitmain was founded in 2013 by Jihan Wu and Ketuan Zhan. Prior to this, Wu Jihan was a private equity fund manager and studied economics and psychology at Peking University.

At the time, Ketuan Zhan, a graduate of the Chinese Academy of Sciences, was trying to raise money for a start-up that would allow users to stream TV shows to computers through set-top boxes.

November 2013 was a key node for both Bitcoin and Bitmain: During this period, a large amount of funds from China pushed the price of Bitcoin to a peak of $1,100; also in this month, Bitmain launched The first generation mining machine - AntMiner S1.

However, Bitmain, which was preparing to soar into the sky, also experienced a difficult period in 2014. At that time, the infamous Mt.Gox collapse occurred, and the entire encryption market collapsed. Things eventually stabilized when Bitcoin's price climbed again the following year. With the passage of time, it was not until the end of 2016 when a new round of encryption boom began that Bitmain ushered in a real take-off.

The cold winter of cryptocurrency has made many early blockchain projects aborted. On the other hand, it has also made Bitmain a success.

At that time, Bitmain saw the right time, relying on the low cost of batch mining and the ever-expanding volume, still persisted in the research and development of mining machines and the construction of mining pools and mines.

Everything is ready, just waiting for an east wind. This east wind is the recovery of Bitcoin and the entire cryptocurrency market.

In the middle of 2016, the price of Bitcoin began to stabilize and rise, jumping from around US$300 at the beginning of the year to nearly US$1,000 at the end of the year.

The rise in currency prices has shortened the payback period of mining machines, and has once again stimulated the desire of miners to mine. The miners who returned were surprised to find that almost only Bitmain’s Antminer remained in the mining machine market. According to Bitmain’s prospectus, Bitmain’s mining machine market share was 74.5% at that time.

In the same year, Bitmain launched the ninth-generation Antminer S9. With its impressive computing power, reliable performance, and low price, it was favored by the majority of miners, so that today, three years later, the S9 mining machine is still the most sold by Bitmain. Good product, there are still a lot of S9 mining machines roaring in the mine.

It is with this mining machine that Bitmain quickly established its "dominant" position in the mining market, with a market share of 70%-80%.

Relying on the popularity of Bitcoin, Bitmain has transformed from a little-known little guy to become a talker in the entire cryptocurrency circle.

The complacent Bitmain ushered in its own bright moment, until it encountered a bear market again.

The bear market is dormant, waiting for the bull market

After experiencing the darkest moment of IPO application failure and initial listing failure, Bitmain began to dormant and low-key.

Against the background of the cryptocurrency market ushering in recovery and the industry entering a flood season one after another, Bitmain, the upstream of the cryptocurrency industry chain, has also received good news one after another.

In April this year, Bitmain launched the second-generation 7nm mining machine S17. Once this mining machine was launched, it was sold out within 5 minutes. At this time, Bitcoin miners who had prepared for the high water season early began to gear up, purchase new mining machines, prepare new mines, and deploy new computing power. In the "mining machine with more than 30% of the total network computing power will be transported to the hydropower area." , ready to go” under the background of the new/used mining machine business.

According to data, starting from April this year, the price of second-hand mining machines has risen in turn. Among them, the Antminer Z11 rose by 8,000 yuan (an increase of 47%). Old models such as the Whatsminer M3 and the Antminer T9+ announced that they were sold out one after another. Major mining machine manufacturers such as Canaan and Whatsminer The new generation of mining machine orders, even in October.

"It seems to be back in the second half of 2017, when the market demand for mining machines was three times the supply." Steven Mosher, head of global sales and marketing at Canaan Zhizhi, said.

Today, 31QU checked Bitmain’s official website and found that Bitmain’s various mining machines, except S9 Hydro, including S9 and S17, are all sold out.

Bitmain, which has a mining pool business under its umbrella, has also made full preparations for the wet season.

According to Coindesk's previous reports, Bitmain has prepared mining machines worth 80 million to 100 million US dollars (about 530 to 670 million yuan) in advance, and will deploy 200,000 mining equipment in the southwestern provinces of China (including Sichuan and Yunnan). Bitcoin can be mined by taking advantage of the cheap hydropower during the summer flood season.

In addition to selling mining machines and preparing for the high water season, there is also new news about AI chips, the main strategic direction of Bitmain.

On May 7th, Bitmain, Fujian Suanyu, and Minglue Technology Group reached a three-party cooperation, focusing on artificial intelligence, big data and other fields, and cooperating in AI application scenarios such as city brains and smart cities. On the 19th of the same month, Bitmain also signed a letter of intent for cooperation with Beijing Haidian District to accelerate the application of computing power chip technology in multiple fields.

On the other hand, in June this year, AntPool, an ant pool owned by Bitmain, launched a new platform, AntPool Labs, to open a new mode of small currency mining.

There are various indications that after April this year, Bitmain seems to be "recovering blood" and is also ready for another impact on the IPO.

It is the currency price that determines the fate of Bitmain

Let us review several important nodes of Bitmain.

The rise of Bitmain began in 2016 when Bitcoin rose, and it flourished in the bull market in late 2017 and early 2018.

The failure of its listing plan and large-scale layoffs stem from the bear market since 2018.

When the time came to April 2019, the cryptocurrency market including Bitcoin and BCH picked up, and Bitmain also regrouped and prepared to go public in the United States.

It is not difficult to find that the development process of Bitmain is almost the same as the currency price trend.

Chen Feng, the sales director of Canaan’s mining machine brand Avalon, who was once a difficult brother and also failed to go public, once said: “The Hong Kong capital market pays more attention to’sustained profitability’. Our industry is subject to market fluctuations. The impact is too great."

Indeed, in Bitmain’s historical income composition, mining machine sales have always been the pillar: the proportion reached 92.1% in 2017, and further increased to 96.5% in Q1 of 2018. Only a very small part.

The profit and loss of the mining machine is closely related to the currency price.

Perhaps Ketuan Zhan and Jihan Wu realized this. As early as 2015, Bitmain began its transformation.

In November of that year, Bitmain released the first AI chip Sophon (Sophon), and announced the adjustment of strategic direction: fully turn to artificial intelligence. At that time, Wu Jihan said confidently: "In the next five years, 40% of Bitmain's revenue will come from AI chips."

It's an ambitious AI initiative.

It is inevitable for mining companies to transform and open up new AI battlefields, but as a latecomer, Bitmain has big brothers such as Nvidia, AMD, Qualcomm, and Intel in the past, and start-ups such as Cambrian chips in the future, and Megvii, Yitu, etc. As a start-up AI company, Bitmain also faces challenges in the AI ​​chip battlefield.

In addition, Baidu, one of the traditional Internet giants BAT, also determined to vigorously develop the AI ​​​​industry as early as a few years ago, so that at the Baidu AI Developers Conference held on July 4 this year, Robin Li was poured cold water and did not weaken his attitude. Baidu's determination to develop AI.

But after such a long time, people's definition of Baidu is still a search engine, and Baidu and AI are not regarded as one.

Bitmain is also facing such an embarrassing situation. Although Bitmain’s business covers mining machines, AI, mining pools, etc., people still regard Bitmain as a mining machine company.