Bitmain's Path to Becoming a Crypto Mining Giant

Bitmain's journey to becoming a crypto mining giant began in 2013, when it was founded by Jihan Wu and Micree Zhan.

The company's early success was largely due to its innovative approach to designing and manufacturing mining equipment.

One of Bitmain's first major products was the Antminer S1, a single-board computer designed specifically for mining Bitcoin.

This product was a game-changer in the industry, allowing miners to efficiently mine Bitcoin and set the stage for Bitmain's future growth.

Worth a look: Bitmain Technologies Georgia Limited

Bitmain was founded in 2013 by Micree Zhan and Jihan Wu. They had previously worked on different projects, with Zhan running a startup called DivaIP and Wu working as a financial analyst and private equity fund manager.

By 2018, Bitmain had become the world's largest designer of ASIC chips for bitcoin mining. This was a significant milestone for the company.

The company's first product was the Antminer S1, an ASIC bitcoin miner that made 180 gigahashes per second while using 80-200 watts of power. Bitmain had 11 mining farms operating in China as of 2018.

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In 2018, Bitmain was reportedly profitable, with a net profit of $742.7 million in the first half of the year. However, the company also had negative operating cash flow.

Bitmain operates two of the largest mining pools for bitcoin, BTC.com and Antpool. In an effort to boost Bitcoin Cash prices, Antpool "burned" 12% of the BCH they mined by sending them to irrecoverable addresses.

The company had a significant layoff in 2018, letting go of about half of its 3000 staff. This was part of a broader downsizing effort that also involved closing offices in Israel and the Netherlands.

Bitmain's business operations are quite impressive. The company is headquartered in Beijing, China, and has a significant presence in other countries including Hong Kong, Singapore, and the United States.

Bitmain's mining pool, Antpool, is one of the largest in the world, controlling over 25% of the global Bitcoin network's mining power. This has led to concerns about the concentration of mining power in the hands of a few large players.

The company's mining hardware is highly sought after, with its Antminer S19 Pro being a top-of-the-line model that can produce up to 110 TH/s of hash power.

Bitmain is expanding its operations in the United States by launching a local production line. This move will help the company serve North American customers better by reducing delivery times and improving supply chain efficiency.

The production line is expected to roll out the first batch of the Antminer s21 pro by the end of December. This device offers a hash rate of 234 terahashes per second with a power efficiency of 15 joules per terahash.

Established in 2013, Bitmain is the largest manufacturer of application-specific integrated circuits, reportedly holding a 90% share of the Bitcoin mining hardware market through its Antminer series.

The company's U.S. production expansion is potentially in response to growing trade tensions between China and the United States. President-elect Donald Trump has announced plans to impose additional tariffs on Chinese imports.

Bitmain's move also aligns with Trump's plan to mine all remaining Bitcoin domestically, a move he claims will bolster energy dominance and reduce reliance on foreign operations.

Bitmain has shown impressive profits, earning $2.3 billion in profits across 2016, 2017, and the first quarter of 2018.

The company's vertically-integrated business model allows it to make its own chips for mining rigs, which are then sold to end customers. This helps maximize profits.

Industry analysts estimate that Bitmain generates profits of as much as $3 billion per year, according to Bernstein Research.

Bitmain's dominance in the mining equipment business is a key factor in its success, controlling as much as 80% of the market for bitcoin mining equipment.

The company's Application-ASIC chips are the industry's favored workhorses for cryptocurrency mining, making them a crucial component in the business.

Bitmain's announcements regarding new ASICs for specific cryptocurrencies can have a significant impact on market trends, with coin numbers often multiplying in the coming months.

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The US has become a significant hub for Bitcoin mining, contributing a large share of the global hashrate.

Bitmain's expansion into the US represents a proactive effort to reduce risks and strengthen its competitive position in the region.

The rollout of the Antminer S21 Pro from the US facility is expected to provide miners with a much-needed boost in efficiency and reduce operational uncertainty.

This move also signals a broader industry trend of diversifying production locations to adapt to shifting trade and regulatory landscapes.

Bitmain's attempts at initial public offering are a fascinating case study in the challenges of going public in a volatile market. In June 2018, Wu told Bloomberg that Bitmain was considering an IPO.

The company completed its $1 billion pre-IPO registration with the Hong Kong Stock Exchange in August, and filed for IPO in September. This move was likely aimed at giving early investors a chance to cash out.

Bitmain Technologies filed for IPO on 26 September 2018 with the Hong Kong regulatory agency and released their first public financial statement. The price drop had hurt mining hardware sales that accounted for 96% of the company's revenue.

Bitmain will use a dual class share structure, which means the share held by company's founders would count as 10 votes. This structure can give founders more control over the company.

On 26 March 2019, Bitmain's application for a Hong Kong initial public offering lapsed, six months after it was filed. Investors were reportedly concerned about the fall in bitcoin's value.

The company issued a statement saying it would "restart the listing application work at an appropriate time in the future."

The US has become a significant hub for Bitcoin mining, contributing a large share of the global hashrate. The industry's reliance on Chinese-manufactured equipment has made it vulnerable to geopolitical and regulatory disruptions.

Bitmain's expansion into the US represents a proactive effort to reduce these risks and strengthen its competitive position in the region. This move is a critical step in navigating the challenges of a rapidly evolving market.

The rollout of the Antminer S21 Pro from the new US facility is expected to provide miners with a much-needed boost in efficiency and reduce operational uncertainty. Analysts note that this will have a positive impact on the mining community.

The industry trend of diversifying production locations is a response to shifting trade and regulatory landscapes. This shift is driven by uncertainty around US-China trade policies and their impact on the crypto sector.

For Bitmain and the broader mining community, establishing US-based production is a strategic move to adapt to changing circumstances. By doing so, they can better navigate the challenges of a rapidly evolving market.

Bitmain has been involved in several controversies over the years, including a lawsuit against a leading bitcoin trading platform in 2015. The lawsuit was unsuccessful, and Bitmain was ordered to pay the trading platform's legal fees, totaling over HK$1.3 Million.

One notable controversy is the lawsuit Bitmain filed against Zuoxing Yang, a former chip design director, in 2017. Yang successfully appealed to a court in China to have the patent revoked, leading to Bitmain's case being dismissed.

In 2018, Bitmain was also sued by a Los Angeles County resident, Gor Gevorkyan, for allegedly mining cryptocurrency on customers' devices without authorization. The lawsuit alleged that Bitmain's ASIC devices were preconfigured to use customers' electricity to generate cryptocurrency for the company's benefit.

Bitmain has also been involved in a dispute with a Labrador mining farm, Great North Data, alleging problems with the agreement between the two companies. Additionally, the company's ousted co-founder, Micree Zhan, filed multiple lawsuits in the Cayman Islands and China against various Bitmain entities in an attempt to regain control of the company.

Bitmain is well-positioned to benefit from the next wave of distributed computing, as predicted by researchers.

The company has diversified its revenue base by foraying into artificial intelligence in 2018 with the Sophon BM1680 chip, which promises to speed up machine learning algorithms.

According to Wu, as much as 40% of Bitmain's revenue will come from AI chips in 5 years.

Bitmain's expertise in ASIC chips makes it a major player in the industry, and it's poised to benefit from the predicted growth of ASIC clouds.

Researchers have outlined the concept of bespoke silicon, a customized form of silicon that leverages specialization to outperform high-volume general-purpose SoCs.

In fact, Bitmain's investor prospectus outlined its plans to go "head-to-head" with the U.S. and Chinese semiconductor giants.

Bitmain's rapid growth in the domestic chip design market is a testament to its success, capturing 8% of the market in just half a decade.

Here's a comparison of Bitmain's growth with Huawei HiSilicon's:

Bitmain's success has earned it a spot in Coindesk's list of the Coindesk 50, an annual selection of the most innovative and consequential projects in the blockchain industry.