Bitmain Likely Lost $400 Million Last Quarter

Bitcoin mining behemoth Bitmain likely posted a net loss of nearly $400 million last quarter, the China-based firm’s recently-filed public offering documents reveal. Much information about the company is redacted in the public versions of those filing documents, but, according to a thorough analysis published by BitMEX Research, there is enough data to glean that Bitmain likely had a historically-abysmal quarter.

Per the filing, Bitmain turned a $742 million net profit during the first half of 2018, extending a rampage that saw the firm rake in $1.2 billion in 2017. What those figures mask, however, is that — according to a leaked investor deck — the firm posted a net profit of $1.1 billion in Q1 alone. Consequently, Bitmain would have had to have posted a net loss of $395 million in Q2 to reduce its six-month returns to $742 million — assuming the leaked investor deck is genuine, that is.

Bitmain appears to allude to these poor quarterly results in the filing, stating that the firm had placed large orders during the early part of the year, anticipating that cryptocurrency prices would continue to increase, along with demand for mining rigs.

“In early 2018, we anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies price since the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there had been significant market volatility in the market price of cryptocurrencies in the first half of 2018.”

This poor performance would explain why Bitmain conducted two funding rounds in quick succession over the summer, raising $442 million in August after raising $293 million just two months prior in June. Those funding rounds enabled Bitmain to significantly increase the amount of cash on its balance sheet, which had reportedly taken a multi-hundred million dollar hit due to the large amount of bitcoin cash that the BCH-promoting firm is holding in reserve.

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