Bitmain may hold one of the biggest stashes of Bitcoin Cash (BCH), more than the forked reward of Satoshi Nakamoto, the founder of Bitcoin. The data revealed that Bitmain may have special interest in the first and most contentious Bitcoin fork.
The question is - what is the rationale of Bitmain behind the large BCH wallet. The funds were accrued by various means. Those included early mining when the crypto community noticed that Bitmain was possibly solving most blocks, even when the network was less profitable. Additionally, Bitmain sold some of the Antminer S9 rigs for BCH, at the time when the price of BCH was above $1,000. The third way that Bitmain got hold of more BCH was by selling Bitcoins.
The decision of Bitmain to hold onto its stash has raised reactions ranging from derision to guesswork what the intentions of the company really are. The announcement of the large holdings happened only days after Bitmain announced it would go public through a sale of stocks, thus linking the world of crypto with ordinary finance.
Bitmain has thus attracted further investments for its chief business of producing powerful chips. But it seems Bitmain also took Bitcoin Cash seriously, investing some of its cash earnings directly, and writing off a significant loss:
In the initial stages following the Bitcoin Cash hard fork, hopes of a “flippening”, or having the new network replace the old and become the de facto Bitcoin, were much more powerful. Later, BCH moved on to become an altcoin, and go through turbulence and relatively short price pumps.
And while some believe the decision of Bitmain shows skin in the game and a readiness for supporting the network, others believe the holdings of more than 1 billion BCH are too much:
It is possible that Bitmain still has plans to promote Bitcoin Cash, including ways to affect its market prices. In any case, the large wallet could disturb the markets. There are opinions that the current IPO is planned to raise funds and offset the large BCH investment.
It is almost impossible to liquidate the BCH on the open market. It is also unknown what means Bitmain would use, and if there are intentions to support - or even manipulate the BCH price. After the recent market shock, BCH dropped to $482.02, with nearly half the trading volumes against Tether (USDT).
Some see the decision of Bitmain to hold 1 million coins as bullish, possibly protecting the value of BCH. However, since the chief idea of BCH is to be spent, and used as electronic cash, it is unknown how the locked funds would help.
Bitmain also holds around 22,000 BTC, based on recently released reports, down from 71,500 BTC held at the end of 2016. Additional holdings include LTC and DASH, all minable by rigs, but negligible amounts of ETH.
According to critics, Bitmain has also indicated it may use some of the funds to buy more BCH. While Bitmain is instrumental in the crypto ecosystem, its moves have also mystified and angered the community.