Bitmain Leak Shows Disastrous Q3 Results
The third-quarter financial report from Bitmain is expected to reveal a drop in revenues on lower ASIC sales but also losses on a portfolio of Bitcoin Cash (BCH). According to leaked information, the situation is far worse than anticipated.
Bitmain’s third-quarter financials have been leaked, with Twitter user BTCKING555 alleging that the company lost $740 million in the reporting period. The official statement from the Chinese mining equipment producer is expected soon, ahead of its planned initial public offering (IPO).
A drop in demand for mining rigs, which was already felt in the second-quarter results, will continue to depress the bottom line. However, the biggest portion of Bitmain’s loss may come from the recognized lower market value of the BCH stack it owns.
Bitmain was the chief entity to stand behind the Bitcoin Cash network since August 1, 2017 and, apparently, did not sell the block rewards to support the coin’s price. Since then, the value of BCH has fluctuated, reaching peaks at $4,355.62 on December 20, 2017, but crashing to current levels of $139.71.
The plunge in BCH value followed the branching of the chain into two versions, followed by a fusion of the BCHABC and BCH tickers. BCH inherited the BCHABC price, starting off at a lower value. Bitmain supported the BCHABC version, recording additional losses on mining activity during the hash wars, which are estimated to have cost up to $500,000 per day.
Bitmain will provide more disclosures before completing its IPO, which is scheduled for January 2019. The worsening climate in the crypto space is affecting the company’s results. Additionally, Bitmain has released its 7 nanometer ASICs, S15 and T14, just when SHA-256 mining for Bitcoin is in decline. The Bitcoin hashrate fell to 33 EH/s in a persistent downward trend in the past day. In just over a month, nearly half of the current miners decreased their capacity, suggesting lower future demand for powerful ASIC.
Additionally, Bitcoin Cash mining has fallen from a peak of 7 EH/s during the height of the hash wars to about 1 EH/s, a small fraction of Bitcoin mining. The low price of the underlying asset has discouraged miners. Some of the rigs are also supporting the Bitcoin SV (BSV) network.