Traditional stock markets and Cryptocurrencies are set to merge at a new level after Bitmain files for a Hong Kong IPO. The Initial Public Offering is the first-of-a-kind and could usher in an era where Blockchain firms have an option of deciding to either raise capital through Initial Coin Offerings (ICO) or Initial Public Offerings (IPO).
The IPO Details
Bitmain financial statements that were presented to the Hong Kong Stock Exchange confirmed the intention. The 438-page files expressed that Bitmain is exploring an IPO to raise billions of dollars and also to attract more investors into the company. Analysts believe that this will be the beginning of a lucrative investment.
The statement shows that Bitmain generated revenues of $2.8 billion in the first half of 2018. This is almost a 1000% jump from a similar period last year. Additionally, the profits of the firm increased tremendously from $83 million to $742.7 million in the same period. The five-year-old firm was founded by Chinese innovators, now-turned-billionaires, Jihan Wu and Micree Zhan. On the perspective of assets, Bitmain holds $886.9 million worth of Cryptocurrencies as at June 2018. This is a remarkable jump from 1$12.3 million in 2015, $56.3 million in 2016, and $343.3 million in 2017. The progression indicates that the business is profitable and growing at a staggering pace.
According to Sanford C. Bernstein & Co, Bitmain controls 85% of the global Crypto mining chip industry. The target valuation will be released in subsequent filings.
The Exchange and Crypto Markets Will Prove To Be A Challenge
The greatest hindrance to Bitmain’s successful IPO will be the volatility in Crypto markets and the bearish Hong Kong Exchange trends.
The firm manufactures chips for mining Digital Assets, however, the demand may be slowing down as volatilities in the market are making miners to lose confidence in Cryptos. For instance, Bitcoin has lost significant value after plunging from $20,000 at the beginning of the year to the current $6,500. Even more recently, BTC crushed from $7,300 in early September to the current lows of $6,500. The unfolding of events might negatively impact Bitmain and lead to depressed demand and lower profits if the situation remains the same.
Meanwhile, Hong Kong Stock Exchange has shed off 16% of its total market cap since the beginning of the year. Just as the situation began to stabilize, Chinese stocks began to come under pressure from the China-US trade war which the US President Donald Trump and his Sec. of State have vowed to win and fight to the end. The ensuing spat is likely to negatively impact HKE. The fact that HKE hosted IPOs from giants such as Xiaomi Corp and Meituan Dianping without reversing the trend indicates that Bitmain could fail to achieve its target.
Nonetheless, HKE is the world’s sixth largest Stock exchange. It has a market capitalization of $5.2 trillion. Bitmain may benefit in the long run.
The News Has An Impact On Crypto Markets
After the release of the information, Bitcoin Cash gained by 20%. Coin market data shows that the price is currently at $528.56 which represents the most robust market movers of the day. Bitmain is the holder of Bitcoin Cash, a revised version of Bitcoin.