Cryptocurrency mining hardware firm Bitmain lost around 500 million USD in the third quarter of 2018, according to its latest initial public offering (IPO) filing. The company recorded this loss as the bear market continues to affect the prices of cryptocurrencies.
Bitmain’s earnings take a hit
Bitmain initially filed for an IPO in September last year, but recently provided the Hong Kong Stock Exchange (HKEx) with an update on its financial results as the stock exchange reviews the company’s application. The updated document showed that the company earned 500 million USD in the first three quarters of last year, with a revenue of over 3 billion USD, according to a source familiar with the situation.
The filing does not break down the quarterly results, but Bitmain disclosed, in its initial IPO filing, that it recorded profits of 1 billion USD in the first half of last year. Subtracting that figure from the 500 million USD profit recorded for the first nine months indicates that Bitmain lost roughly 500 million USD in the third quarter of 2018.
The company previously reported revenue of 2.8 billion USD for the first half of 2018, implying that it recorded about 200 million USD as revenue in the third quarter of last year.
Bitmain’s portfolio plummets
The updated document submitted to HKEx revealed that Bitmain’s crypto holdings dropped in value over the past few months, from 800 million USD in June 2018 to less than 700 million by the end of September.
Bitmain’s IPO application showed that it mainly possessed Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash. Although the company did not provide a breakdown of how much it held of each coin, all the cryptocurrencies declined by more than 50 percent since September 30, according to CoinMarketCap.
Decline in revenue indicates rough times for Bitmain
The updated figure is an indication that Bitmain is currently undergoing a rough patch after experiencing significant growth in revenues and profits over the past few years. The company had already signaled financial turmoil with office closures and layoffs late last year.
there’s post on Chinese Linkedin (usually very high accuracy, posted by employees themselves) saying Bitmain will start a layoff the coming week … 😳😳😳
A separate rumor said the plan is for more than 50% of its headcount ???! pic.twitter.com/b0ZSBuPX4d
— Dovey Wan 🦖 (@DoveyWan) December 23, 2018
The turn in financial fortunes affected every unit of Bitmain’s operations, with its main business of manufacturing mining equipment, and operating mining farms and pools, suffering the most due to declining crypto prices.
The updated financial document will not be revealed to the public unless the company advances to a listing hearing with approval from the HKEx, before the expiration of the six-month window on March 26.
There is a high probability that HKEx could reject Bitmain’s IPO proposal, as the stock exchange previously admitted hesitancy in approving applications from cryptocurrency mining companies due to uncertainty on the sustainability of their revenue.