Bitmain currently maintains the leading position when it comes to cryptocurrency mining. Its hardware is shipped to dozens of countries around the world. With competition heating up, the firm may be facing a few setbacks. Losing this competitive edge ahead of the company’s IPO can have all sorts of consequences.
The Bitmain Situation Explained
Becoming the world’s leading manufacturer of cryptocurrency mining hardware is no small feat. For Bitmain, it is the culmination of years of hard work and continuous innovation. At the same time, the company may be at a turning point in terms of market dominance. Analysts are concerned that the company’s overall valuation may not be what it seems. This is primarily driven by competition from other cryptocurrency firms entering the mining space.
According to Bernstein, companies working with Bitmain need to change their methods. The analysts deem the manufacturer to be less “competitive” than ever before. Those findings come at a crucial stage for the Chinese firm. Bitmain plans to launch its IPO later this year. Its projected value is quite steep, which has some experts concerned. The findings by Bernstein only seem to attribute to those concerns.
For now, it seems unlikely Bitmain’s suppliers will make any changes. Although Bernstein advises asking for full prepayments, those comments will likely fall on deaf ears. Even so, there appears to be less demand for products from the mining manufacturer, which is always worrisome. This is primarily due to stiff competition from other firms exploring IPO plans.
Competition is a Good Thing
Bernstein experts identify two major competitors to Bitmain at this stage. Both Ebang International Holdings and Canaan have begun making inroads in the cryptocurrency industry. Competition can only be considered to be a positive sign for the industry. For the Chinese manufacturing giant, however, it can affect their projected IPO valuation.
Over the past few months, the company has been subject to a lot of speculation. Especially concerns regarding its finances are a hot topic of debate right now. A lot of details regarding Bitmain’s business and investments remain unclear at this stage. Additionally, declining prices of Bitcoin and altcoins should also cause issues for the company. So far, they seem unencumbered by these market fluctuations, for some unknown reason.
There are also concerns over the company’s Bitcoin Cash holdings. Recent documents show Bitmain owns a large amount of BCH. Investors and analysts consider this to be a very risky hedge first and foremost. The Bitcoin Cash price lost a lot more value compared to Bitcoin, making it a very tricky investment. The coming months will be crucial for the Chinese manufacturer and its IPO plans.
Image courtesy of ShutterStock