Bitmain Says It Is Shouldering the Burden of Crypto Anxiety

November 8, 2018

By Alex Heath and Jacqueline Corba

As the world’s biggest hardware manufacturer for cryptocurrency, Bitmain is among the most crucial companies to watch in the crypto space.

But the Beijing-headquartered firm is also notoriously secretive ー and is burdened by controversy during a crucial time in its history.

Bitmain rocked the crypto world in September when it filed for a landmark initial public offering that could seek to raise roughly $3 billion on the Hong Kong Stock Exchange.

But many harbor concerns that Bitmain may have misled investors about some of its finances and may have recently lost its main hardware supplier after failing to pay its debts. And more companies are springing up to try and steal Bitmain’s dominance as the biggest supplier of chips for creating digital cryptocurrency — a process called mining.

Bitmain’s Vice President of BTC.com, Alejandro De La Torre, recently sat down with Cheddar’s Alex Heath for a rare interview at the Web Summit conference in Lisbon, Portugal. He addressed many of the issues confronting Bitmain.

In its IPO paperwork filed back in September, Bitmain revealed that it significantly overestimated demand for its mining chips — its inventory swelled by $1 billion in 2018 — after seeing the surge in prices for cryptocurrencies like Bitcoin and Ethereum toward the end of 2017.

But despite the financial mishap, De La Torre said that Bitmain is observing more people mining Bitcoin ー even as the price has decreased.

“I think many of the miners and people in the industry really believe in cryptocurrency and think this is just a normal market trend,” he told Cheddar. “The price was very, very, very high. It’s unsustainable,” De La Torre said.

Bitmain achieved more than $2.8 billion in revenue last year and $701 million in net profit, but its gross margin for the first six months of 2018 was 36 percent, down considerably from 48 percent in 2017 and 54 percent the year before — a sign that costs are going up.

A recent report from Coingeek alleged that TSMC, which supplies more than 50 percent of Bitmain’s chips, has stopped supplying chips, a response to Bitmain’s inability to pay back $300 million in debt.

De La Torre wouldn’t comment on the report specifically, but he did tell Cheddar that, “what I can say is that there is a lot of fear, uncertainty, and doubt in the market. And a lot of it is being pressured or shot at us, at Bitmain.”

When asked about how investors should consider the intense price volatility in the crypto market, De La Torre said that he hopes to see cryptocurrencies applied to everyday payments.

“When the currency is used not just for speculation, I believe and my other peers believe that volatility will decrease,” he said.

For the full video interview with Bitmain VP Alejandro De La Torre click here.