As per the recent news from INEWS QQ, Bitmain, one of the most vital companies in the cryptocurrency market might go bankrupt in coming days.
The company might face bankruptcy on various issues like inventory losses, regular investments in Bitcoin Cash (BCH), no new chips created in the last times and no growing market for its AI branch.
The company has registered incredible profits during the first quarter of this year registering $1.1 billion dollars. This is quite important because Nvidia reported a net income of $1.2 billion dollars, a company already established in the market.
As per the report, the main loss of Bitmain is related to its holdings in Bitcoin Cash. Bitmain has always been a strong supporter of this hard fork of Bitcoin. However, since its all-time high, Bitcoin Cash lost around 88 per cent of its value.
Back in August, BitMEX Research released a report in which it provided information about Bitmain and its planned Initial Public Offering (IPO). Bitmain was planning to raise funds from investors by going public in Hong Kong.
BitMEX Research informs that Bitmain lost $328 million dollars after investing in Bitcoin Cash, eating up the massive profits made during the first quarter of the year. And as mentioned before, Bitmain did not release a killer product to the market in a long time.
The company accounted for over 85 per cent of the total cryptocurrency mining market, including the most famous mining pools on the internet. BitMEX informs that three successive generations of Bitmain chips have failed, costing the firm several hundreds of millions of dollars.
Moreover, there are different competitors that are moving and starting to take the important part of the market. Canaan Creative and Ebang Communication are also planning an IPO in the near future in order to gain funding advantage.
The report released by BitMEX reads: “Once the company goes public, capital allocation decisions in this volatile and unpredictable market will be difficult enough, letting emotions impact too many investment decisions may not be tolerated.”
Finally, falling cryptocurrency prices had also a negative impact on the revenue of the company. Some miners were not profitable under some Bitcoin price levels.
Currently, the company will have to make a big effort to avoid going bankrupt. If the market starts a new bull run in the near future, things could be much better for Bitmain.