When a company’s abysmal quarterly earnings are leaked – a month before a planned IPO – one has to wonder: is Enron now in the business of cryptocurrency mining?
As revealed on Twitter, the once high-flying crypto hardware-mining company, Bitmain, might be spiraling towards financial ruin. With losses putatively reported in Q3 2018 upwards of $740M and Bitcoin Cash (BCH) inventory held on the balance sheet, the investing public got an early look into what might come next month when the company floats a portion of its ownership.
Without looking through the financial statements, one can easily ascertain the hits to the bottom line Bitmain might have been taking this year. A firm, whose main focus is building and selling mining rigs, has fallen victim to depressed demand and declining technical performance on the back of an across-the-board tanking of cryptocurrencies.
The company was a prominent backer of BCH in the first place, which has seen prices implode from $4k a year ago to $140.
In a rift of epic proportions in the crypto world, Bitmain stood as a public backer of the fork that created BCH. Further, BCH prices began their fall off the cliff when it branched into two versions, BCHABC and BCH, and Bitmain assumed the lower value of BCHABC which eventually folded into BCH. But while it was providing support, it was involved in the notorious hash wars, which are estimated to have inflicted a $500k per day hit to the firm.
This all happened under the guise of Bitmain dumping its BTC holdings whilst accumulating BCH.
The Chinese mining equipment producer has yet to publicly respond to the leak. But rest assured, no company with an impending IPO and a whirling dervish of leaked news can stay quiet for long.
As the IPO approaches, the firm will disclose more results. But the market is expecting to see further hits as the release of its newest mining hardware faces a falling hashrate. In the last month alone, nearly half of the current miners have decreased their capacity as the BCH hashrate smashes into 1 EH/s – not quite the auspicious sign for future demand of ASIC, the type of hardware Bitmain sells.
With an IPO rapidly approaching and the crash of an underlying asset to its products, Bitmain has one hell of a journey ahead of them this month. Rarely do companies change leadership ahead of an event with as much importance as an IPO, but the question must still be pondered.
Are heads about to roll?