The “world’s most power-efficient Bitcoin miner” as described on the website made the wrong choice when betting on Bitcoin Cash, but still has a chance to become “one of the great companies” in the cryptocurrency space, the representatives of BitMEX reported.
Before making remarks, BitMEX researchers took an in-depth look at Bitmain‘s Initial Public Offering IPO, considering its potential to repeat a previous success while passing through a tough period regarding its management system.
“Bitmain can be a legendary crypto company, generating strong shareholder returns for decades to come, but in order to achieve this (and it’s a lot harder than it sounds) the Bitmain management team may need to improve their management of company resources,” the analysis summarizes.
Bitmain has sparked controversy last month when the details of a pre-IPO investor deck went public, leading to revelations that the company might be facing critical liquidity problems.
Bitmain blundered last month after the information of a pre-IPO investor was made public. The incident revealed that the leading mining company would have serious liquidity problems.
The company’s losses were mainly caused by poor sales in the second quarter of this year, but also due to incorrect investments of executors in Bitcoin Cash BCH, whose currency fell by about 80% afterward.
“The figures indicate Bitmain was highly profitable and cash generative in 2017, but may currently be loss making. Bitmain also spent the majority of its operating cash flow acquiring Bitcoin Cash and may have suffered mark to market losses of US$328 million as a result.”
While the researchers assume that company’s IPO might be successful, BitMEX has been severely blundering with the extreme interest in BCH investments, money paid out of the company’s account, as executors spent roughly 70% of Bitman’s 2017 cash flow.
“In a way some of Bitmain’s biggest mistakes, such as producing too many units and buying too many speculative altcoins in a bull market, are somewhat analogous to the typical behavior of mining company management teams,” researchers write.
Author: Adriana Midrigan