A closer look at Bitmain's massive IPO

Leo Zhang

By Leo Zhang

One of the hottest events in the capital markets now is Bitmain's massive IPO. Valued at a whopping $18 billion, the mining giant is expected to outshine even Facebook's $16 billion IPO price tag. While it is extremely impressive to have built such a behemoth in such short time, new disclosures are making investors nervous.

Bitmain is hodling nearly $600 million in Bitcoin Cash
(CCN, by Josiah Wilmoth)

"Notably, Bitmain appears to be methodically liquidating its BTC holdings, even as it deepens its stake in bitcoin cash. Bitmain had about 22,000 bitcoins at the end of March, down from more than 71,500 in Dec. 2016. This does not necessarily mean that Bitmain is trading BTC directly for BCH, but it does suggest that it is selling bitcoin to cover the expenses associated with its acquisition of BCH through other means, such as mining and ASIC sales."

A BCH update: Bitmain, BCH, the IPO & what it all actually means
(Crypto Herpes Cat)

"It is impossible for Bitmain to divest their BCH holdings onmarket. Full stop. The BCH markets are not liquid enough to absorb the amount of coins Bitmain is still holding (probably around 700k or so now). There is no BCH OTC market to speak of (it’s minuscule compared to BTC OTC). Grayscale already created the BCH investment trust so that’s one available option already burned. Bitmain is stuck with these coins or they risk dumping the entire market and hurting the coin permanently."

Commentary on Bitmain's operating cashflow

Technical Updates

The business model of crypto-wallets
(Hackernoon, by Ouriel Ohayon)

"Before we start: crypto wallets are generally free software or mobile apps that enable you to manage your crypto funds: host, send, receive and public/private key management. If you ask me, they all look like fax machine but some are very popular and even making serious money. So how is that possible?"

Universal method to sort complex information found
(Quanta Magazine, by Kevin Hartnett)

"In this new work, the computer scientists began by stepping back from the pursuit of specific nearest neighbor algorithms. Instead, they asked a broader question: What prevents a good nearest neighbor algorithm from existing for a distance metric?"

News & Commentary

Commentary on "fat protocol"

Ether tumbles as concern increases that ICOs are cashing out
(Bloomberg, by Camila Russo and Olga Kharif)

"Pressure from ICOs cashing out is compounding with generalized bearishness in the cryptocurrency market, with market capitalization dropping to about $200 billion from a high of over $800 billion in January, on concern about tightening regulation and slow adoption."

Cryptocurrency exit scams have conned people out of almost $100M
(Hard Fork, by Matthew Beedham)

"Exit scams continue to plague the ICO space as there is little by means of regulation to ensure the legitmacy of projects being listed, afterall there are no legal obligations in this arena to deliver a product once you have raised secured funding. It’s pretty much a digital wild west as far as the law is concerned."

Not all governance is voting
(Tony Sheng)

"Governance is not a feature, it is a complex system. Voting is just one (optional) part of that system and does not itself lead to strictly better governance (though it can). A project can have strong governance without voting and a project with voting can have terrible governance. We should be wary of projects that claim decentralized governance solely based on their voting feature and instead seek to understand all sources of influence across the decision-making process."