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Report: Bitmain to Launch 200,000 Crypto Mining Rigs in China

Bitmain Bitcoin Mining China 2019

According to a report published by CoinDesk on Mazar. 21, cryptocurrency mining conglomerate Bitmain is looking to launch up to 200,000 new mining rigs in China, at a conservatively estimated cost of $80 million.

The move will allow Bitmain to take advantage of the relatively cheap hydroelectric power in China during the summer of 2019, with CoinDesk also reporting that the expensive deployment of equipment may end up being more cost-effective for the company than outright selling their inventory. CoinDesk also reports that the decision by CoinDesk is positive for the industry and miners, sending a signal of a “broader shift in the market, with miners preparing to invest again following last year’s contraction in capacity.”

Bitmain, which holds the distinction of being the largest manufacturer of cryptocurrency mining equipment by market share, can take advantage of the excess hydropower in China’s southwestern province for cheap mining costs relative to the broader market. According to sources in the region familiar with the situation, Bitmain has “already started discussions and making deals with farms to host its equipment so that it can be fully prepared.”

The report also includes information that Bitmain will be primarily deploying its newer model mining rigs, the AntMiner S11 and S15, which retail for around $500 and $1000, respectively, per unit. It is also unclear according to the sources which proof-of-work cryptocurrency Bitmain will be targeting to mine for. As CoinDesk points out, even at $80 million in projected costs to deploy the equipment in the new region, the move represents a “non-negotiable opportunity cost” considering Bitmain’s primary revenue source is from mining equipment sales as opposed to actual mining.

However, the company is caught in a difficult position due to the ongoing bear market that has extended into the beginning of 2019. While the company could attempt to selloff the bulk of their 200,000 intended units for deployment, the marginal profits that could be made from mining in the presence of cheaper electricity may provide the better sunk cost. CoinDesk calculates that, using conservative estimates, Bitmain may be able to secure a monthly profit of $7.7 million.

CoinDesk also reports that Bitmain’s scaling up in mining operations could send a strong signal to the broader market, particularly as cryptocurrency mining and coins prices continue to linger at relative lows. Estimated reports found that over 600,000 Bitcoin miners shut down operation in 2018 due to the falling con prices no longer proving profitable relative to mining costs, leading to the market being flooded with second-hand rigs being sold at a discount.

Despite the decline, Bitmain and other miners deploying to China in the upcoming wet season to take advantage of excess hydroelectric power could bring about a sharp increase in Bitcoin’s hash rate, with some estimates putting it at 70 quintillion hashes per second (EH/s), well above the all time network high of 60 EH/s.

Renewed mining interest in conjunction with building crypto adoption that has already started in 2019 could lead to a reversal in both coin prices and increased competition to capitalize on the market while prices are still depressed. With increased mining competition for Bitcoin, the selling price for newly minted coins should also rise, which could have a broader effect on BTC pricing.

The post Report: Bitmain to Launch 200,000 Crypto Mining Rigs in China appeared first on Ethereum World News.

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DST Global Denies Investing in Bitmain IPO

Cryptocurrency–Just days after Softbank, one of the largest investors in Uber, denied putting money into cryptocurrency mining conglomerate Bitmain’s IPO, another company has come forth to put to rest rumors related to participation in the IPO. DST Global, an investment fund which focuses on late-stage, global ventures, has said in a written statement to CoinTelegraph that it has not been a participant in Bitmain’s $400 million funding round that occurred earlier in the year, despite reports saying otherwise.

CoinTelegraph reports receiving an anonymous tip today claiming that the investment firm had steered clear of Bitmain’s IPO, with managing partner at DST Global John Lindfors later confirming the rumor, writing in an email,

“I can confirm that DST has never invested in Bitmain.”

The bizarre twist over Bitmain IPO partnership comes just days after Cointelegraph was able to confirm reports that Softbank, a high profile investment firm that has made headlines as the largest investor in Uber, had also refrained from putting money into Bitmain’s IPO. Like DST Global, the rumor mill had proposed that Softbank was participating in cryptocurrency’s large profile IPO via Bitmain, which was confirmed to be not true following the release of a statement from Softbank, saying on August 18,

“Neither the SoftBank Group Corp. nor the SoftBank Vision Fund were in any way involved in the deal.”

In addition to the aforementioned denials, Chinese multinational investment holding Tencent has come forth to dispel any rumors related to its connection with the Bitmain IPO. Tencent, which holds the distinction of being China’s largest tech entity by market capitalization, told a Hong Kong news outlet that

“the company did not take part in the investment of Bitmain Technologies.”

While the series of investment banks and firms backing out of a rumored partnership with Bitmain is concerning, the IPO has already stumbled into controversy related to the crypto mining firm’s massive holding of Bitcoin Cash. Despite most of cryptocurrency seeing a large decline in value throughout 2018 (particularly the classification of altcoins), Bitcoin Cash has experienced an 87 percent decline in price from it’s all-time high of $4300 on December 20, 2017. In addition, Q2 sales for Bitmain were reportedly disappointing, falling in line with the rest of the crypto market decline throughout the year.

Leaked documents from the pre-ICO show that Bitmain is sitting on $600 million worth of Bitcoin Cash–a risky proposition in the current market, but one that could prove fortuitous if the price of BCH makes a turn back towards the bullish. Some even view the massive holding of BCH as an indication that Bitmain is supporting the hard fork of Bitcoin fully, and preparing to back the investment with action that further promotes the price of BCH,

However, other investors have described the proposition of a Bitmain IPO as risky in the current market conditions. Popular crypto Twitter pundit WhalePanda put his concerns over Bitmain’s IPO in a specific light,

“They purposely didn’t include the Q2 numbers for Pre-IPO buyers since they were a disaster… They told Pre-IPO buyers they would use some of the money to buy more BCH.”

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