4-YEAR-OLD COMPANY MAKES 4 BILLION IN PROFIT
Specializing in mining pays off
Bitmain’s story tells us how finding an opportunity in the market makes you global number one, even if you have no more than a few years of history in the industry.
Have you heard of Bitmain? Many of us haven’t. But if you have ever looked around to find out what crypto-mining means you must have come across the brand “Antminer”. Antminer S9 is the world’s most effective, and as a result, most popular miner equipment. The company that produces them is called Bitmain. The Chinese firm, according to a US research company, Bernstein’s analysts, who underline that these are conservative estimates, made $3 billion to $4 billion in operating profits in 2017.
To help you understand what it means to end a financial year with 3 to 4 billion dollars in profits, well-known graphics card manufacturer Nvidia’s profit for 2017 was 3 billion dollars, based on Bernstein’s estimates. What makes Bitmain’s achievement outstanding is that it was established 4 years ago, while it took 24 years for Nvidia to rise as high as 3 billion in operating profits.
Beijing-based Bitmain was founded by Jihan Wu and Micree Zhan in 2013. The company has since grown into one of the primary firms involved with the process of using computing power to generate Bitcoins, in other words, with Bitcoin mining.
In the beginning, miners used ordinary video graphics cards for mining. And it was a profitable solution. Then came a China-based company that started selling application-specific integrated circuits (or ASIC), computer chip cards that could mine Bitcoin 50 times faster than traditional video graphics cards. That was back in 2013.
If you are looking for equipment like that in 2018, Google will lead you to Antminer Bitcoin mining rigs produced by Bitmain. Based on estimates, Bitmain’s market share in Bitcoin miners and ASIC’s is an astonishing 70 to 80% globally.
Much of the growth in the company’s profits came from the exponential rise in Bitcoin prices in 2017, the Bernstein report said. And what’s quite interesting about Bitmain’s sales strategy is that they adjusted the price of miners to the development of the price of Bitcoin. When Bitcoin’s price was soaring around $20,000 at the end of last year, an Antminer S9 cost twice as much than a month earlier when one Bitcoin was worth about $10,000.
Current data indicate that Bitmain is likely to dominate this industrial segment in 2018, too.
Though Chinese authorities have taken serious actions by banning ICOs and causing local bitcoin exchanges to close, Bitmain seems to stay ahead of the game. The company is expanding: a mining pool subsidiary in Israel, mining farms in Canada and Switzerland, and regional headquarters in Singapore, according to the Bernstein report. And Bitmain is also expanding its business to other cryptocurrencies such as Ethereum and Monero.