After two months full of question marks, the IPO plans of the Chinese mining company Bitmain are now gaining momentum again. According to a document published on 26 September, Bitmain has filed an official application with the Hong Kong Stock Exchange. This announcement also pleases investors in Bitcoin Cash - the crypto currency is now rising by more than 20 percent.
Now it counts: Bitmain has officially announced its Initial Public Offering on the Hong Kong Stock Exchange (HKEX). This is how Jihan Wu actually makes his announcement come true and brings the mining giant to the stock exchange. Since the CEO of Bitmain told about the plans in June, the cryptoscene has been speculating about the place and time of the IPO - as well as about the company's value assessment. Wu himself had initially brought 12 billion US dollars into play as a benchmark and thus set the value of his company high.
Not as successful in pre-IPO as desired
In the following months, however, there were some irregularities with regard to the IPO. The investment company Sequoia Capital China invested as much as 400 million US dollars in the pre-IPO. However, Sequoia Capital is also one of the venture capital companies originally invested in Bitmain. However, Bitmain received a rejection from other major investors.
Chinese media reported an investment of one billion US dollars by the Chinese technology group Tencent and the Japanese SoftBank. In the course of this, expectations were revised upwards to 18 billion US dollars. Some time later, however, both Tencent and SoftBank announced that they were not involved in Bitmain's pre-IPO. The investment company Temasek also rejected a participation.
A good day for Bitmain - and for Bitcoin Cash?
So now the registration at the Hong Kong Stock Exchange. In a more than 400-page application, Bitmain sets out the main features of the planned IPO and opens its books. The manufacturer of mining hardware reveals a net profit of 740 million US dollars with a turnover of 2.8 billion US dollars in the first half of the year. Even if the application does not include the targeted market value, a high valuation is to be expected.
Bitmain's listing on the stock exchange is also reflected elsewhere. Thus, the price of Bitcoin-Hard-Fork Bitcoin Cash rose by more than 20 percent in the 24 hours after the publication of the document. Thus, the Bitcoin Cash exchange rate is again well above 560 US dollars, the market capitalization is scratching the 10 billion US dollar mark. This price increase is due to the special relationship between Bitcoin Cash and Bitmain.
How strong is the relationship between Bitmain and BCH?
As was announced in August, Bitmain holds more than one million Bitcoin Cash in addition to smaller deposits of various crypto currencies. With a circulation of about 17 million BCH, this would correspond to almost six percent of all Bitcoin Cash units - a considerable amount. Bitmain is thus making it clear what crypto currency the company is behind.
Bitmain gains even greater control over the fortunes of the Bitcoin Cash community by using its ASIC miners to mine Bitcoin Cash. With a market share of almost 80 percent, Bitmain not only holds a dominant position in the sale of mining hardware. The company also operates the two largest mining pools and has a stake in a third. The company is therefore in an outstanding position to generate new BCH units.
Critical voices therefore refer to Bitmain as a kind of central bank of Bitcoin Cash. On the one hand, it holds reserves of the currency and, on the other hand, controls the money supply. Even if the term central bank certainly goes a little too far, the influence of Bitmain on the fate of the BCH community should not be under-estimated.
So what does the Bitmain-IPO mean for Bitcoin Cash?
BCH can profit from a successful IPO in two ways. A large part of the money collected could flow directly into Bitcoin Cash, which would increase Bitmain's BCH reserves and reduce the amount of BCH circulating. Bitmain could also invest even larger sums in state-of-the-art mining technology to mine Bitcoin Cash. In both cases, for Bitcoin Cash this means: the price rises. The joyful expectation of this also explains the 27 percent increase in the last 24 hours.