Inside the rise and fall (and rise?) of crypto mining giant Bitmain

The world’s biggest cryptocurrency mining company is going through tough times. But a code change in bitcoin might come to the rescue, again.

Beijing-based Bitmain Technologies on Tuesday called off its plan to go public in Hong Kong after its application lapsed after six months. The failure of what was billed as potentially the world’s largest crypto-related IPO adds to news of retrenchments. A new CEO has been appointed to replace the two main founders, who had previously shared the role.

Hope for Bitmain lies in the next bitcoin halving in May 2020, a preconfigured algorithmic event that cuts the reward for mining bitcoin in half every four years or so and is designed to cap the digital money’s supply. If history is any guide, bitcoin typically rallies in the lead-up to a halving, spurring demand for the specialised computers used by hobbyists or businesses to validate transactions and earn new coins.

Bitmain is now betting that its next flagship product scheduled to be released by the end of this year will turn out to be a winner in the mining gear market, capturing an expected rally, according to a company source with knowledge of the plan.

It was the same strategy Bitmain pulled off in 2016, the person said, when the company launched its Antminer S9 model on the eve of bitcoin’s last halving. In the following year, the S9 accounted for an estimated 60 per cent of shipments among all bitcoin mining hardware.

The South China Morning Post spoke to over a dozen people close to Bitmain, including former and current employees, as well as business partners and a rival, for a sense of how one of the world’s most low profile cryptocurrency companies blew billions of dollars in funds raised before being forced to rein back its ambitions.