World’s top cryptocurrency miner may be losing its edge, analysts say

Beijing-based Bitmain may need to write down the value of its inventory as makers of rival cryptocurrency mining equipment catch up

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Technicians inspect bitcoin mining machines at a facility operated by Bitmain Technologies in Ordos, Inner Mongolia. Bitmain, which is also one of the biggest operators of cryptocurrency mining collectives, is planning a Hong Kong initial public offering that could raise as much as US$3 billion. Photo: Bloomberg

Published: 3:42pm, 22 Aug 2018Updated: 3:54pm, 22 Aug 2018

Bitmain Technologies, the designer of chips used in cryptocurrency mining that is planning a landmark initial public offering (IPO), may be losing its technological edge, according to analysts at Sanford C Bernstein & Co.

The Beijing-based company, co-founded by 32-year-old billionaire Jihan Wu, may need to write down the value of its inventory as makers of rival cryptocurrency mining equipment catch up, analysts led by Mark Li at Bernstein wrote in a report on Wednesday.

Taiwan Semiconductor Manufacturing Co (TSMC), which produces the chips designed by Bitmain, should ask the company to make full prepayments and refrain from adding capacity solely for cryptocurrency-related demand, according to the Bernstein analysts.

“The competitiveness of Bitmain’s chips is in question,” the analysts wrote.

While Bernstein called Bitmain’s performance last year a “wild success” and noted that it controlled an estimated 85 per cent of the market for cryptocurrency mining chips, the company is facing growing competition from players including Canaan and Ebang International Holdings, which are also pursuing IPOs in Hong Kong.