Bitmain – review a mining software solution in 2019

People like to compare mining with the “gold fever” of the 19th century. However, unlike the actual gold miners, these people, who sell them the equipment for gold mining – these people actually get rich. Mining of cryptocurrency not only allowed the producers of video cards to make a profit, but also gave the market a new type of equipment – ASIC devices.

There are a lot of Bitmain reviews, as it has become a monopolist in the ASIC industry. For five years, the company has gone from a startup to a market leader, has created a number of mining farms, launched its own pools, and also entered the artificial intelligence market. Now Bitmain is preparing for an IPO. Let’s jump into it in our Bitmain scam review to figure out, is it legit or not.

A brief history of the development of devices for mining

Mining is a process that ensures the operation of a cryptocurrency network and the issue of coins. Independent nodes or miners solve a complex algorithmic problem to determine the hash of the next block. You can carry out the necessary calculations only with the help of special equipment.

The miner, who will cope with the task first, will add a new block to the blockchain and will receive a certain amount of cryptocurrency as a reward. This creates competition between network nodes and leads to an increase in mining complexity.

For the first time mining was used in the Bitcoin network. Initially, BTC was mined by using processors. But over time, the number of miners in the network increased, and with them the complexity of the problem. In 2010, Laszlo Kanyez invented a way to extract cryptocurrency using video cards and competition intensified.

Video card manufacturers began to make money from BTC mining and this attracted new players to the industry. They did not set themselves the goal of releasing GPUs, but created a new type of equipment for mining – integrated circuits for special purposes or ASIC. These devices quickly proved their efficiency and drove old mining methods out of the market. In 2012-2013, to mine bitcoins using processors or video cards became unprofitable.

Jihan Wu and Mikri Zhang. Bitmain Creators

The founders of Bitmain were Jihan Wu and Mikri Zhang. Entrepreneurs are kept in the shadows, the details of their biography are little known. Jihan Wu received degrees in psychology and economics from Peking University. Mikri Zhang is an engineer. He received a degree from the Chinese Academy of Sciences. They first met in 2010. At that time, Zhang was running his own startup, DivaIP. The entrepreneur created a set-top box to broadcast to a computer.

Cihan Wu worked in a venture fund and accidentally drew attention to one of the employees of DivaIP, who advertised the company’s product on the street. Wu became interested in the project and decided to meet with Zhang. The latter at the time needed venture capital and asked the future partner for advice. But in the end, Wu could not help Zhang and DivaIP.

The story might have ended in a chance encounter, but in 2011, Cihan Wu became interested in Bitcoin. The idea to create a company that will be engaged in the production of equipment for mining did not come immediately.

At first, Wu preferred to invest in Bitcoin. At the time, its rate was at $ 1 per coin. Wu invested in BTC all the savings. Relatives seriously feared that he was the victim of fraudsters. But soon they realized that Wu made a timely investment. In 2013, the Bitcoin rate began to grow rapidly. Wu managed not only to return the investment, but also to earn.

Having received start-up capital, he decided to enter the market of equipment for mining. But the company needed a talented engineer. Wu remembered Zhang and wrote him an email in which he set out everything he knew about Bitcoin. Zhang spent two hours reading about this cryptocurrency on Wikipedia. In the end, he decided that he wanted to participate in the project. Together they in 2013 created the company Bitmain.

Conclusion: Is Bitmain legit?

The answer is Yes. According to Bloomberg, Bitmain, as for 2018 controls 85% of the mining equipment market. The company continues to produce ASIC not only for Bitcoin, but also for other cryptocurrencies. Because of this, Bitmain is ambiguous.

The emergence of ASIC devices for a cryptocurrency network means an increase in mining complexity. Many altcoins can still be mined with video cards and processors. But the emergence of ASIC will remove this opportunity. This has already happened with Bitcoin and many miners are afraid of a repetition of the situation. Therefore, the next ASIC is met with caution and discontent.

For example, this year Bitmain released Antminer X3 for mining on the CryptoNight algorithm. The situation turned out to be unhappy members of the community of anonymous cryptocurrency Monero. As a result, the cryptocurrency conducted hardfork to protect against ASIC.

Besides the increasing complexity of mining, miners do not like centralization. It is believed that Bitmain has enough leverage to influence cryptocurrency networks. The company is suspected of being able to remotely control an ASIC. While all this remains a rumor.

Now in Bitmain more than 600 people work. The company cannot yet be called a giant, but in its industry it is the undisputed leader. In June, Cihan Wu announced that he was considering the possibility of an IPO. In August, it became known that the company plans to raise $ 3 billion. The IPO will be held on the Hong Kong Stock Exchange in the fourth quarter of 2018 or early 2019.

In July, the company raised approximately $ 300–400 million from Sequoia China, Coatue hedge fund, and the Singapore-based public investment fund EDBI. Then the company was valued at $ 12 billion. Information about Tencent and Softbank’s investments in the amount of $ 1 billion also appeared. But both companies denied this information.

Bitmain’s IPO looks promising, but you should not overestimate the company. Analysts are concerned about the opacity of its operations and the fact that a significant part of the assets invested in BCH. The rate of this coin falls, which is not the best effect on the financial condition of Bitmain. It is assumed that due to BCH, the company could receive losses amounting to $ 500-600 million.

It is believed that with the help of funds raised on IPO, the company intends not only to continue to produce ASIC and experiment with artificial intelligence, but also to further develop in the cryptocurrency industry. But it is quite possible that in this way Bitmain is simply trying to overcome financial difficulties.

Bitmain influences the industry not only with the help of ASIC, but also by investing in various projects, such as the EOS blockchain platform. Despite the ambiguous attitude of the community, the company plays an important role in the market.

An IPO will strengthen Bitmain’s position, but not everyone believes in its future. According to analysts Sanford C. Bernstein & Co, Bitmain is catching up with competitors, and its position does not look stable. To this are added the problems of BCH because of which the company lost about half a billion dollars.

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