Questions Raised Over Bitmain Profits After IPO Filing

After Bitmain submitted its listing application to the Hong Kong Stock Exchange at the end of September, its profitability was known to investors. However, the information released caused a storm. The British Financial Times quoted the past financing documents yesterday, pointing out that Bitmain’s pre-IPO financing round, about one month before the application for listing, listed the net profit for 2017 at $1.1 billion USD, but in the initial prospectus, it only showed earnings of $7.014 million USD, a difference of more than 36% before and after earnings.

According to the document quoted in the report, Bitmain raised $400 million USD in the B round of financing in June this year, led by Sequoia Capital China. The 2017 net profit data provided by Bitmain at that time was $1.25 billion USD. In other words, the profit data published from June to September this year has been revised twice.

However, Bitmain did not respond positively to the reasons for the change in net profit. It only said that all the preliminary prospectus documents shall prevail. As for the exclusive sponsor, China International Capital Corporation, they refused to respond. The accountant KPMG did not respond to the relevant matters either.

In September last year, Bitmain sold 5% of its shares for $50 million USD in the A round of financing, with a valuation of $1 billion USD. It has investments in IDG and Sequoia Capital China. Its valuation has now increased to $14 billion USD and projected that it would reach a valuation of between $30 billion and $40 billion within three years