Analysts suggested that mining rig manufacturer Bitmain is trying to get rid around a million of its Bitcoin Cash through an initial public offering (IPO).
Mining rig manufacturer Bitmain wants to offload a huge number of Bitcoin Cash (BCH) out of its inventory, analysts said after the developer reportedly filed documents for an initial public offering (IPO) reportedly worth as high as US$18 billion. An IPO allows a company to raise capital by selling some of its shares to investors.
Analysts online argued that Bitmain is trying to get rid of its Bitcoin Cash by indirectly selling the altcoins through the proposed IPO. One reason, they pointed out, was the failed gamble the developer took when the crypto market was soaring high.
Bitcoin Cash Bag
A photo of Bitmain’s on-hand cryptocurrency assets surfaced online, showing the company betting almost all-in on Bitcoin Cash. The document suggested that the company sold most of its Bitcoin (BTC) on hand to purchase more Bitcoin Cash.
The numbers show that from December 31 of last year, Bitmain has more than 840 BCH and 36,000 BTC.
Three months later, the numbers shifted to 1 million and 22,000 for Bitcoin Cash and Bitcoin, respectively. The Bitcoin Cash on Bitmain’s inventory lost more than US$300 million in value from March and is now only worth around US$600 million.
Analysts argued that Bitmain sold off its Bitcoin and held a lot of Bitcoin Cash to support the expenses of the altcoin-related operations. These moves propped the Bitcoin Cash higher than how the altcoin should have naturally moved. All these happened while the crypto market headed south.
WhalePanda, online crypto personality, said:
“By investing in the Bitmain IPO, you’re giving them money to act as buy support for $BCH. Why now the sudden push for IPO? Since they can’t support the price anymore and they realize they’ve made a huge mistake.”
As the crypto market continues to follow a bearish trend, analysts argued that Bitmain now wants to get rid of its Bitcoin Cash. However, they thought that the manufacturer could not easily do so. While a million of the altcoin is worth millions of dollars, they could not be easily converted into its cash equivalent, leaving the bag full of Bitcoin Cash virtually useless in business-related transactions. Moreover, the crypto market lacks the ideal liquidity to receive suddenly a huge amount of the altcoin.
The company then faced a dilemma: hold the non-valuable Bitcoin Cash and keep Bitmain in a losing position, or dump them and send the coin spiraling down.
IPO is the Only Way
Analysts now concluded that Bitmain resorted to an IPO as a way to get rid of Bitcoin Cash without dumping them to the market. By offering to investors stocks of its company—which value includes the bag of Bitcoin Cash—Bitmain can indirectly get rid of some of its altcoins without necessarily harming the market.
Crypto Herpes Cat, another online personality, said:
“How do you realize the value of this monolith crypto business and your holdings? You IPO and pass the bag on in one huge lumped stock offering and hope investors don’t realize all of your assets are very, very illiquid. As many people are realizing now, there’s no way to realize many of these coin assets.”
Samson Mow of Blockstream, however, warned investors from putting money into the Bitmain IPO. He described it as “incredibly risky for any investor to buy into.” He argued that investors only face massive losses, as Bitmain has “no idea how to maintain [Bitcoin Cash], but are all-in.”
WhalePanda also issued his own warning, stating that participating in the Bitmain IPO Is similar to investors throwing their money into a dumpster fire.
Nevertheless, several companies have supposedly participated in Bitmain’s pre-IPO round. Venture capital firm Sequoia Capital, Chinese conglomerate Tencent, and Japanese multinational Softbank are some of the reported institutional investors.
Bitcoin Cash is performing poorly in the market. The fourth largest crypto based on market capitalization has reached US$484.34, its lowest value for the year.