Bitmain, the Beijing-based bitcoin mining company which predominates the bitcoin “mining” industry, made $Trio billion to $Four billion ter operating profits ter 2018, according to Bernstein Research, the CNBC reported.
The estimates are based on conservative estimates of gross margin of 75 procent and operating margin of 65 procent.
The analysis also compares Bitmain to Nvidia, a US artificial intelligence company, with the two companies reporting profits of approximately the same amount last year.
“But Bitmain achieved this ter merely four years, while it took Nvidia 24 years to get here,” Bernstein said.
Bitmain, a privately-held and secretive company, wasgoed founded by Jihan Wu and Micree Zhan ter 2013.
The company has since grown into one of the leading firms involved with bitcoin mining, the process of using computing power to generate bitcoins. Wu is also a widely-followed figure ter the bitcoin world.
When Bitcoin very first commenced, ordinary movie graphics cards could be used to process computations needed to mine the cryptocurrency.
The company turned bitcoin mining into a specialized process te 2013 by selling application-specific integrated circuits, or asic, rekentuig chip cards that could mine bitcoin 50 times quicker than conventional movie graphics cards.
Today, Bitmain sells Antminer bitcoin mining equipments that can cost several hundred dollars to a few thousand dollars each.
The company also operates mining pools ter which participants collaborate on bitcoin mining to cut costs.
It is estimated that Bitmain has 70 to 80 procent of market share ter bitcoin miners and asics.
Most of Bitmain’s income wasgoed generated by selling miners powered by the company’s chips, according to Bernstein.
It is predicted the surplus wasgoed generated by mining itself to a large extent and, to a much lesser extent, through collecting management fees from the mining pools it operates and renting out the mining power of its mining farms through cloud services.
Much of the growth te mining revenue came from the exponential rise ter bitcoin prices, Bernstein said. Its analysis also said that “Bitmain shrewdly adjusts the prices of miners according to bitcoin prices.”
Spil the price of bitcoin surged toward $20,000 late last year, the price of Bitmain’s AntMiner S9 leaped near $Five,000. Production costs remained the same, according to Bernstein.
However, longer-term growth is not assured, especially te the volatile cryptocurrency market.
Bitcoin has lost half its value since the embark of 2018 and there are worries about a regulatory crackdown.
So far Chinese authorities have taken some of the strongest deeds against cryptocurrencies by banning initial coin offerings and causing local bitcoin exchanges to close.
Bitmain has taken significant steps to preserve its competitive advantage. It has launched a mining pool subsidiary last April te Israel, and is opening mining farms te Canada and Switzerland, spil well spil regional headquarters ter Singapore.
It is also widening its business to other cryptocurrencies such spil Ethereum and Monero.
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