The world’s largest producer of cryptocurrency mining equipment may lose its market dominance according to new research by Sanford C. Bernstein & Co.
The report, published on Wednesday, suggests that the current bear market has reduced mining hardware sales to the point where it may become unprofitable to continue development.
Bitmain, which was recently valued at $12 billion, holds approximately 85 percent of the cryptocurrency mining market has recently announced it will be holding an initial public offering (IPO). Q1 profits for 2018 were reported by Bitmain to be $1.1 billion but the companies profits since may well be significantly lower.
Analysts for Sanford C. Bernstein & Co also noted that the mining giants considerable hoard of Bitcoin Cash (BCH) could present a “major risk” going forward. Bitcoin Cash developers are currently in the middle of a disagreement regarding the future of the network, posing a possible fork of the network into two incompatible blockchains.
Last week, documents were leaked from Bitmains pre-IPO investor deck earlier this year showing the company is holding over one million BCH. These assets will have decreased in price considerably since the documents were made, causing around $300 million in losses.
The report goes on to note that Bitmain’s main semiconductor supplier, Taiwan Semiconductor Manufacturing Co, should request full advance payments and be wary of increasing production of cryptocurrency mining hardware.
Reports earlier this week suggest that two companies said to have invested in Bitmain’s pre-IPO round, Softbank and Tencent, have now denied any involvement with the company.
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