Cryptocurrency mining as a way to make money has lost much of its appeal since bitcoin prices peaked and plunged. At the same time, mining has increasingly become the domain of large mining farms and companies, leaving independent miners largely in a weaker position as financial rewards for mining cryptocurrencies has, for the most part, fallen alongside bitcoin.
It turns out that these plunges in cryptocurrency prices alongside likely weakening demand has led the world’s top producer of crypto mining equipment to pull back their planned initial public offering. Bitmain said on Monday they would no longer be planning to list on the Hong Kong stock exchange.
“Bitmain’s listing application to HKex in September 2018 has reached its 6-month expiration date. We do recognize that despite the huge potential of the cryptocurrency and blockchain industry, it remains a relatively young industry which is proving its value. We hope regulatory authorities, media, and the general public can be more inclusive to this young industry. We will restart the listing application work at an appropriate time in the future,” said the company in a press release. “In the meantime, the listing process has made the company more transparent and standardized. The process of rationalization and optimization has made our business more focused on the things that are core to our mission.”
The company went on to cite plunging digital currency prices as being one of the main reasons. Bitmain, which is based in Beijing, filed its IPO plans back in September 2018 when bitcoin prices were skyrocketing and its own six-month revenues ending Jun 2018 reached $2.8 billion. At the time, the company added that its ownership of digital currencies was close to around $886.9 billion in value.
However, recent reports have gone on to indicate that with the plunging of cryptocurrency prices, so did Bitmain’s profitability as the company lost $500 million in the third quarter of 2018, according to CoinDesk. At the time, the company denied the report, saying that “the rumors are not true, and we will make announcements in due course in accordance with the requirements of relevant laws and regulations.” However, it is clear that the company has had a number of layoffs and official closures around the world, and the crypto portfolio held by Bitmain supposedly lost as much as $600 billion in valuation.
“The bear market at the end of 2018 brought both challenges and opportunities that Bitmain will work hard at addressing in 2019,” added the company in the press release. “We continue to fund open-source developers, projects and organizations. For those that we see potential and share our vision, we fund them, often with no strings attached.” Besides the official statement, Bitmain refused to respond to requests for further comments from publications.
Should prices not return to previous levels, crypto mining will continue to remain less profitable for individuals. According to a research paper published back in November 2018 when prices were still high, the amount of energy required to mine bitcoin was more environmentally taxing that it was to produce an equivalent amount of gold and other precious metals. Electricity costs have always been something that crypto miners have had to deal with, with mining farms usually being set up in areas where power is cheap. Regardless, it seems like the state of crypto mining in 2019 isn’t as lucrative as it was in previous years.