Bitmain Profits Higher than US GPU Giant Nvidia - $4-Billion Dollars in Profits

Dear Steemit Friends,

When it comes to mining cryptocurrencies, no name is more synonymous with the industry then Bitmain. Over the course of the past 5 years, Bitmain has established its presence as the #1 ASIC manufacturer in the world developing and selling ASIC miners for various algo's across the cryptocurrency landscape. They are well known for producing the world's most efficient miners at the most competitive price and have been unbeatable when it comes to scale and profitability.

Bitmain Facility - Image Source

In a time where ASICs are beginning to dominate the market in terms of overall hashrate, Bitmain continues to stand out as the leader in overall sales and production. Almost on a regular basis, the manufacturer continues to churn out hardware at considerable markups to position itself for huge profits in margin. It was just announced that Bitmain through its sales of mining hardware and other various mining operations, made $3-billion to $4-billion dollars in profits for 2017. As a comparison GPU manufacturer Nvidia, who's video cards are also popular for mining, took home a profit of a little over $3-billion. This profit for Bitmain is expected to rise as Cryptocurrencies become more popular and more mainstream in 2018.

According to the research from Berstein, Bitmain was able to increase its overall earnings primarily due to the dramatic increase in value of cryptocurrencies over the past few months. Following the demand, Bitmain adjusted the prices, as well as production output of its ASIC miners to match the overall increase of the price. At one point, miners that were originally selling for roughly $1500 USD, sold for roughly $4000-plus for the same model unit and at the same cost to produce the miner. As the single most popular ASIC available, consumers continued to purchase units regardless of the over-inflated price.

Bitmain not only specializes in producing Bitcoin ASIC miners, but they are also constantly the first-to-market ASIC for other algos. With the popularity and increase in overall value of the cryptocurrency market, Bitmain was first to release several ASICs for other well-known and less popular currencies such as Litecoin, Dash, etc.

Owning roughly 70% - 80% of the overall hardware landscape, Bitmain continues to make it challenging for any competition to enter the market. The company has a good reputation and a stronghold on chip manufacturers making it difficult for other ASIC developers to compete. Their position in the market has also allowed them to diversify and increase earnings by capturing other spaces in the industry such as mining pools.

Bitmain’s Antpool and BTC.com mining pools make up just over 40% of the computing power of the overall network hash rate. Bitmain's earnings from these pools come in the form of mining fees which they charge miners for joining its pools. The company is also diving into Artificial Intelligence applications which should also help to diversify and boost their overall revenue in the years to come. Their primary source of income, however, will still continue to be hardware design and ASIC manufacturing which they have become well known for.

In an article by CNBC, the following diagram illustrates in gray where Bitmain generates its revenue.

Bitmain Revenue Sources - Diagram Source

According to Bernstein:

Bitmain's purchases from Taiwan Semiconductor Manufacturing estimated that the start-up contributed to 2 to 3 percent of the chipmaker's total revenue last year.

In the year 2018, Bitmain will likely lead the cryptocurrency asic industry and migrate some of its chips to 10nm and the most advanced 7nm. That will make the company one of the top five users of TSMC's 7nm in 2018, with demand comparable with Qualcomm's, HiSilicon's, or AMD's which is demonstrated in the diagram below.

Diagram Source

Recently the Chinese government has started to close in on mining operations. These new restrictions and regulations may pose a challenge to Bitmain's overall earnings, but because of the companies scale and cash position, they have the flexibility to expand and operate in various other regions to mitigate the impact and possibly come out even further ahead due to those regions hunger for new industries and business.

This earnings achievement is a highlight not only because Bitmain was able to exceed a well know GPU manufacturers earnings, but because of the amount of time it took to do so. Bitmain amassed these profits in just 4-years, vs the 24-years that Nvidia has existed - which in the last few years has just recently achieved the same earning potential - also primarily due to the cryptocurrency industry.

Many companies have tried but never come close to the price per hash that Bitmain can offer. The company shows no sign of slowing down in the coming years and is expected to continue R&D and development in additional ASICs for various other currencies that are gaining traction. One such miner is a rumored ASIC for Ethereum, which I posted about here and another ASIC for Monero. With the increasing popularity of digital currencies and blockchain technology and Bitmain's already established and consistently growing footprint, the company stands to become one of the most profitable entities in the industry.

Thanks for taking the time to read. Let me know what your thoughts are about Bitmain. If you have any questions, inputs, or feedback, please feel free to post a comment below. I would also appreciate support in the form of Upvoting, Following, and Re-steeming my post if you found it informative.