After a 10-month wait, Bitcoin has recently surged past $30,000, marking an over 80% increase this year. This rise has driven a roughly 20% increase in Bitcoin miner revenue compared to February.
While the overall cryptocurrency market is experiencing an upward trend and positive news continues to emerge from markets like Hong Kong, the well-known mining giant Bitmain has been hit with a significant fine.
Bitcoin's Price Rally and Miner Revenue Increase
On April 11, Bitcoin broke through the $30,000 barrier, reaching its highest price since June of last year, with a year-to-date increase of over 80%.
Since March, events such as the Silicon Valley Bank collapse have raised concerns about potential crises within the financial system. This has led to a surge in assets like gold and cryptocurrencies, which are often seen as safe havens.
Bitcoin mining revenue had fallen to approximately $470 million in November and December 2022. Driven by the current market price increase, miner revenue has shown an upward trend in recent months. Data from The Block Research indicates that Bitcoin miner revenue reached $755.4 million in March, a record high since May 2022, representing a roughly 20% increase from February's $613.5 million.
Simultaneously, Bitcoin is approaching another halving event. Around May 2024, Bitcoin is expected to undergo its fourth halving, which will reduce the block reward. This will further increase mining difficulty, potentially淘汰ing lower-performance mining rigs and miners with lower risk tolerance. However, market expectations for a price increase are also strengthening.
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Bitmain's Substantial Tax Fine
For cryptocurrency mining companies, the market undoubtedly presents both opportunities and challenges. In this environment, Bitmain, under the leadership of Jihan Wu's rival Micree Zhan, has reappeared in the public eye due to a tax fine of nearly 25 million yuan.
According to information released by the tax authority, on April 4, 2023, Beijing Bitmain Technologies Ltd. was fined approximately 24.9687 million yuan by the Fourth Inspection Bureau of the Beijing Municipal Taxation Bureau for tax violations.
The reason for the penalty was Bitmain's failure to withhold and remit individual income tax on benefits provided to employees, such as travel subsidies. Furthermore, even after inspection personnel delivered a "Notice Ordering Correction" to the company in August 2022, it still failed to withhold and remit the aforementioned personal income tax, totaling 16.6458 million yuan.
Fu Jian, director of Henan Zejin Law Firm, commented: "When a company commits tax violations, besides being required to re-declare and pay the owed taxes, it must also accept administrative penalties. This situation can negatively impact the enterprise's reputation and goodwill. Additionally, it affects the company's creditworthiness. Once a company is found to have violated regulations by the tax authority, it may face consequences such as a lowered credit rating, penalties, and public disclosure. Moreover, tax inspections require the company's full cooperation, consuming its energy, time, and financial resources, and can even disrupt normal business operations."
According to Article 69 of the "Law of the People's Republic of China on the Administration of Tax Collection": "If a withholding agent fails to withhold or collect tax that should have been withheld or collected, the tax authorities shall recover the tax from the taxpayer, and impose a fine of not less than 50% but not more than three times the amount of tax that should have been withheld or collected." This means that in addition to making up the 16.6458 million yuan in taxes, Bitmain must also pay an additional fine of 24.9687 million yuan.
IPO Setbacks and an Uncertain Path to Listing
Bitmain is a well-known manufacturer of cryptocurrency mining rigs globally. Centered around its brand "Antminer," it once monopolized over 70% of the global Bitcoin mining machine market share.
In 2018, Bitmain attempted to list on the Hong Kong stock exchange. According to its prospectus at the time, Bitmain sold 2.56 million mining machines in the first half of 2018, accounting for nearly 95% of its revenue. Its net profit was $743 million, a year-on-year increase of nearly 8 times, and the company was valued at $12-15 billion.
However, due to various reasons, Bitmain's IPO plans ultimately failed. Subsequently, the company was severely weakened by an internal power struggle between its two founders, Jihan Wu and Micree Zhan, for control.
In March 2021, Bitmain formally split, with the two founders going their separate ways. Under the leadership of Micree Zhan, Bitmain's "technical brain" and current leader, the new vision became "from mining machines to AI, from AI to the blockchain ecosystem."
Since 2022, Bitmain has spun off its AI and CPU businesses into the company Sophon, while also acquiring the intelligent technology firm CVITEK, accelerating its pursuit of the AI and CPU product markets.
In 2023, Bitmain launched its new mining machine, the S19j Pro+, with a hash rate of up to 122 TH/s, a power consumption of 3355W, and a power efficiency of 27.5 J/TH. Its overall performance is 10% higher than the S19j Pro and it is compatible with most mining farms worldwide.
Additionally, Bitmain recently secured a major order at the end of March. The Nautilus Data Center, the first nuclear-powered blockchain data center in the United States, will exclusively deploy Bitmain's ANTMINER products.
As a global leader in ASIC chips, Bitmain's development prospects are promising amidst the current AI boom. According to a prior KBV Research report, the global ASIC chip market size is expected to reach $24.7 billion from 2019 to 2025, growing at a compound annual growth rate (CAGR) of 8.2% during the forecast period.
Furthermore, as the cryptocurrency market emerges from its downturn, the mining rig market is warming up, making the prospects for the mining hardware business even more anticipated.
While Bitmain seems to be progressing as expected in terms of technological research and development, it has yet to provide answers regarding its much-anticipated listing process.
Corporate Management and Legal Challenges
On the corporate management front, in May 2022, Micree Zhan stepped down from his positions at Bitmain. The company's legal representative is now Zhou Feng, but Zhan still maintains actual control of Beijing Bitmain through Hong Kong Bitmain Technologies Ltd.
Following the internal power struggle, Bitmain stated in external responses regarding its listing work that the plan was proceeding in an orderly manner and that relevant progress would be disclosed promptly according to normal procedures. However, no updates have been provided since.
Additionally, Bitmain's cloud mining platform BitFuFu, intended to compete with Bitdeer, announced plans for a SPAC listing on Nasdaq early in 2022. The listing time, however, has been repeatedly postponed.
In contrast, the other co-founder, Jihan Wu, took assets like BTC.com, Bitdeer, and overseas mining farms abroad. On March 28, 2023, the U.S. Securities and Exchange Commission (SEC) announced the effectiveness of the F-4 registration statement related to the business combination with Bitdeer, indicating that Bitdeer is soon to list on Nasdaq.
Bitmain also faces legal challenges. According to incomplete statistics, labor dispute cases are a frequent issue among Bitmain's 95 lawsuits. Since 2021, Bitmain has been involved in court battles with former employees like Yang Zuoxing, founder of Bitmicro, and Wang Haichao, the actual controller of the Chaomo series of companies.
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Frequently Asked Questions
What caused Bitcoin's price to surge past $30,000?
Recent concerns about the traditional financial system, triggered by events like the collapse of Silicon Valley Bank, increased the appeal of alternative assets like Bitcoin. This, combined with existing market momentum, pushed its price above $30,000.
How does Bitcoin's halving event affect miners?
The halving reduces the reward for mining new blocks by half. This decreases mining profitability in the short term unless the price of Bitcoin rises significantly, often leading to the淘汰ion of less efficient mining hardware and operations.
What was the nature of Bitmain's tax fine?
Bitmain was fined for failing to withhold and pay individual income tax on certain employee benefits, such as travel subsidies. Despite being ordered to correct this in 2022, the company did not comply, leading to the penalty.
What is Bitmain's current focus beyond mining hardware?
Under its current leadership, Bitmain is expanding into AI and CPU markets. It has spun off these businesses into a separate entity and acquired other tech firms to strengthen its position in these new areas.
Has Bitmain successfully gone public?
No, Bitmain's initial attempts to list in Hong Kong failed. While the company has stated its listing plans are ongoing, there have been no recent updates, and its spin-off cloud mining platform has also delayed its NASDAQ listing.
How does Bitmain's situation compare to its former co-founder's new venture?
Jihan Wu, the other co-founder, took several key assets and established new ventures overseas. His company, Bitdeer, is now progressing towards a NASDAQ listing, contrasting with Bitmain's current delays and challenges.