Chinese mining giant Bitmain is making headlines after announcing that it has chosen Hong Kong as the lucky city to host its upcoming IPO.

Some History on the King of Miners

Bitmain has often been the focus of controversy due to its alleged creation of what some analysts believe to be a centralized mining community. The company’s hashing power is not only considerably stronger than other mining companies both in China and abroad, but it also supplies most of the mining equipment to the cryptocurrency community.

Read: What is Bitmain? Beginner’s Guide to The Controversial ASIC Mining Behemoth

With such a large presence, many have stated that Bitmain’s operations present unfairness to smaller mining ventures, and thus give rise to fears of a 51 percent attack. This would mean that Bitmain would control more than half of the mining community, killing competition and preventing innovation amongst similar businesses. Bitmain has often denied any claims that this has been a goal.

Moving in a New Direction

Bitmain has released its first public financial statements to the Hong Kong Stock Exchange. The company states it is eager to go public, and while the documents do not state how much the company is looking to raise through its upcoming IPO efforts, they do show insurmountable growth over just the last year alone. The company earned just shy of $3 billion within the first six months of 2018, which is a massive increase of roughly $800 million over the same period in 2017.

The company announced:

“During the years ending December 31, 2015, 2016 and 2017, we recorded revenue from mining hardware sales in the amounts of USD $107.7 million, USD $214.7 million, and USD $2,263.2 million, representing 78.6 percent, 77.3 percent, and 89.9 percent of our total revenue respectively.”

What Makes the Company So Successful?

Some of the company’s staple products are its Antminer devices, which are often touted as some of the strongest mining devices available on the market. In addition, the company is fabless, which means it creates its own chip designs and works with manufacturers to physically build them and splice them together.

These chips then power the Antminers and other mining hardware, allowing the owners to receive rewards in bitcoin and assorted cryptocurrencies. Bitmain states it has over 80,000 customers, with about half stationed in China and the rest scattered throughout the globe.

Some Problems in the Mix

Despite the company’s growing success, 2018 has presented its fair share of challenges. Margins, for example, are currently down for the year. Gross margin within the first six months was down about 36 percent, which was a 12 percent drop from the same period in 2017, and 18 percent from 2016. Mining equipment prices went up to about 64 percent this year – up from 51 percent and 52 percent in 2017 and 2016 respectively.

The main reason for the price hikes is an over-estimate of supply demand following the 2017 cryptocurrency boom that saw bitcoin trading for nearly $20,000 in late December. Inventory ultimately ballooned past the $1 billion-dollar mark, to which executives explain:

“We anticipated strong market growth for cryptocurrency mining hardware in 2018 due to the upward trend of cryptocurrencies’ prices in the fourth quarter of 2017, and we placed a large amount of orders with our production partners in response to the anticipated significant sales growth. However, there has been significant market volatility in the market prices of cryptocurrencies in the first half of 2018. As a result, the expected economic return from cryptocurrency mining has been adversely affected and the sales of our mining hardware slowed down, which in turn caused an increase in our inventories level and a decrease in advances received from our customers in the first half of 2018.”

Bitmain was founded in 2013 by Jihan Wu and Micree Zhan. As of late June, the company’s cryptocurrency stash is valued at nearly $900 million.