13 ms·
Sequoia Capital China Said To Invest In Bitmain's $400M Round At $12B Valuation
- eb0la 8y agoHolly Guacamole! I misread BatMAN not bItmaIn
- tristanj 8y agoFrom a couple months ago: Bitmain, the largest mining hardware company, made around $4B last year https://news.ycombinator.com/item?id=16449590 https://news.ycombinator.com/item?id=16449590 https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mi...
- devoply 8y agoSo what do they want with the fraction of that as an investment? Is it a political play?
- Alex3917 8y ago> Is it a political play? Given that it's mathematically impossible for BTC to succeed until they change their POW, this doesn't make sense as a political play. Most likely Sequoia is just paying for BTC in advance to get a deeper discount than they'd normally get for buying in volume. It's also possible that they're just selling the BTC as they go and hoping for a short payback period, but while this makes sense financially it's unclear how it would relate to their overall portfolio strategy.
- JumpCrisscross 8y ago> It's also possible that they're just selling the BTC as they go and hoping for a short payback period Sequoia's China team is has more bankers than Sequoia's U.S. team. The investment may have been made with cash-yielding convertible debt.
- charlesdm 8y agoOr their LP agreement might not allow them to invest in crypto directly, only in companies (generating crypto)
- icelancer 8y ago>> mathematically impossible for BTC to succeed until they change their POW Citation desperately needed, and not random rantings, please.
- asdionio 8y ago4 transactions per second is not very many. 8 gigawatts is a lot.
- wmf 8y agoBut that's an artificial limit that has nothing to do with POW.
- asdionio 8y agoSo you move to Bitcoin Cash, which can do 60 transactions a second. Big deal. It's still orders of magnitude slower than it has to be to be useful. Blockchains don't scale. Period. If you know of a way to make them scale, publish it and you'll find instant fame and fortune. The power consumption will continue to increase, and that is purely the fault of POW.
- wmf 8y agoBlockchains don't scale. Period. If that's your position then changing the POW won't help. (I know no one cares, but there could be a pragmatic scaling path where you increase on-chain throughput while you do sharding/layer 2 research.)
- andrestan 8y agoMost likely credibility, publicity, connections and mentorship that major VCs provide.
- dopamean 8y agoWhat kind of mentorship would the management of a company that is doing $4B/year in sales need? I don't mean that sarcastically. I would have thought, "clearly these people figured it out."
- justicezyx 8y agoI randomly speculated that this might help them evade some of the financial control inposed by the government?
- wmf 8y agoIt's funny you should say that. Bitmain has dealt very poorly with western miners and developers and repeatedly blamed those "misunderstandings" on "cultural gaps". In the short term they don't need to solve this problem, but one day I expect the pitchforks to catch up with them.
- andrestan 8y agoA great example of an executive who has led the rapid development of a business but drastically needed more mentorship would be Travis Kalanik formerly of Uber. Running a large and successful company well is much, much more than just generating revenue and valuation.
- johnmorrow 8y agoDidn't Sequoia invest in them too? You might be right but this is not the best example lol
- joering2 8y agoSecond that. Outside of HN an average person, or probably north of 95% Uber riders, neither heard nor care/cared about internal problems at Uber. None of those problems really reflected on qualty of services they provide to the final consumer.
- rebelidealist 8y agoFor when bitcoin mining cease to be profitable. Bitcoin mining rewards halves ever so often.
- trophycase 8y agoBitmain sells a lot of mining hardware. Bitcoin, Litecoin, Dash, and many others.
- bertil 8y agoI would think of their hardware as cryptographic rather than exclusively currency related: even without cryptocurrencies around, you might need that hardware to operate strong encryption, either on your laptop or as a service. I’m not very clear on what are the next requirement and algorithm coming, but it sounds like a reasonable area to invest in. If you look at it slightly differently: this is a company who was able to be successful in the cut-throat B2B hardware integration business. Even if some of the key aspects of that hardware might not be relevant, they have demonstrated agility at scale, which is valuable. Every company with the same scale in China has been able to negotiate full pivots repeatedly: maps become platform, search engines conversation agents, integrators turn into high-street brands, etc.
- thinkmassive 8y agoThe block reward halves approximately every 4 years, and it's currently halfway through the 12.5 BTC reward period. Based on this schedule there will be a mining reward until the year 2140. In addition to the block reward, the miner who finds each block also gains a fee from every transaction in that block. Ideally this fee stays low, but it depends on network congestion (and what miners are willing to accept, since they choose the transactions that make it into each block). The transaction fee has already hit the equivalent of $50 per transaction, back in late 2017. Even with improvements such as batching, segwit, and lightning, there is still likely to be sufficient returns to incentivize miners for the foreseeable future.
- 21 8y agoMaybe they need cash to pay for electricity and hardware, so that they don't spend bitcoin now when it's down.
- sgspace 8y agoThey most likely went short on Bitcoin when the price was high. This is Bitmain they are not just guessing what the price will be they certainly have projections and they know what a crypto bear market is like. Its a very safe position to short Bitcoin when you have the Bitcoin to cover the shorts if the price goes up.
- rspeer 8y agoMaybe there's some subtlety I'm missing. If you have a lot of Bitcoin and you want to short Bitcoin, isn't that just called "selling Bitcoin"?
- goldenkey 8y agoThey most likely are underwriting rolling options, most of which expire unused.
- KMag 8y agoCan you currently buy puts on Bitcoin where your counterparty risk isn't highly correlated to the price of Bitcoin?
- goldenkey 8y agoWouldn't that be the case for the above if the option underwriter is guaranteeing possession of the underlying bitcoin?
- KMag 8y agoThat is only the case for call options, which isn't the case where you're concerned about counterparty risk correlation with the underlier. For put option, they'll need to guarantee enough cash (or cash equivalents) on hand to pay you out if Bitcoin reaches zero. The carrying cost (or at least opportunity cost) is high for holding large inventories of cash, so it's not very attractive from a business perspective to do so unless there's either a market or regulatory demand to do so.
- rajacombinator 8y agoDefinitely a political play and a smart one too.
- hanniabu 8y agoExpand mining operations. Miners have cash flow issues do and often resort to loans
- RcouF1uZ4gsC 8y agoThis follows the principle that in a gold rush, you want to be the one selling shovels. Bitmain is the one selling shovels (mining machines) for the Bitcoin boom.
- anoncoward111 8y agoExactly this. This is really one gigantic wealth transfer from the USA to a few semi-Chinese entities, btw. The 27 year old American accountant who desires to quit his desk job will send $4,000 of his salary (or more) to buy some Chinese-made machines. The 200 or so major shareholders of Bitmain profit instantly. The accountant barely profits on his transaction. [1] [1] some will profit more than others depending on length of time holding assets, but statistically someone ultimately holds the bag.
- crb002 8y agoThey also are rolling out an ASIC competitor to Google TPU. Bitmain is poised to be be the Nvidia of the custom compute world.
- mtgx 8y agoBackdoors, backdoors for everyone. https://www.antbleed.com/ https://www.antbleed.com/
- jason_slack 8y agoI just found out about Bitmain's Sophon card, but I don't think you can buy it yet.
- sanxiyn 8y agoAs I understand, Sophon SC1 shipped in last October at $600 price, making Bitmain ahead of other competitors. It seems to be out of stock(?) now. Bloomberg reported on this: https://www.bloomberg.com/news/features/2018-05-17/china-s-crypto-chips-king-sets-his-sights-on-ai https://www.bloomberg.com/news/features/2018-05-17/china-s-c...
- mlrtime 8y agomine the miners
- ddtaylor 8y agoSelling the shovels during the gold rush.
- xiphias 8y agoBitmain was playing very ugly with monopolising ASICBoost mining and promoting Bitcoin cash heavily. I really hope their competitor will be successful.
- debt 8y agoThe problem with these investments is when they completely implode, it'll taint the investor public's perspective on tech in general and likely bring down the whole sector.
- shiado 8y agoIt would be great if cryptocurrencies regularly switched POW hash functions to disable hardware companies from trying to monopolize the currency with hardware patents. I doubt the companies that own BTC core would allow it though. BTC is now for institutional gamblers.
- josu 8y agoAlthough it may seem counterintuitive that would probably lead to more centralization. Andreas explained it very well here: https://www.youtube.com/watch?time_continue=3&v=AcaktuPdQrc https://www.youtube.com/watch?time_continue=3&v=AcaktuPdQrc
- chrisstanchak 8y agoCheck out x16r. https://ravencoin.org/wp-content/uploads/2018/03/X16R-Whitepaper.pdf https://ravencoin.org/wp-content/uploads/2018/03/X16R-Whitep... Cycles through 16 different algos based on hash of prior block.
- anoncoward111 8y agoSee this is a really cool coin. I believe heavily in ASIC and even gpu resistance where possible. I'd be happy to operate an exchange and set up some basic crypto services (gambling) using this coin if you guys have a community of users.
- gomox 8y agoThis is actually less secure because the resources needed to perform a 51% attack on a coin are reduced drastically (as you only need 51% of the hashing power for one specific algorithm).
- Zpalmtree 8y agoThis post on the verge hack demonstrates that quite well, suggesting the attacker only needed as much as 10% of the hashrate, or even as low as 0.4% - https://blog.theabacus.io/the-verge-hack-explained-7942f63a3017 https://blog.theabacus.io/the-verge-hack-explained-7942f63a3...
- bsaul 8y agoMaybe someone could enlighten me : aren't next gen DLT moving to proof of stake ? doesn't this mean the cryptographic power needs are going to be reduced dramatically ?
- Laforet 8y ago>next gen DLT moving to proof of stake This might happen, but Bitmain's future does not appear to have much to do with blockchain. The company supposedly diversifying into ASIC designs for AI/ML/flavor of the month applications and is expected to do well in the post-Trump political environment, hence the attention by investors.
- SkyMarshal 8y agoHow does the political environment affect them?
- lozaning 8y agoIf I had to guess I would assume the above poster is referencing that there is a push within China's political atmosphere to turn inward and start developing more critical tech at home. At the heart of all the cheap Chinese android phones is generally a qualcomm chip, much to the chagrin of the Chinese government. BitMain is likely well positioned to take advantage of their governments increased attention and investment in the high tech sector.
- Jommi 8y agoYeah, talked with multiple people working for them here in China. They are hiring a lot of people, even fresh grads, from top universities in China to build ASICs for AI/ML. I got told that the time creating those is already 5-times bigger than the BTC asic team.
- lawn 8y agoMany coins are but it's not sure they will work properly and securely. So far POW is still king.
- throwawayqdhd 8y agoA perfect example of getting rich from selling shovels in a gold rush
- OscarTheGrinch 8y agoIn a gold rush, sell shovels...
- thebiglebrewski 8y agoSo Bitmain...sells machines...to make money...but wouldn't they just keep the machines themselves if they were so profitable? I don't get it
- st1ck 8y agoSo Boeing... sells airplanes... to make money...