Bitmain is Sitting On A Lot Of BCH – What Does This Mean?

· 24 Aug 2018 in Analysis

Bitmain is Sitting On A Lot Of BCH – What Does This Mean?

Bitmain is no doubt a behemoth in the cryptocurrency industry.

Not only are they one of the largest mining pool operators in the world, but they are also the de-facto manufacturer for highly specialized ASIC mining chips. They are also quite controversial and have drawn the ire of many Bitcoin supporters.

One of the most controversial decisions that they have taken was their support for Bitcoin Cash and the Segregated Witness 2X hardfork at the end of last year. When it comes to the former, they have actually put their money where their mouth is.

This is because of what was released in a leaked Bitmain IPO investor deck from last week. It showed that as of March 31st, Bitmain held 1 million Bitcoin Cash on its books.

This is no doubt an important disclosure, but what exactly does it mean?

Background Story

It is no secret that Bitmain is a big supporter of Bitcoin Cash. They were one of the most vocal backers for the big block solution that Bitcoin Cash was promoting. Yet, there was never any knowledge exactly how much Bitmain had at stake in the game.

However, given that Bitmain is now looking at an Initial Public Offering (IPO) it means that they had to disclose information to potential investors. This is where the investor deck came in.

The entire investor deck was leaked with the most important information being the disclosure of their current assets. As seen, Bitmain has been increasing their stake in Bitcoin Cash and decreasing their stake in Bitcoin.

Leaked Bitmain Investor Deck. Image source: Docdroid

As of report’s snapshot, they held the 1 million BCH which was worth $900 million at the time. At current exchange rates that’s around $600m.

These coins were obtained by Bitmain through a combination of forked coins, mining rewards and BCH payments for their Antminers. Although things may have changed since then, they are unlikely to have been that dramatic.

Despite the impact that this disclosure has on their IPO, there are a lot of implications that it has for Bitcoin Cash.

Positives for BCH

This shows that Bitmain is clearly doing more than talking. They have more merely “skin in the game” as Bitcoin Cash makes up most of the current assets on their balance sheet.

This means that Bitmain has a lot to lose if Bitcoin Cash continues sliding in price. A falling price could have a substantial impact on the listing valuation that they are able to get in their IPO.

Moreover, they have devoted a lot of their hashing power and electricity to mine Bitcoin Cash instead of Bitcoin. Hence, these BCH cost the company a great deal of resources to obtain.

Quite simply, a strong Bitcoin Cash is in the interests of Bitmain. This is perhaps best illustrated in a tweet by CobraBitcoin (co-owner of and a Bitcoin veteran).

Moreover, if Bitmain is able to go public and get a fresh injection of new capital, it will mean that they could invest more into the Bitcoin Cash ecosystem.

There are, however, some concerns about this large stash of BCH that is sitting on Bitmain’s books.

Concerns for BCH

One of the major concerns that people may have with this position is the sheer size of it in the context of the broader market. With 1m in BCH, Bitmain effectively controls about >5% of the total 17.3m Bitcoin Cash in circulation.

This means that they are in a tricky situation when it comes to being able to liquidate these coins. This is perhaps one of the reasons that they have been hodling the coins since the beginning of the year and through the downturn.

Apart from the fact that Bitcoin Cash is down by a large amount in dollar terms, it is also down about 50% when compared to Bitcoin. Even if Bitmain wanted to exit these positions, they may have worried about the impact that this could have had on the broader Bitcoin Cash market.

Similarly, there does not appear to be a large and developed Bitcoin Cash OTC market. So even if they wanted to offload some of their positions away from public order books, they would struggle to do so.

There is indeed some evidence that since March, Bitmain has been trying to divest from their holdings of Bitcoin Cash. For example, in this comprehensive piece by the crypto hermes cat, they take a look at the Bitmain wallets to determine what movements have taken place.

In the below image, you see Bitmain’s ASIC sales wallet taking all of their Bitcoin Cash. There was a 162k drop in the amount of coins in this wallet at the end of June. The author concludes that this most likely would have been sold through an OTC transaction.

Sale of Bitcoin Cash from Bitmain Sales Wallets. Image source: Medium

There were similar moves in some of Bitmain’s other wallets. What this shows is that although Bitmain still remains one of the largest supporters of Bitcoin Cash, they are trying to make it less of a focus as they head into the IPO.

They also have to conserve their capital in order to develop their next generation SHA256 ASIC miners. They have taken quite some time to develop this miner which shows just how hard it is to keep up with Bitcoin’s difficulty adjustments.


Bitmain is clearly exposed to Bitcoin Cash and has a large incentive to make the project a success. They have a large supply of the coins and can put their unparalleled hashing power onto the chain. Coins are still being sent into burn addresses to aid the scarcity.

However, Bitmain now has to take into account what IPO investors want to see. They have to consider the implications of the declining price of BCH relative to BTC. They also have to consider the capital demands that their business may require going forward.

In the end, the Bitmain IPO will no doubt be exciting. One of the most important pieces of information we should look out for are updated balance sheet numbers.

All eyes on the news wires!


Nic is an ex-investment banker and founder of the Coin Bureau. When he is not sitting behind six screens trading Bitcoin, he is maintaining his numerous mining rigs.

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