INTERNATIONAL - Bitmain Technologies, the designer of cryptocurrency mining chips that’s planning a landmark initial public offering, may be losing its technological edge, according to Sanford C Bernstein.
The Beijing-based company, co-founded by 32-year-old billionaire Jihan Wu, may need to write down the value of its inventory as makers of rival mining gear catch up, analysts led by Mark Li at Bernstein wrote in a report dated Wednesday.
Taiwan Semiconductor Manufacturing Co., which produces chips designed by Bitmain, should ask the company to make full prepayments and refrain from adding capacity solely for crypto-related demand, according to the Bernstein analysts.
“The competitiveness of Bitmain’s chips is in question,” the analysts wrote.
While Bernstein called Bitmain’s performance last year a “wild success” and noted that it controlled an estimated 85 percent of the market for cryptocurrency mining chips, the company is facing growing competition from players including Canaan and Ebang International Holdings, which are also pursuing IPOs in Hong Kong.