Bitcoin Mining Company Bitmain Made Almost $4 Billion in Profits in 2017

Bitmain made between $3 billion to $4 billion in operating profits last year, according to Bernstein Research.
Sibel Nicholson

Bitmain, the Beijing-based bitcoin mining company which dominates the bitcoin "mining" industry, made $3 billion to $4 billion in operating profits in 2017, according to Bernstein Research, the CNBC reported.

The estimates are based on conservative estimates of gross margin of 75 percent and operating margin of 65 percent.

The analysis also compares Bitmain to Nvidia, a US artificial intelligence company, with the two companies reporting profits of approximately the same amount last year.

"But Bitmain achieved this in merely four years, while it took Nvidia 24 years to get here," Bernstein said.

Bitmain, a privately-held and secretive company, was founded by Jihan Wu and Micree Zhan in 2013.

The company has since grown into one of the leading firms involved with bitcoin mining, the process of using computing power to generate bitcoins. Wu is also a widely-followed figure in the bitcoin world.

Bitmain made mining faster

When Bitcoin first started, ordinary video graphics cards could be used to process computations needed to mine the cryptocurrency.

The company turned bitcoin mining into a specialized process in 2013 by selling application-specific integrated circuits, or asic, computer chip cards that could mine bitcoin 50 times faster than conventional video graphics cards.

Today, Bitmain sells Antminer bitcoin mining rigs that can cost several hundred dollars to a few thousand dollars each.

The company also operates mining pools in which participants collaborate on bitcoin mining to cut costs.

It is estimated that Bitmain has 70 to 80 percent of market share in bitcoin miners and asics.


Most of Bitmain's income was generated by selling miners powered by the company's chips, according to Bernstein.

It is predicted the rest was generated by mining itself to a large extent and, to a much lesser extent, through collecting management fees from the mining pools it operates and renting out the mining power of its mining farms through cloud services.

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Much of the growth in mining revenue came from the exponential rise in bitcoin prices, Bernstein said. Its analysis also said that "Bitmain shrewdly adjusts the prices of miners according to bitcoin prices."

As the price of bitcoin surged toward $20,000 late last year, the price of Bitmain's AntMiner S9 jumped near $5,000. Production costs remained the same, according to Bernstein.

Bitmain stays ahead of the game

However, longer-term growth is not guaranteed, especially in the volatile cryptocurrency market.

Bitcoin has lost half its value since the start of 2018 and there are worries about a regulatory crackdown.

So far Chinese authorities have taken some of the strongest actions against cryptocurrencies by banning initial coin offerings and causing local bitcoin exchanges to close.

Bitmain has taken significant steps to preserve its competitive advantage. It has launched a mining pool subsidiary last April in Israel, and is opening mining farms in Canada and Switzerland, as well as regional headquarters in Singapore.

It is also widening its business to other cryptocurrencies such as Ethereum and Monero.


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