Photo of an application-specific integrated circuit (ASIC) device and power unit, made by Bitmain Technologies Inc., at a cryptocurrency mining facility in South Korea. Photographer: SeongJoon Cho/Bloomberg
With rumors, controversy, and news abuzz about its upcoming IPO, Chinese cryptocurrency mining chip firm Bitmain has been thrust into the spotlight in recent months. Jihan Wu, Bitmain’s cofounder and co-CEO, has gotten most of the media coverage, largely because of his prominent online social presence.
Meanwhile, Micree Zhan, Bitmain’s other cofounder and co-CEO, has kept a much lower profile but owns a much bigger stake in Bitmain than Wu does. Zhan is Bitmain's technical mastermind and owns 36.58% of the company, while Wu’s stake is 20.5%, according to the leaked pre-IPO investor decks. The Beijing-based company is confident that it will achieve a $14 billion market capitalization once it offers shares to the public, according to its pre-IPO investor materials. That would make Zhan’s stake worth at least $5.1 billion and Wu’s stake worth nearly $2.9 billion.
Forbes isn’t so bullish. After talking with analysts, we estimate Zhan’s net worth at around $4 billion and Wu’s at close to $2.3 billion. Forbes valued Bitmain by applying price-to-sales ratios from comparable companies including Nvidia, AMD, Qualcomm, Mediatek and Cisco.
It is important to note that there are no directly comparable companies given the unique nature of Bitmain. We picked these companies because they are also fabless chip makers, companies that design and sell chips and hardware but outsource production to another manufacturer, per Daiwa Capital Markets analyst Rick Hsu’s guidance. Bitmain is not purely a semiconductor company; a portion of its revenue is also derived from its mining pools, BTC.com and Antpool. And given the novelty and volatility of the current cryptocurrency industry, the application of these mining chips is uncertain, according to Mark Li, a senior technology analyst at Sanford C. Bernstein & Co. Brett Simpson of Arete Research noted that Bitmain should be viewed as an early-stage version of Cisco, when there was plenty of uncertainty in the future of IP.
Despite his role as the technical backbone behind Bitmain, little is known about Zhan, an engineer who developed the custom application-specific integrated circuit (ASIC) chips that have propelled the global growth of the largest crypto-mining chip producer. Even his LinkedIn profile is stark, listing only “CEO at Bitmain” and nothing about prior jobs or education.
Here’s what we know so far. After graduating from Shandong University with a degree in electrical engineering in 2001, Zhan received a master’s in engineering from the Chinese Academy of Sciences’ Institute of Microelectronics in 2004. He went to work at Tsinghua University as a research and development engineer in the Research Institute of Information Technology.
In 2006, he began a new job as the head of research and development and manager of the integrated circuit department at Chinese company Unitend Technologies, which specializes in circuit design. At Unitend, Zhan oversaw the design and development of specific chips for digital television; the shipment volume of these chips exceeded 1 million during his time there. He’s also published numerous papers and patents about circuit chips and helped write the national standard for universal transport interfaces, a protocol used in digital television devices. In 2010, Zhan founded DivaIP Technologies, a Beijing-based startup to develop TV set-top boxes. He met Wu by chance when the startup was canvassing the streets of Beijing, and Zhan sought advice from Wu regarding funding, Quartz reports. Though Wu was unable to help in that specific regard, the two would meet up again three years later.
The younger of the duo, Wu graduated from Peking University in 2009 with a dual degree in economics and psychology. According to his LinkedIn profile, he worked as an investment manager at private equity firm China Grand Prosperity Investment from 2010 to 2013, before he cofounded Bitmain. A cofounder of 8BTC, a China-based Bitcoin forum launched in 2011, Wu is reportedly the first person to translate the bitcoin whitepaper—the original report written by Satoshi Nakamoto that explained the fundamentals of bitcoin—into Mandarin Chinese. He also drew attention to himself in 2016 when he tweeted a vitriolic response to someone who criticized his support for Bitcoin Cash.
In 2013, Wu approached Zhan about founding Bitmain together. Wu sought Zhan’s expertise in chip design to develop the mining chips that virtual currency mining necessitated. Mining bitcoins and other cryptocurrencies requires brute force that these ASIC chips provide, in order to solve the complex math problems that would verify transactions on a blockchain. The morning after their meeting, Zhan spent two hours poring through the Wikipedia page about bitcoin and promptly agreed to join the venture, Bloomberg reports.
Four years later, in 2017, Bitmain brought in $2.5 billion in revenue predominantly from sales of its cryptocurrency mining equipment, according to the investor decks. In the first quarter of 2018 alone, Bitmain had $1.9 billion in revenue. The company hopes to complete its IPO on the Hong Kong Stock Exchange before the end of the year, but little is known thus far. This could be a monumental step not just for Bitmain but also for the larger cryptocurrency community. The industry has been attempting to nudge its way back into the spotlight after a brief frenzy over cryptocurrencies that began at the end of 2017. After the leaking of the investor decks, however, doubt has arisen surrounding the feasibility of this IPO due to questions of their performance in the second and third quarters of 2018.
By Jasmine Teng