Bitmain almost equals that of Nvidia: Bitmain which is a seller of Bitcoin mining rigs achieved the same level of profits from Bitcoin mining in 4 years, as compared to that of Nvidia which took 2 decades.
The profit of the Bitmain was in between $ 3 billion-$ 4 billion in the year 2017. Meanwhile, Nvidia which has a market cap of around $ 147 billion reported a profit of $ 3 billion in 2017.
Increased profitability in Bitcoin mining:
Bitcoin mining is the process of verifying the decentralized ledger transactions. After a set number of transactions are mined, the miner is rewarded with a Bitcoin as compensation.
With each transaction being processed, the difficulty level to make the same amount of money increases further. This is the reason why the scalability of the business goes on increasing.
On the other hand, Nvidia is in the business of building semiconductors. Nvidia is currently building mining rigs as well. Even though the mining operations are gaining more and more steam but still, the profits were almost equal to Bitmain.
The main reason for the high profits of Bitmain is the superior operating margins. The operating margins for the company are at 65%. Similarly, the gross profit margins are at 75%. Also, in the last 12 months to 18 months, there has been an astronomical rise in the price of Bitcoin.
This is another reason why they are able to make such a significant amount of money. According to a report by Bernstein, Bitmain also surges the prices of the mining rigs according to the volatility in the Bitcoin prices. This is the reason why they are able to protect their margins.
Bitmain controls roughly 80% of the Bitcoin mining market. This is the reason why it is able to make such a significant amount of money.
With the Bitcoin price is falling since the start of this year, it remains to be seen how much profit Bitmain is able to generate. For now, however, it looks to retain its dominant position in China.
Bitmain is also trying to expand to other countries. It is going into markets like Switzerland which are more cryptocurrency friendly.
On the other hand, Nvidia is already diversified and has a presence in many different countries all over the world.
It remains to be seen whether in the coming years as well, Bitmain is able to generate similar profits or not.
Also, the profits of Nvidia are also increasing rapidly as the demand for Bitcoin mining rigs is increasing on a year-on-year basis.
Adam Webb is editor in Smartereum, blockchain and currency news, where he produces updates on Blockchain, Ethereum and other alternative cryptocurrencies.