Rows of mining machines for litecoin, another cryptocurrency, in Bitmain’s facility in Ordos, Inner Mongolia. Photo credit: Tech in Asia.
The news (extracted from Bloomberg):
- Sequoia Capital and IDG Capital are investing in Bitmain, the world’s largest bitcoin mining company, according to people familiar with the matter.
- Beijing-based Bitmain, which produces chips and machines for mining bitcoin and operates its own mining facilities, has benefited from the meteoric rise in the cryptocurrency’s market value, which currently stands at about US$75 billion.
- The company is currently seeking funding to expand its artificial intelligence capabilities, after previously focusing on developing chips for mining.
Why it matters:
- The Chinese government has for the most part taken a hands-off approach to regulating the country’s growing cryptocurrency mining industry – but signs suggest this is changing. Large mining groups are increasingly looking to register as companies and partner with local governments in China, partly to try to avoid potential regulatory issues.
- What this might mean for prospective foreign and private sector investors like Sequoia and IDG is unclear. The cryptocurrency mining industry in China could face similarly stringent regulation as experienced in other internet-related sectors, potentially making such investments riskier.
- Chinese regulators are also reportedly drafting rules – or even considering an outright ban – for cryptocurrency-based “initial coin offerings.”
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