The world’s largest maker of cryptocurrency mining equipment Bitmain made a $0.5 billion loss in 2018’s Q3, CoinDesk reports.

Citing a source who viewed an update that was filed with the Hong Kong Stock Exchange the publication also reported that Bitmain generated revenues of more than $3 billion during the first three quarters of 2018 with only $200 million being generated in Q3.

The loss is evidence that the crypto bear market has dampened demand for mining rigs, the firm’s major product. It comes at a particularly bad time as Bitmain has been planning an IPO on the Hong Kong Stock Exchange.

While it is not a given, these results might now complicate this effort. This is especially so considering that the CEO of HKEX, Charles Li Xiaojia, has previously raised concerns with the cryptocurrency firms.

Sustainability of Bitmain’s Business Model Questioned by Stock Exchange

Last month in Davos, Switzerland during the World Economic Forum gathering, Xiaojia questioned the sustainability of Bitmain-like businesses. This was in light of the toll that had been exacted on the cryptocurrency mining sector by ‘crypto winter’.

Investors have also echoed similar concerns. According to a partner at the risk assurance practice of PricewaterhouseCoopers China, Chun Yin Cheung, investor concerns primarily have to do with whether the sustainability of the business model. They are also concerned about the exposure makers of cryptocurrency mining gear such as Bitmain have to cryptocurrencies:

Investors share some concerns. For one thing, it remains a question if the cryptocurrency mining business still makes that much money. Secondly, the cryptocurrency bear market has largely weighed on the valuation of these candidates. Some own a considerable number of tokens.

Troubles at Bitmain Have a Human Toll

Besides now threatening to torpedo Bitmain’s IPO plans, the dwindling fortunes of the mining rigs maker have also reportedly cost the company’s co-CEOs, Jihan Wu and Zhan Ketuan, their jobs.

Late last month South China Morning Post reported that Jihan and Ketuan, who are also the co-founders, would be stepping down. A product engineering director at the firm was tipped to step into the CEO role. Jihan and Ketuan are however slated to remain as co-chairs of the company. Towards the end of last year, CCN had also hinted that the two were on their way out.

The restructuring at Bitmain has not been limited to the top echelons though. Over the last couple of months, the mining rig manufacturer has laid off employees at various locations around the world. Last month Bitmain shut down a cryptocurrency mining operation in Texas where it had between 7,000 and 8,000 crypto mining rigs.

Bitmain Scales Back as it Abandons Expansionist Mode

Earlier in December last year, Bitmain had closed a development center in Israel and laid off all 23 employees. At the time, the development center’s head Gadi Glikberg indicated that the move had been prompted by the bear market.

The crypto market has undergone a shakeup in the past few months, which has forced Bitmain to examine its various activities around the globe and refocus its business in accordance with the current situation.

With all the bad news that Bitmain has been generating the past few months, it remains to be seen whether it will push ahead with the IPO plans in the face of the $0.5 billion loss. And if it does, whether HKEX will allow it.

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