Agm Holdings (Agmh.O) Promises $100 Million in Sales for Mining Machines as the Market's Zeal for the Gadgets

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

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On September 27, AGM Holdings Limited (AGMH.O) reached an agreement with Shenzhen Highsharp Electronics Ltd.. According to the deal, AGMH promises a $100 million sales for mining machines ending March 25, 2022. As a return, Highsharp will provide AGMH with the latest ASIC chip technology and manufacturing services on a priority basis within six months. As the market sees an increasing demand for high-capacity cryptocurrency miners, the mining machine industry is also ushering in huge development opportunities.

Competitive landscape of China's Bitcoin mining machine industry

China is home to a large number of mining machine manufacturers that makes it a global leader in bitcoin mining machine production. The market is highly concentrated and is mainly contributed by several industry majors like Canaan (CAN.O), Bitmain, Microbit, Ebang and AGM. The Bitcoin mining industry relies on the hash rates of the mining machines, which devices with 90TH/S could be considered as high-capacity mining machine. At this stage, though few manufacturers have not the ability to make cutting-edge these machines, the low-capacity gadgets have also market demand. There are strong players standing out during the competition. 

Founded in 2013, Canaan CAN successfully listed on NASDAQ in November 2019, with a current market cap of $1.596 billion. The company generated revenue of 448 million yuan in 2020, down 68.5% year-over-year. In 2020, Canaan launched three models of Avalon Miner, including A1166, A1166 Pro and A1246, which the A1246 model has a rated hash rates of 90TH/S and an energy efficiency ratio (EER) of 38J/T. Though the model is the first Avalon Miner that has such high hash rate, it has a low-cost performance.

Established in 2010, EBON International (EBON.O) is mainly engaged in communications and bitcoin mining business, and listed on Nasdaq in June 2020, with a current market value of $507 million. The company earned 19 million yuan in 2020, a decrease of 82.6% year-on-year. The latest miner is the E12, launched in 2019, with a hash rates of 44TH/S and an EER of 57J/T.

Angaomeng (AGMH.O) was founded in 2015, primarily dedicated to the research and development (R&D) of blockchain ASIC chips, cryptocurrency mining machine manufacturing and financial technology software services. It went public on NASDAQ in 2018, and the current market capitalization reaches $258 million. In this August, Angaomeng has released its brand new Jinli Miner-C16 which is designed with a hash rate of 113TH/S and an EER of 30.9 J/T, becoming the best in the industry. It is worth noting that the majority of clients of AGM’s C16 come from the United States and Canada, where they are not impacted by China’s banning policy on bitcoin, and therefore distinguishes AGM from its peers in the overseas markets. 

The Ant Miner and Whats Miner created respectively by Bitmain and Microbit are the two shining stars in high-capacity miner market because of their outstanding technologies, for this reason, the two have a higher market share. The low-capacity machines Innosilicon Miner and SP Miner made respectively by Innosilicon and Bitfily are targeted at the low-end market. 

The share of China’s Bitcoin hash rates drops as overseas mining stocks rush to by mining machines

In the last decade, the bitcoin mining difficulty across the whole network has been stepping up to a peak of over 25 T. The increase of hash rates underlies the greater mining difficulty. At the end of 2020, the gross volume of bitcoin hash rates across the entire network risen nearly 37% from a low of 111.31 EH/s on January 1, while it falls again as miners flee.

The buck of global bitcoin hash rates is concentrated in China, but the clampdown on cryptocurrency mining industry within China has slashed almost one third of the hash rates. On contrary, the hash rates in other countries see tangible growth with the U.S. having the fastest growing share. As of March 1, 2021, China’s share of hash rates declined to 49% and the U.S.’s increased to 16%.

Note: Based on the percentage of average monthly hash rates China’s ban on cryptocurrency mining is an opportunity for other nations. With bitcoin prices reaching record highs, mining stocks, represented by Marathon Patent Group, Riot Blockchain and BTBT, have crazily bought miners. As of February 18, 2021, these mining companies have purchased 330,000 mining machines with announced hash rates closing to 21 EH/s, more than 16% of bitcoin's full network hash rates(136.18 EH/s) .

Among the major mining stocks, Riot Blockchain has the highest market cap at $5.3 billion, while the rest are below $5 billion. 100,000 mining machines were snapped up by Marathon Patent Group, with a total hash rate of 10,261 PH/s, accounting for 82%. Market Cap/Hash Rates performance varies by company, with an average value of 8, with Ault Global Holdings having the highest value of 18.

Companies mentioned above bought a higher amount of Ant Miner of Bitmain and Whats Miner of Microbit due to their more advanced technologies and higher market shares. Nevertheless, Canaan has reached several big deals in 2021. In April this year, it signed an order for 11,760 Avalon mining machines with Mawson, and in August Mawson ordered another 17,352 Avalon devices with Canaan.

Bitcoin has been growing rapidly for ten years, with the highest price exceeding $50,000, and increases over 150% within the last three months. Bitcoin’s hash rates across the whole network is roughly proportional to the price, the higher the coin value, the greater the full hash rates, and the tougher the mining practice. Newly emerged high-capacity miners have stronger competitiveness, such as the successful release of AGM’s Jinli Miner, which may cause a hit to the current market share.

At the same time, more and more players are coming in the bitcoin mining has showed the industry’s vitality. For those companies that have a stock of miners in the early stage, 2021 may be a good year for mining as the bitcoin price rises and chips production is restricted. And for the mining machine manufacturers, owing to the delaying benefit feature, the market should pay more patience. 

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.