Cryptocurrencies are inherently volatile, said Jihan Wu, president of Bitdeer and Matrixport. However, its growth in the long term will bring many benefits that go beyond price volatility. “Even if 95% of today’s coins lose value and disappear, the remaining 5% will grow enormously,” he said.
Wu’s optimism comes from his own experiences. Jihan Wu discovered bitcoin and realized its potential more than 10 years ago when he saw people using it to buy computer hardware and software on the Bitcointalk.org forum. However, to break out of its niche and gain wider adoption, bitcoin needs a lot of backing. Thus, Wu started to develop a solution that could play an important role in the development of bitcoin.
In 2013, Mr. Wu partnered with Micree Ketuan Zhan to launch Bitmain Technologies, a supplier of specialized hardware equipment for bitcoin mining. Customers who own Bitmain-powered hardware can check or mine new bitcoins by putting their validation and algorithmic processing power on the network.
As the bitcoin price surged over the years, Bitmain’s business turned Mr. Wu and Zhan into billionaires. By 2018, Bitmain was the world’s largest supplier of bitcoin mining equipment with a 75% market share, according to Frost & Sullivan. The Bitmain company intends to conduct a billion-dollar IPO in Hong Kong, until the price of bitcoin plummets, losing up to 70% of its value by the end of 2018.
Bitmain’s IPO fell victim to the volatile nature of bitcoin and put financial pressure on the company. The two founders of Bitmain quickly fell into a spiral of trying to keep the company alive and then wresting control of their own company.
Now, Mr. Wu sees his experience as milestones on his journey to building one of the biggest crypto empires. Since that time, Bitmain has returned to profitability and continues to dominate the crypto mining equipment market despite China’s recent tightening of mining and cryptocurrency exchanges.
In response to the regulatory changes, Bitmain stopped shipping to customers in mainland China. However, Bitmain’s foreign customers are not affected. Bitmain is also building lower-power “miners” to address operator concerns.
Mr. Wu left Bitmain earlier this year to focus on being the chairman of two other independent Singapore-based companies, Bitdeer (a cryptocurrency mining platform that announced plans to IPO on Nasdaq, US in the US in the US). valued at $4 billion) and Matrixport (a financial services company valued at $1 billion in its latest funding round).
Matrixport, launched in February 2019, is another proof of Mr. Wu’s long-term optimism about the crypto industry. Bitcoin was still in a bear market at the time Mr. Wu and co-founder John Ge Yuesheng started the company.
“We believe crypto and blockchain will experience rapid growth in the future, reaching tens of trillions of dollars,” said Mr. Wu. “And a lot of the new users will stay in the crypto market forever, so they need sophisticated and premium products to manage the wealth they have accumulated.”
Mr. Wu’s decision to move forward is nothing short of an obvious one right now. Since the launch of Matrixport, the cryptocurrency market cap has hit a record high of $3 trillion in November, according to CoinGecko. The global market size in terms of crypto potential users also more than doubled to 221 million in the first half of the year, as reported by Crypto.com.
While still highly volatile, cryptocurrencies are trending higher this year following signs that digital assets are gaining wider acceptance. El Salvador became the first country to accept bitcoin as fiat currency, and many companies such as AMC, AT&T, Mastercard, Microsoft, and PayPal are accepting several cryptocurrencies as a method of payment.
Going in the positive direction of the cryptocurrency market, Matrixport successfully raised $100 million in a Series C funding round announced in August with the participation of many large investment funds.
The “history” of consistently creating billion-dollar companies like Wu’s is unprecedented, said Adam Goldberg, co-founder of Standard Crypto, a San Francisco-based hedge fund. Mr. Goldberg was an investor in Bitmain in 2017 and later joined the Matrixport board. Matrixport wants to become a “gateway” for investors to enter the world of digital assets. Matrixport’s strategy is to offer investment products similar to those on Wall Street but tailored to crypto-asset investors.
Matrixport’s services include custodial services, loan investments and structured products. Mr. Wu said that Matrixport was the first company to offer a dual-cryptocurrency product. It is an investment product that guarantees profit with the payment made in either cryptocurrencies depending on the price movement at the time. Matrixport says it manages $10 billion in assets with an average monthly turnover of around $5 billion.
Another of Mr. Wu’s companies, Bitdeer, is a cryptocurrency “mining” platform that manages more than 100,000 miners.
Bitdeer and Matrixport are both ways the company split from Bitmain as an agreement Mr. Wu and Zhan reached after the two co-founders had disagreements. A confidentiality clause does not allow Mr. Wu to share details of the agreement between the two, but Mr. Wu first shared with Forbes Asia about the development leading up to this incident.
“It was a time for our business and for me. And of course, the pressure of running a complex manufacturing company is increasing and leading to disagreements between the two co-founders,” Wu said.
From having $2.5 billion in revenue in 2017 and $742 million in the first half of 2018, according to the prospectus Bitmain filed with the Hong Kong stock exchange, Bitmain fell to the brink of failure and fired a large number of personnel.
Bitmain expanded into a lot of different areas at its growth stage – AI, bitcoin mining, decentralized exchanges, venture capital… – but a lot of it didn’t deliver. profit when the market goes down in 2018.
The two founders of Bitmain had disagreements over the strategic direction. It was not until the end of last year that this incident became known to the public when an agreement was announced. Mr. Wu stepped down as chairman and CEO of Bitmain but still has a stake in the company. Mr. Zhang currently runs Bitmain’s production and a “mining pool” called Antpool.
“This agreement marks the end of a difficult period. Bitmain did not go bankrupt, instead flourished,” said Mr. Wu. “Bitmain’s cumulative net profit is expected to range from $2 billion to $4 billion. This is a very profitable company,” he said.
Mr. Wu’s journey into the crypto business began with his discovery of bitcoin while working as an investment analyst in Beijing. Studying economics and psychology at Peking University, he was immediately drawn to the decentralized digital currency from Satoshi Nakamoto’s idea.
Mr. Wu said he immediately stopped studying to become a professional accountant to focus on learning and investing in bitcoin. After buying hundreds of coins in 2011, Mr. Wu invested in ASICMiner, a bitcoin mining company. Mr. Wu used the profits from this deal and capital from a group of other investors to co-found Bitmain with Zhan in 2013.
Mr. Zhan was a chip designer before collaborating with Wu. Before that, he had a company that produced set-top boxes for TV equipment. Bitmain became one of the first companies to produce tailor-made chips for cryptocurrency mining.
Initially, Mr. Wu just wanted to be an investor in Bitmain. However, he soon realized the pressure of running a technology startup required him to run the company directly.
In less than 4 years, Bitmain became the most influential company in the bitcoin economy.
While there are still many uncertainties regarding cryptocurrency regulation in many major markets around the world, Mr. Wu believes that the industry will continue to see more unique innovations as it is not tied to the financial background. traditional.
“Crypto and blockchain technology creates a new world that allows fintech entrepreneurs to take big strides. Ultimately, traditional financial institutions and regulators will embrace blockchain technology,” he said.