Bitcoin outperformed private investing in crypto-mining firms, even with 80% decline from peak price

In the wake of Bitmain's IPO lapsing, we took a look at private funding rounds into some of the largest crypto mining companies to measure potential returns vs. outright Bitcoin performance during the same time horizon. Outside of Canaan, which is reportedly still exploring an IPO in either Shanghai or the U.S., all major crypto mining IPO applications have lapsed their filling. The potential for higher valuations (either via new funding rounds or public exits) above the respective companies' latest valuations remain slim given the prolonged bear market which has seen price and volumes decline by more than 80% since early 2018. Therefore, we estimate private investments in some of the largest crypto-mining companies —Bitfury, Bitmain, and Canaan—have underperformed outright ownership of BTC at the time of private funding to today, absent opportunity costs of capital and any liquidity premiums/discounts.

Founded in 2011, Bitfury raised 3 rounds of $20m within a span of 14 months from 2014 - 2015 (when Bitcoin was under $750), and a final $30m to start 2017. While Bitfury's valuation in 2014-2015 is publicly unknown, CIO Alexsejs Petrovs was quoted in 2017 as stating a ~$400m valuation. Using the historical price of Bitcoin at various Bitfury funding dates shows an implied underlying Bitfury break-even valuation that appears unlikely to have been met at those points in time. More recently, Bitcoin has outperformed both Series B and Series C investors by anywhere from 3x - 18x assuming a ~$4000 price of BTC and a conservative $450m valuation for Bitfury.