F-1/A: BGIN Blockchain Faces Q2 2025 Loss Amid KAS Price Drop

BGIN Blockchain Limited reports a significant net loss of $60.16 million in the first half of 2025, driven by a sharp decline in mining machine sales and increased operating expenses, as it progresses towards its Nasdaq IPO.

Summary

• BGIN Blockchain Limited, a digital asset technology company, primarily generates revenue from selling self-designed mining machines, conducting mining operations, operating mining pools, and providing hosting services.
• Revenue for the fiscal year ended December 31, 2024, increased by 17.5% to $302.28 million from $257.27 million in 2023.
• Net income for the fiscal year ended December 31, 2024, decreased significantly to $66.14 million from $139.76 million in 2023.
• For the six months ended June 30, 2025, total revenue sharply declined by 67% to $47.66 million from $144.48 million in the same period of 2024.
• The company reported a net loss of $60.16 million for the six months ended June 30, 2025, compared to a net income of $63.58 million for the six months ended June 30, 2024.
• The decline in revenue and net income in H1 2025 was primarily due to a 35% decrease in the per-unit price of KAS coins, leading to reduced demand for KAS mining machines and intensified market competition.
• Operating expenses increased by 579% to $54.83 million in H1 2025, mainly due to higher general and administrative expenses, cryptocurrency fair value fluctuations, and property and equipment impairment charges.
• BGIN plans to use approximately 60% of the IPO net proceeds for purchasing and/or constructing mining farms, 32% for R&D of new proprietary chips, and 8% for general corporate purposes.
• The company has a dual-class share structure, with Class B ordinary shares (held by CEO Qingfeng Wu) carrying five votes per share, giving him 55.03% of total voting power post-IPO (assuming full over-allotment exercise).

Sentiment

Score: 4

Explanation: The company shows strong long-term strategic vision and R&D capabilities, but recent financial performance (significant net loss and revenue decline in H1 2025) and numerous market/regulatory risks in the volatile cryptocurrency industry present immediate challenges and uncertainties for investors.

Positives

• Revenue increased by 17.5% to $302.28 million for the fiscal year ended December 31, 2024, compared to $257.27 million in 2023.
• The company possesses experience-driven innovative research and development capabilities, enabling the design of robust, energy-efficient mining machines for various cryptocurrencies.
• A strategic focus on maintaining operational flexibility allows the company to proactively seize revenue opportunities and adapt to evolving regulatory landscapes.
• Proprietary technologies, including ASIC chips and cloud-based mining machine management software, support a defensible business model.
• The management team is experienced and visionary, with proven track records in the technology sector and senior management.
• U.S. Customs concluded its investigation into ICERIVER mining machine shipments without monetary penalty, returning 828 machines for import.
• The contractual dispute with hosting service provider Krypton Technologies, LLC, and Mawson Hosting, LLC, has been resolved via a confidential settlement agreement, with all mining machines returned to BGIN Infrastructure US.
• Canadian trademark proceedings for the ICERIVER brand were settled, leading to official registration of the trademarks in Canada.

Negatives

• Net income decreased by $73.62 million to $66.14 million for the fiscal year ended December 31, 2024, from $139.76 million in 2023.
• Total revenue for the six months ended June 30, 2025, decreased by $96.82 million (67%) to $47.66 million from $144.48 million in the same period of 2024.
• The company reported a net loss of $60.16 million for the six months ended June 30, 2025, compared to a net income of $63.58 million for the six months ended June 30, 2024.
• Mining machine sales revenue decreased by $85.21 million in H1 2025 compared to H1 2024, primarily due to a 35% decline in the market price of KAS coins, reducing mining profitability and demand.
• Operating expenses increased by $46.76 million (579%) in H1 2025, driven by higher general and administrative expenses, fluctuations in cryptocurrency fair value, and impairment charges on property and equipment.
• Gross profit margin for mining machine sales decreased from 81% in H1 2024 to 23% in H1 2025 due to decreased KAS prices and intensified market competition.
• Mining pool revenue decreased by $30.9 million (87%) in H1 2025, following a strategic decision to shift operations primarily for internal use due to lower gross profit margins and limited long-term strategic value.
• The company recorded an inventory provision of $12.65 million and a write-off of $24.06 million in 2024 due to obsolete and slow-moving inventory items and declining KAS prices.
• An impairment charge of $16.30 million was recorded in 2024 for mining equipment and assembly-in-progress mining equipment due to decreased market price of KASPA mining machines.
• The company does not currently maintain any commercial insurance, exposing it to substantial losses from property damage, accidents, or liabilities.

Risks

• Dependence on the stability and popularity of KAS coins, with any technical issues, security vulnerabilities, or reduced popularity directly impacting business operations and revenue.
• Special risks associated with the KAS blockchain, including advanced setup complexity, potential for hidden issues, and block exclusion, which could affect security and transaction confirmation.
• Volatility in the market price of cryptocurrencies, which can adversely affect business and results of operations, as well as the value of cryptocurrency holdings and mining machine inventory.
• Regulatory risks regarding mining, holding, using, or transferring cryptocurrencies across multiple jurisdictions, with potential for new laws, restrictions on energy usage, and increased compliance costs.
• Potential for U.S. and/or foreign regulators to assert jurisdiction over cryptocurrencies and cryptocurrency markets, leading to additional regulations, compliance costs, or required alterations to business operations.
• Risk of being deemed an investment company under the 1940 Act if crypto assets are classified as investment securities, potentially requiring registration or operational adjustments.
• Liabilities arising from possible violation of Section 5 of the Securities Act if USDT were to be deemed a security, particularly in connection with dividend distributions in USDT coins.
• Substantial risks associated with using payment platforms (e.g., WindPayer, Pyvio, World First, KUN) for cash exchange and payments, including technical failures, cybersecurity threats, regulatory non-compliance, and financial instability of the platforms.
• Reputational harm if disruption in the cryptocurrency markets occurs, especially due to continued use of exchanges like Binance.com, which has faced SEC charges and legal settlements.
• Deficiencies in risk management processes and policies, including commingling of funds and single individual access to cold wallet private keys, which could lead to material asset loss.
• Reliance on a single chip foundry for proprietary ASIC chip manufacturing, posing risks of supply disruption or inability to meet manufacturing requirements.
• Dependence on a few major suppliers for mining machine components and a few partner manufacturers for assembly, making the company vulnerable to supply disruption and price fluctuation.
• Reliance on a steady and inexpensive power supply for mining operations; failure to access such power could significantly increase expenses and adversely affect results.
• Quality of mining machines relies on third-party production partners; any failure to maintain quality could materially and adversely affect business and reputation.
• Limited operating history and rapid growth pose challenges for effective management, potentially affecting business execution and financial performance.
• Inability to raise additional capital needed for growth, which could impair expansion and adversely affect existing operations.
• Operational adjustments in response to coin price fluctuations may materially and adversely affect revenues due to reduced machine usage.
• Dependence on a few customers for a significant portion of revenues, with the loss of any major customer potentially affecting business, financial condition, and cash flows.
• Changes in market conditions, including increased competition, may restrict pricing ability and lead to lower margins or reduced sales.
• Failure to maintain an effective quality control system could decrease product demand, lead to recalls, product liability claims, and harm reputation.
• Loss of senior management or key personnel, or failure to attract and retain qualified staff, could impair business growth and strategy execution.
• Conflicts of interest due to the Chief Technology Officer's ownership in Shenzhen Bgin, an affiliated entity.
• Third parties may claim infringement of intellectual property rights, leading to significant litigation expense and potential operational inhibition.
• Third parties may infringe upon the company's intellectual property rights, including trade names like ICERIVER, harming brand and competitive position.
• Cryptocurrencies and transactions may be subject to further taxation in the future, reducing economic returns and increasing holding costs.
• Hacking and fraud risks in cryptocurrency exchanges and wallets could erode user confidence and lead to declining market prices.
• Significant disruption of Internet connectivity could adversely affect cryptocurrency network functionality and business operations.
• Uncertain impact of geopolitical and economic events on cryptocurrency supply and demand.
• Uncertainty regarding the acceptance and widespread use of cryptocurrency in the retail and commercial marketplace.
• Competition from other methods of investing in cryptocurrencies, potentially limiting the market for shares and reducing liquidity.
• Risks related to doing business in Hong Kong and Mainland China, including uncertainties in the legal system, potential government intervention, and regulatory changes (e.g., M&A Rules, Cybersecurity Review Measures, Overseas Listing Trial Measures).
• Difficulty for overseas shareholders and/or regulators to conduct investigations or collect evidence within China, including Hong Kong.
• Additional costs and procedural obstacles in enforcing foreign judgments or bringing actions in Hong Kong against the company or management.
• Impact of the Hong Kong National Security Law and Ordinance on Hong Kong subsidiaries.
• Uncertainties in the Hong Kong legal system limiting legal protections.
• Political risks associated with conducting business in Hong Kong, including potential changes to autonomy and trade tensions.
• Potential impact of the currency peg system in Hong Kong on expenditures.
• Risks associated with operating in the rapidly evolving Southeast Asia region, including currency devaluation, inflation, health epidemics, and political instability.
• Adverse changes in Singapore government regulations may materially and adversely affect operations and financial condition.
• Uncertainty regarding the company's classification as a Singapore tax resident.
• Some U.S. subsidiaries conducted business in certain states without first obtaining certificates of authority, potentially facing adverse consequences.
• Mining operations are subject to environmental, health, and safety laws and regulations, potentially leading to significant liabilities.
• Local government regulations for mining business may affect operations and expansion plans.
• The dual-class share structure limits the ability of Class A shareholders to influence corporate matters and could discourage change of control transactions.
• The dual-class structure may adversely affect the trading market for Class A ordinary shares, potentially excluding them from certain indices.
• Immediate and substantial dilution for new investors due to the initial public offering price being substantially higher than net tangible book value per share.
• Substantial future sales or perceived potential sales of Class A ordinary shares could cause the price to decline.
• The company may not pay dividends in the foreseeable future, requiring reliance on price appreciation for investment return.
• As an emerging growth company, the company is not required to comply with certain reporting requirements, potentially providing less information to investors.
• Failure to establish and maintain proper internal financial reporting controls, including identified material weaknesses (commingling of funds, lack of formal documentation, single cold wallet access), could impair accurate financial statements and compliance.
• Reliance on third-party data and information (e.g., Frost & Sullivan Report) that may not be independently verified or accurate.
• As a Cayman Islands company, certain corporate governance practices may differ from Nasdaq standards, potentially affording less protection to shareholders.
• As a foreign private issuer, the company is exempt from certain U.S. domestic public company reporting requirements, providing less extensive and timely information.
• Increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.
• Potential loss of foreign private issuer status in the future, resulting in significant additional costs and expenses.
• Broad discretion in the use of IPO net proceeds, which may not be used effectively or in ways shareholders agree with.

Future Outlook

The company plans to establish a mining farm network with an aggregate power capacity of approximately 500MW within the next two years through construction, leasing, or acquisition. It is actively developing new ASIC chips and mining machines, including the BL1 series for Dogecoin (expected H1 2026) and BT1 series for Bitcoin (expected Q1 2026). The company intends to continue investing in R&D to enhance operational efficiency, expand product and service offerings, and enter new markets. It also plans to expand R&D teams and upgrade facilities, and will continue energy-saving efforts by adopting energy-efficient cooling methods.

Management Comments

• Management believes that suspending all mining activities in mainland China in September 2021 would have caused the company to lose all revenue and income for a substantial period, potentially leading to greater losses than potential monetary penalties for non-compliance with PRC regulations.
• Management believes that the company's innovative research and development capabilities are a key competitive strength, enabling the design and delivery of robust and energy-efficient mining machines.
• Management believes that the management team's continuous focus on retaining operational flexibility has enabled the company to proactively seize revenue opportunities and strategically position itself for future growth.
• Management believes that the industry recognizes the quality of the machines designed and developed, with the company's brand 'Ice River' ranking first in KAS mining machine sales volume in 2024.
• Management believes that the current focus on selected alternative cryptocurrencies and business strategies for newly launched cryptocurrencies, combined with cloud-based mining machine management software, provides a distinctive competitive advantage for reacting to market fluctuations and maximizing profitability.
• Management believes that the ability to innovate is critical to success and future growth, and strong in-house R&D and continued investment will provide an advantage over competitors.
• Management believes that growing with sustainability is important for long-term success, and intends to expand energy-saving efforts and prioritize renewable energy in site selection.
• Management believes that the properties currently leased for executive offices are adequate for the foreseeable future and that suitable additional space for mining farms will be available on commercially reasonable terms.

Industry Context

The global blockchain and cryptocurrency market is characterized by rapid technological innovation and significant volatility. The total market capitalization of cryptocurrencies grew at a CAGR of 76% from 2019 to 2024, reaching $3,264 billion. Alternative cryptocurrencies, including KAS, have seen substantial growth. The industry is driven by hardware upgrades (ASIC, FPGA, GPU chips), increasing market recognition, and adoption of cryptocurrencies in various application scenarios. However, it is also subject to evolving regulatory environments, geopolitical events, and market disruptions, as evidenced by the FTX bankruptcy. The company's strategic focus on alternative cryptocurrencies and proprietary ASIC chip development positions it within a competitive, yet fragmented, market segment, where it aims to leverage its R&D to expand into larger cryptocurrencies like Bitcoin and Dogecoin.

Comparison to Industry Standards

• Ice River, the company's brand, is ranked among the top three players in the global KAS mining machine market, holding the largest selection of models tailored for KAS.
• Ice River is considered one of the best KAS mining machine sellers worldwide, offering high cost-effective ratio models.
• The company's proprietary ASIC chips offer significantly greater computing power (500x for 8nm, 200x for 12nm) and energy efficiency compared to traditional FPGA chips, leading to approximately 200 times the mining rewards without increased power consumption.

Management Changes

Corporate Governance

Legal Proceedings

• U.S. Customs detained eight shipments (2,412 units, value ~$8.02 million) of ICERIVER mining machines in December 2024, initially citing potential FCC regulation violations. Four shipments were re-exported to Malaysia in early 2025. The remaining 828 units (value ~$5.59 million) were returned for import in April 2025 after U.S. Customs found no FCC violations, ending the investigation without monetary penalty.
• A contractual dispute with hosting service provider Krypton Technologies, LLC, regarding 5,325 mining machines (net book value ~$4.32 million) was initiated in December 2024. Bgin Infrastructure US filed a complaint against Krypton's landlord, Mawson Hosting, LLC, in March 2025, after Mawson took control of the machines. The dispute was resolved via a confidential settlement agreement on August 21, 2025, with Mawson returning all mining machines to Bgin Infrastructure US.
• Canadian trademark proceedings for the ICERIVER brand were settled on August 25, 2025, with Bgin Trading amending its statement of goods and DIRTT Environmental Solutions Ltd. withdrawing its oppositions. The trademarks are now officially registered.
• The company is engaged in pre-litigation settlement discussions with a European-based entity, IceRiver.eu, for trademark infringement and false affiliation claims. The company believes it can resolve the matter without protracted litigation but cannot assure it. Potential remedies include injunctive relief, monetary damages, and attorneys' fees.

Related Party Transactions

• Mr. Qiuhua Li, Chairman, and Mr. Qingfeng Wu, CEO, are founders and principal shareholders. Mr. Qi Shao, CTO, is also a principal shareholder.
• Coinpal Limited, a payment platform used by customers for crypto asset payments, was acquired 100% by Mr. Qiuhua Li on April 10, 2025. CoinPal remitted US$199.8 million in USDT in 2023 and US$188.7 million in 2024 to the company.
• Shenzhen Bgin Technology Co., Ltd. (controlled by Mr. Qi Shao and Mr. Qiuhua Li) provided services to Bgin SG from January 1, 2025, to June 30, 2025, for US$70,000 per month (agreement not renewed).
• Shenzhen Bgin previously provided R&D, administrative support, and mining farm operation/maintenance services to Bgin HK (agreements renewed multiple times, last renewal June 28, 2024).
• Shenzhen Bgin previously acted as an agent for Bgin HK to procure components and contract manufacturing (Agency Agreement expired February 28, 2022).
• Zhongshan Bgin Technology Co., Ltd. (wholly owned by Shenzhen Bgin) previously provided technology services to Bgin HK (agreements terminated March 31, 2022, and May 7, 2022).
• The company paid US$660,000 in management services fees to Shenzhen Bgin in 2024 (US$711,846 in 2023).
• The company paid US$97,157 to IGV HK (controlled by Mr. Li's spouse) for technical services in 2024 (US$70,668 in 2023).
• Short-term loans of US$2 million each were received from Mr. Wu and Mr. Li in 2023, bearing 3.65% annual interest, and were fully repaid in USDT coins before December 31, 2023.
• The company occupies office space in Shanghai, PRC, free of charge from Shanghai HuiShi Information Technology Co., Ltd. (controlled by Mr. Li) until January 31, 2027.
• Due from related parties (Mr. Qiuhua Li, Mr. Qingfeng Wu, Icing Trading Limited) totaled US$101,336 as of December 31, 2024 (US$32,006 as of Dec 31, 2023), unsecured, interest-free, and due on demand (2024 balance repaid by May 2025).
• Due to related parties (Icing Trading Limited) totaled US$10,363 as of December 31, 2024 (US$485,587 as of Dec 31, 2023), unsecured, interest-free, and due on demand (2024 balance fully repaid by June 30, 2025).

Stakeholder Impact

• Shareholders: Will experience immediate and substantial dilution from the IPO. The dual-class share structure limits Class A shareholders' influence on corporate matters. Future share price volatility is expected. Dividends are discretionary and not guaranteed.
• Employees: The company's future success depends on retaining and attracting qualified personnel. PRC individuals on service agreements may face labor law protection issues. Equity incentives are granted, but share price volatility could affect their value.
• Customers: May face increased costs due to potential tariffs on mining machines. Hosting service customers are exposed to risks of operational disruptions and disputes with hosting providers. Customers paying with crypto assets are exposed to volatility and security risks.
• Suppliers: The company's reliance on a few major suppliers and a single chip foundry creates supply chain risks, potentially affecting production costs and delivery schedules.
• Creditors: The company's lack of commercial insurance exposes it to substantial losses, which could impact its ability to meet obligations. Deposits in U.S. banks exceeding FDIC insured amounts are at risk in case of bank failure.
• Regulators: The company faces extensive and evolving regulatory scrutiny in multiple jurisdictions (U.S., Hong Kong, Singapore, PRC), potentially leading to increased compliance costs, investigations, fines, or operational restrictions.

Next Steps

• Complete the initial public offering and list Class A ordinary shares on the Nasdaq Stock Market under the symbol BGIN.
• Use approximately 60% of IPO net proceeds for the purchase and/or construction of new mining farms, aiming for an aggregate power capacity of approximately 500MW within the next two years.
• Allocate approximately 32% of IPO net proceeds for the research and development of new proprietary chips for cryptocurrency mining machines.
• Continue R&D efforts to design and develop new series of mining machines, including BL1 for Dogecoin (expected H1 2026) and BT1 for Bitcoin (expected Q1 2026).
• Expand R&D teams and upgrade facilities to enhance capabilities.
• Implement energy-saving efforts, such as adopting energy-efficient miner cooling methods.
• Form an independent audit committee, compensation committee, and nominating and corporate governance committee upon the effectiveness of the registration statement.
• Adopt a code of ethics and an executive compensation recovery policy.
• Address identified material weaknesses in internal controls, including establishing multi-level authorization for cold wallet access and refining cash management policies.
• Continue pre-litigation settlement discussions for the IceRiver.eu trademark infringement case.

Key Dates

Recommendation

While BGIN Blockchain demonstrates strong R&D capabilities, a diversified business model, and strategic growth plans, the recent significant net loss and revenue decline in H1 2025, coupled with high market volatility in the cryptocurrency sector and numerous regulatory uncertainties, present substantial short-term risks. The company's dependence on KAS coins, supply chain vulnerabilities, and internal control weaknesses warrant caution. The IPO proceeds are earmarked for growth, but execution risk remains high in a rapidly evolving and competitive industry. A 'hold' recommendation is appropriate, acknowledging the long-term potential from R&D and expansion into Bitcoin/Dogecoin mining, but advising investors to monitor financial performance and risk mitigation efforts closely before considering further investment.

Keywords

Cryptocurrency Mining, ASIC Chips, Blockchain Technology, Digital Assets, KAS Coin, Mining Machines, IPO, Nasdaq, SEC Filing, Financial Performance, Risk Factors, Corporate Governance, Singapore, Hong Kong, United States, Regulatory Compliance, Supply Chain, Market Volatility, Research and Development, Dividend Policy, Related Party Transactions