F-1/A: BGIN Blockchain Files for Nasdaq IPO, Reveals Mixed Financials Amid Crypto Market Volatility and Operational Shifts

BGIN Blockchain Limited, a digital asset technology company, filed an F-1/A registration statement for its initial public offering on Nasdaq, reporting increased revenue but decreased net income in 2024, alongside ongoing legal disputes and a strategic shift of operations to the U.S.

Summary

• BGIN Blockchain Limited is pursuing an Initial Public Offering (IPO) of 6,000,000 Class A Ordinary Shares on the Nasdaq Stock Market under the symbol BGIN, with an estimated price range of US$5.00 to US$7.00 per share.
• Revenue increased by 17.5% from US$257.3 million in 2023 to US$302.3 million in 2024, primarily driven by growth in mining and mining pool revenue.
• Net income decreased significantly from US$139.8 million in 2023 to US$66.1 million in 2024, mainly due to a substantial increase in cost of revenue.
• Sales of self-designed mining machines were the primary revenue source, contributing 85.43% of total revenue in 2023 (US$219.8 million) and 63.57% in 2024 (US$192.2 million).
• The gross profit margin for mining machine sales decreased from 88% in 2023 to 58% in 2024, attributed to a US$24.1 million write-off of obsolete machines and components, a US$12.6 million inventory provision, and higher sales volume.
• Mining revenue increased by 246.38% to US$45.0 million in 2024, with KAS and ALPH being key contributors, but the overall mining gross profit margin slightly decreased from 35% to 34%.
• Mining pool services, launched in September 2023, generated US$58.8 million in revenue in 2024 (19.5% of total revenue), primarily from KAS coins (91.49%).
• Research and development (R&D) expenses increased to US$16.4 million in 2024 from US$10.1 million in 2023, mainly for ASIC chip development.
• The company holds a significant balance in Tethers (USDT), with US$2.35 million as of December 31, 2024, down from US$115.8 million in 2023, and US$16.19 million in crypto short-term investments with Binance.com as of December 31, 2024.
• A material weakness in internal controls was identified due to commingling of funds with the CEO's personal account prior to April 2022, and a lack of formal documentation in internal controls over financial reporting.
• The company is involved in a contractual dispute with former hosting service provider Krypton and its landlord Mawson, regarding 5,325 mining machines (net book value US$4.32 million) that Mawson has taken control of and is operating without authorization.
• U.S. Customs detained 2,412 ICERIVER mining machines in December 2024, but subsequently returned 828 units for import after finding no FCC violations, while 4 shipments were re-exported to Malaysia.

Sentiment

Score: 4

Explanation: The company shows strong revenue growth and strategic expansion plans, particularly in R&D and mining infrastructure. However, the significant decline in net income and gross profit margins, coupled with identified material weaknesses in internal controls and ongoing legal disputes over substantial assets, indicates considerable operational and financial challenges. The heavy reliance on KAS coins also presents a concentration risk. While the IPO aims to fund growth, the current financial performance and unresolved issues temper overall sentiment.

Positives

• Total revenue increased by 17.5% from US$257.3 million in 2023 to US$302.3 million in 2024.
• Mining revenue saw a significant increase of 246.38% to US$45.0 million in 2024 due to increased machine deployment.
• Successful launch and growth of mining pool services, contributing US$58.8 million in revenue in 2024.
• Continuous investment in research and development, with R&D expenses increasing to US$16.4 million in 2024, leading to new ASIC chip and mining machine models.
• Development of proprietary ASIC chips and cloud-based mining machine management software, enhancing computing power and energy efficiency.
• Strategic shift of mining operations from China to the U.S. is expected to decrease electricity costs in the long run.
• Plans to expand mining farm network to 500MW capacity within two years, and develop new mining machines for Dogecoin and Bitcoin, targeting larger markets.
• U.S. Customs concluded its investigation on ICERIVER mining machines without monetary penalty, returning 828 units for import.

Negatives

• Net income decreased by US$73.7 million, from US$139.8 million in 2023 to US$66.1 million in 2024.
• Gross profit margin for sales of mining machines significantly decreased from 88% in 2023 to 58% in 2024, primarily due to a US$24.1 million write-off of obsolete inventory and a US$12.6 million inventory provision.
• Heavy dependence on KAS coins for business operations (57.77% of total revenue from KAS mining machine sales, 84.80% of mining revenue from KAS coins, and 19.46% of mining pool revenue from KAS coins in 2024).
• Significant increase in cost of revenue, up by US$116.5 million in 2024 compared to 2023.
• Identified material weaknesses in internal controls, including commingling of funds with the CEO's personal account and lack of formal documentation.
• Ongoing contractual dispute with former hosting provider Krypton and its landlord Mawson, resulting in the inability to access 5,325 mining machines (US$4.32 million net book value).
• Reliance on a single chip foundry and a few major suppliers for mining machine components, creating supply disruption and price fluctuation vulnerabilities.
• No commercial insurance coverage for mining operations, exposing the company to substantial losses from property damage, accidents, or liabilities.
• Significant balance in Tethers (USDT) exposes the company to risks if USDT breaks its U.S. dollar peg, as it has done previously.

Risks

• Uncertainties arising from the legal system in Mainland China and Hong Kong, including interpretation and enforcement of laws, and rapid changes in regulations, could hinder ability to offer securities or materially affect business operations.
• The PRC government's significant authority to intervene in or influence operations in Hong Kong could limit cash transfers and impact business value.
• Potential delisting from Nasdaq under the Holding Foreign Companies Accountable Act if PCAOB is unable to inspect the auditor for two consecutive years, despite current compliance.
• Risks related to service/freelancer agreements with PRC individuals, which do not constitute labor relationships under PRC laws, potentially leading to arbitration or litigation.
• Risk of third-party payment institutions failing to hold relevant licenses for cross-border payments, requiring alternative arrangements.
• Past cryptocurrency mining operations in Mainland China (prior to October 2022) were in violation of PRC laws, potentially exposing affiliated entities and the company to fines or liabilities.
• Shipment of mining machines from Mainland China to the U.S. could be deemed a violation of PRC laws, leading to claims for breach of contract or compensation from third parties.
• Failure to comply with cybersecurity, data privacy, and data protection laws (e.g., Data Security Law, Personal Information Protection Law) could result in fines, sanctions, and reputational damage.
• Potential requirement to obtain permission or approval from CSRC, CAC, or other PRC authorities for this offering, which if not obtained, could significantly limit or hinder the ability to offer securities.
• Difficulties for overseas shareholders and 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/Mainland China against the company or management.
• Impact of the Hong Kong National Security Law and Ordinance on Hong Kong subsidiaries, potentially affecting business operations.
• Uncertainties in the Hong Kong legal system could limit legal protections.
• Political risks associated with conducting business in Hong Kong, including potential changes to the currency peg system.
• Exposure to Singapore laws, which differ from U.S. laws, and risks associated with operating in the rapidly evolving Southeast Asia region.
• Adverse changes in Singapore government regulations may materially affect operations and financial condition.
• The ability of Singapore subsidiaries to distribute dividends may be subject to future restrictions.
• Uncertainty regarding classification as a Singapore tax resident.
• Limited operating history and rapid growth pose risks if growth is not managed effectively.
• Heavy dependence on the stability and popularity of KAS coins, making the business vulnerable to technical issues, security vulnerabilities, or reduced popularity of the KAS blockchain.
• Inability to raise additional capital needed for business expansion on favorable terms.
• U.S. tariffs on Chinese imports and tariffs on imports from other Asian countries (Malaysia, South Korea) could adversely affect supply chain, cost structure, and results of operations.
• Volatility in cryptocurrency market prices may adversely affect business and results of operations, despite mitigation strategies.
• Bankruptcies and financial distress among cryptocurrency market participants (e.g., FTX) have caused widespread disruption and negatively impacted the business.
• Use of payment platforms (WindPayer, Pyvio, World First, KUN) for cash exchange and payments exposes the company to substantial risks, including technical failures, cybersecurity threats, and regulatory non-compliance.
• Reputational harm if disruption in cryptocurrency markets occurs, especially due to continued use of Binance.com after SEC charges and plea agreement.
• Inadequate risk management processes and policies for safeguarding cryptocurrencies, potentially leading to material loss.
• Risk that USDT could be deemed a security under the Securities Act, leading to liabilities for past dividend distributions in USDT.
• Dependence on FDIC-insured banks for cash deposits, with amounts exceeding insured limits, posing risk of loss or delayed access in case of bank failure.
• Banks may be reluctant to provide services to crypto-related businesses.
• Customers submitting cryptocurrencies as payment via CoinPal (a related party) exposes the company to risks like USDT de-pegging, cyber-attacks, and conflicts of interest.
• Regulatory risks regarding mining, holding, using, or transferring cryptocurrencies, including potential new laws or stricter enforcement.
• Regulatory investigations by U.S. Customs and Border Protection and FCC related to international shipping of mining machines.
• Erosion or loss of user confidence in cryptocurrencies due to decentralization concerns, security flaws, or negative publicity.
• Capital-intensive nature of producing new mining machines and obtaining components, requiring substantial investment.
• Reliance on a major supplier for components and a few partner manufacturers for assembly, creating vulnerability to supply disruption and price fluctuation.
• Dependence on a steady and inexpensive power supply; failure to access it at reasonable costs could significantly increase expenses.
• Quality of mining machines relies on third-party production partners; any failure could adversely affect business.
• Lack of long-term contracts with most suppliers, increasing risk of production cost increases or delays.
• Mining operations are not covered by commercial insurance, exposing the company to substantial uninsured losses.
• Disputes with hosting service providers could result in operational disruptions and financial losses.
• Failure to anticipate or adapt to technological innovations in a timely manner could render mining machines obsolete.
• Changes in market conditions and competitive environment may restrict pricing ability or sales volume.
• Failure to maintain an effective quality control system could adversely affect business and reputation.
• Product defects could lead to large-scale recalls or product liability claims.
• Loss of senior management or inability to attract/retain qualified personnel could impair business growth.
• Conflicts of interest due to the Chief Technology Officer's ownership in Shenzhen Bgin.
• Third parties may claim infringement of intellectual property rights, leading to litigation expenses.
• Inability to adequately protect or enforce intellectual property rights, including trade names (e.g., IceRiver.eu case).
• Future taxation on cryptocurrencies and transactions could reduce economic returns.
• Hacking and fraud risks in cryptocurrency exchanges and wallets could erode user confidence.
• Significant disruption of Internet connectivity could adversely affect business.
• Uncertain impact of geopolitical and economic events on cryptocurrency supply and demand.
• Uncertainty regarding widespread acceptance and use of cryptocurrency.
• Competition from other methods of investing in cryptocurrencies.
• No public market for Class A ordinary shares prior to offering, leading to potential price volatility.
• Immediate and substantial dilution for new investors due to offering price being higher than net tangible book value.
• Substantial future sales or perceived potential sales of Class A ordinary shares could cause price decline.
• Dual-class share structure limits influence of Class A shareholders and could discourage change of control transactions.
• Dual-class structure may adversely affect trading market for Class A shares (e.g., exclusion from indices).
• Difficulties in protecting interests and enforcing U.S. judgments due to incorporation under Cayman Islands law.
• Risk of being classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes.
• Increased costs as a public company, especially after ceasing to qualify as an emerging growth company.
• Potential loss of foreign private issuer status, resulting in significant additional costs and expenses.
• Broad discretion in the use of net proceeds from the IPO, which may not be used effectively.
• Obligation to disclose information publicly may put the company at a disadvantage to private competitors.

Future Outlook

The company plans to further integrate its business model across the cryptocurrency mining value chain, focusing on designing new ASIC chips and mining machines, and increasing research and development efforts. It intends to establish a mining farm network with an aggregate power capacity of approximately 500MW within the next two years through construction, leasing, or acquisition. New BL1 series mining machines for Dogecoin are expected to launch in the first half of 2026, and BT1 series mining machines for Bitcoin are expected to launch by the first calendar quarter of 2026. The company expects to incur approximately US$22 million in R&D expenses for these projects. It also plans to expand its R&D teams and upgrade facilities, recruit local U.S. employees, and obtain employment visas in Hong Kong and Singapore for officers, eventually terminating service agreements with PRC individuals.

Management Comments

• Management believes its experience-driven innovative research and development capabilities are a key competitive strength, enabling the design and delivery of robust and energy-efficient mining machines.
• Management'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, citing the company's position among the top three leading players in the global KAS mining machine market.
• Management believes that the current focus on selected alternative cryptocurrencies and business strategies with respect to newly launched cryptocurrencies, combined with cloud-based mining machine management software, is a distinctive competitive advantage.
• Management believes that growing with sustainability is important for long-term success, emphasizing energy-efficient ASIC chips and future adoption of water/immersion cooling methods.
• Management believes that its current cash and cash equivalents and anticipated cash flows from investing activities will be sufficient to meet anticipated working capital requirements and capital expenditures for at least the next 12 months.

Industry Context

The global blockchain and cryptocurrency market has seen significant growth, with total market capitalization increasing at a CAGR of 76% from US$193 billion in 2019 to US$3,264 billion in 2024. Bitcoin, Ethereum, and alternative cryptocurrencies accounted for approximately 57%, 12%, and 31% of the total market capitalization, respectively, as of December 31, 2024. The alternative cryptocurrency market, in particular, grew at an 85% CAGR from 2019 to 2024. Key drivers include individual-friendly alternative cryptocurrencies, continuous hardware upgrades (ASIC, GPU, FPGA chips), and increasing market recognition and adoption of cryptocurrencies. The company's brand, Ice River, is ranked first in terms of sales volume of KAS mining machines in 2024 and is considered one of the best KAS mining machine sellers worldwide, indicating a strong competitive position in this niche.

Comparison to Industry Standards

• The company's gross profit margin for mining machine sales decreased from 88% in 2023 to 58% in 2024. While still strong, this decline suggests increased competition or market adjustments compared to previous periods.
• The company's reliance on KAS coins (57.77% of total revenue from KAS mining machine sales in 2024) indicates a concentrated business model compared to diversified industry players who might mine a broader portfolio of cryptocurrencies like Bitcoin and Ethereum.
• The company's strategic shift of mining operations to the U.S. due to regulatory changes in China aligns with a broader industry trend of crypto miners seeking more favorable regulatory and energy environments.
• The company's development of proprietary ASIC chips and cloud-based mining machine management software positions it competitively against other hardware suppliers like Bitmain and Wind Miner, particularly in the KAS mining machine market where Ice River (the company's brand) is a top player.
• The company's lack of commercial insurance for its mining operations is a significant deviation from standard risk management practices in mature industries, potentially exposing it to greater financial risk compared to competitors who might carry such coverage.
• The company's identified material weaknesses in internal controls, particularly fund commingling and lack of formal documentation, indicate a need for improvement to meet the higher corporate governance standards expected of publicly traded companies, especially compared to established industry benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• **Machine Detention by U.S. Customs:** In December 2024, U.S. Customs detained eight shipments (2,412 units, value US$8,016,268) of ICERIVER mining machines, initially citing potential FCC regulation violations. Four shipments were re-exported to Malaysia in early 2025, ending that part of the investigation. Subsequently, U.S. Customs found no FCC violations for ICERIVER machines and returned the remaining 828 units (value US$5,594,332) for import in April 2025. No monetary penalty was imposed.
• **Contractual Dispute and Proceedings Regarding Hosting Services Agreement with Krypton:** On June 14, 2024, Bgin Infrastructure US entered a hosting agreement with Krypton, which Krypton terminated on December 20, 2024, alleging payment failure. Bgin Infrastructure US disputed this, citing Krypton's breach due to performance issues. As of December 31, 2024, Krypton was contractually obligated to return 5,325 mining machines (net book value US$4.32 million). On February 12, 2025, Bgin Infrastructure US learned Krypton's landlord, Mawson Hosting, LLC, had taken control of and was operating these machines since January 1, 2025, without authorization. On March 31, 2025, Bgin Infrastructure US and Bgin Mining filed a complaint against Mawson and Allegheny & Tsingshan Stainless, LLC in Pennsylvania to recover the machines and damages. Settlement discussions are ongoing, but no resolution has been reached, and a trial date is not yet scheduled.
• **Canadian Trademark Proceedings:** During the trademark application process for two ICERIVER marks in Canada, DIRTT Environmental Solutions Ltd. filed Statements of Opposition. Bgin Trading filed Counter Statements on April 29, 2025, and the oppositions remain pending. Successful opposition could require amendments, re-filing, appeals, or additional legal costs.
• **IceRiver.eu Case:** The company became aware of a European entity, IceRiver.eu, falsely claiming to be an official affiliate and marketing products under the ICERIVER brand. On May 15, 2025, the company's U.S. counsel sent a formal demand letter for trademark infringement, seeking cessation of use, transfer of the infringing website, accounting of sales, and damages. Pre-litigation settlement discussions are ongoing, but litigation may be necessary.

Related Party Transactions

• **Business Transactions with CoinPal:** Mr. Qiuhua Li, the chairman of the board, acquired 100% of Coinpal Limited on April 10, 2025. CoinPal is the designated payment platform for customers purchasing ICERIVER mining machines with crypto assets. The company is charged 0.8% processing fees, and CoinPal remits payments in USDT. In 2023 and 2024, USDT valued at US$199.8 million and US$188.7 million, respectively, was remitted by CoinPal. The company believes these transactions were on an arms-length basis.
• **Services Agreement with Shenzhen Bgin (Expired):** Bgin SG and Shenzhen Bgin (controlled by Mr. Qi Shao and Mr. Qiuhua Li) had a services agreement from January 1, 2025, to June 30, 2025, for project requirement development and maintenance services, with monthly fees of US$70,000. This agreement was not renewed. Previously, Bgin HK had similar service agreements with Shenzhen Bgin from March 1, 2019, which were renewed multiple times, with the last renewal on June 28, 2024.
• **Technology Services Agreement with Zhongshan Bgin (Terminated):** Bgin HK and Zhongshan Bgin (a subsidiary of Shenzhen Bgin) had technology services agreements, including one from December 9, 2021, to December 8, 2022, for RMB60,000. This agreement was terminated on March 31, 2022. Another similar agreement was in effect from March 8, 2022, to May 7, 2022.
• **Agency Agreement with Shenzhen Bgin (Expired):** From March 1, 2019, to February 28, 2022, Shenzhen Bgin acted as an agent for Bgin HK to procure mining machine components from PRC suppliers and contract with third-party manufacturers. Bgin HK reimbursed Shenzhen Bgin for actual costs. This agreement was not renewed.
• **Use of Office Space:** The company is authorized by Shanghai HuiShi Information Technology Co., Ltd. (controlled by Mr. Qiuhua Li) to occupy a 215 sq ft office space in Shanghai, PRC, free of charge until January 31, 2027.
• **Payments to Related Parties:** In 2024, the company paid US$660,000 to Shenzhen Bgin for management services and US$97,157 to Igvault HK Limited (controlled by Mr. Li's spouse) for technical services. In 2023, these payments were US$711,846 and US$70,668, respectively.
• **Due from Related Parties:** As of December 31, 2024, US$68,238 was due from Mr. Qingfeng Wu and US$33,098 from Mr. Qiuhua Li. These balances were unsecured, interest-free, and due on demand, and were repaid by May 2025. Prior to April 2022, there was commingling of funds between Mr. Wu's personal account and the company's account.
• **Due to Related Parties:** As of December 31, 2024, US$10,363 was due to Icing Trading Limited (controlled by Mr. Wu), which was fully repaid by June 30, 2025. As of December 31, 2023, US$343,837 was due to Mr. Qiuhua Li and US$120,000 to Shenzhen Bgin. These balances were unsecured, interest-free, and due on demand.
• **Short-Term Loans:** In 2023, the company received US$2 million short-term loans (in USDT) from each of Mr. Wu and Mr. Li, bearing 3.65% annual interest, fully repaid by December 31, 2023.

Stakeholder Impact

• **Shareholders:** New investors will experience immediate and substantial dilution (US$4.32 per Class A ordinary share) due to the IPO price being significantly higher than the net tangible book value. The dual-class share structure concentrates voting power with the CEO, limiting influence of Class A shareholders. Future dividends are discretionary and not guaranteed. Delisting risks under the HFCAA could adversely affect investment value.
• **Employees:** The company plans to expand U.S.-based teams and obtain employment visas for officers, potentially shifting employment focus away from PRC individuals. The lack of formal labor relationships with PRC individuals could expose the company to future arbitration or litigation.
• **Customers:** Sales of mining machines are a primary revenue source, and customer demand is sensitive to cryptocurrency prices and competition. The ongoing dispute with a hosting provider could impact hosting service reliability. Trademark infringement by third parties (e.g., IceRiver.eu) could cause confusion and harm customer trust.
• **Suppliers:** Reliance on a few major suppliers and a single chip foundry creates vulnerability to supply disruptions and price fluctuations, potentially impacting production costs and delivery times.
• **Creditors:** The company's financial health, including cash flow and profitability, directly impacts its ability to meet financial obligations. Legal proceedings and operational disruptions could strain liquidity.

Next Steps

• Complete the Initial Public Offering on the Nasdaq Stock Market.
• Utilize IPO proceeds for the purchase and/or construction of new mining farms (approximately US$18.4 million).
• Invest in research and development of new proprietary chips for cryptocurrency mining machines (approximately US$9.8 million).
• Address identified material weaknesses in internal controls, including formalizing documentation and establishing an independent audit committee.
• Continue efforts to regain control of 5,325 mining machines from Mawson Hosting, LLC through ongoing settlement discussions or litigation.
• Expand research and development teams and upgrade facilities.
• Develop BL1 series mining machines for Dogecoin (expected launch H1 2026) and BT1 series mining machines for Bitcoin (expected launch Q1 2026).
• Recruit local employees in the U.S. and obtain employment visas for officers in Hong Kong and Singapore, with plans to terminate service agreements with PRC individuals.
• Monitor cryptocurrency market conditions and adjust mining strategies to maximize overall rate of return.
• Continue converting excess USDT coins into fiat currency and explore storing crypto assets in licensed, U.S.-regulated centralized custodians.

Key Dates

Recommendation

While BGIN Blockchain Limited demonstrates strong revenue growth and a strategic focus on proprietary technology and market expansion, particularly into Bitcoin and Dogecoin mining, several significant risks and negative financial trends warrant a 'hold' recommendation. The substantial decline in net income and gross profit margins in 2024, coupled with large inventory write-offs and impairment charges, raises concerns about profitability and asset management. The ongoing legal dispute over a significant number of mining machines and identified material weaknesses in internal controls highlight operational and governance challenges. Furthermore, the heavy dependence on KAS coins and the inherent volatility and regulatory uncertainties of the cryptocurrency market, especially concerning stablecoins like USDT, introduce considerable risk. The IPO aims to fund future growth, but the current financial performance and unresolved issues suggest a cautious approach until there is clear evidence of improved profitability, resolution of legal matters, and strengthened internal controls.

Keywords

Cryptocurrency mining, ASIC chips, Blockchain technology, Digital assets, KAS coin, Mining machines, Mining pools, Hosting services, IPO, SEC filing, F-1/A, Nasdaq, Cayman Islands, Hong Kong, Singapore, United States, Supply chain, Regulatory risk, Intellectual property, Financial performance, Risk management, Corporate governance