Bitmain leads $110m investment round in Circle
Bitmain, China's biggest bitcoin mining company is leading a $110m investment round in Circle Internet Financial with a valuation of the fast-growing US mobile cryptocurrency trading and payments company at around $3bn.
This funding round led by Bitmain will push Circle into the elite tier of cryptocurrency companies.
Circle makes use of blockchain technology that underpins Bitcoin to provide over-the-counter cryptocurrency trading and peer-to-peer payment services.
The investment comes as the company (Circle) launches a new "stablecoin" token backed by fiat currency reserves at a central bank with the intent to overcome the volatility that still significantly impacts the efforts to use cryptocurrencies as a mainstream payment method.
Jeremy Allaire, the internet entrepreneur in 2013 who co-founded Circle with previous ventures including the online video sharing platform Brightcove stated: "We are creating a stablecoin, a USD coin, backed by fiat currency reserves."
Bitmain, which is primarily based in Beijing but also have offices in other cities: Amsterdam, Tel-Aviv and Hong Kong, claims to be the largest provider of high-powered computer servers for cryptocurrency mining in the world.
China in recent months has started to clamp down on cryptocurrency mining companies, as well as banning exchanges and token issues for initial coin offerings (ICOs). Bitmain has expanded its operations outside of China and had plans to penetrate the US cryptocurrency mining market.
Circle said with the help of Bitmain the company can be introduced to other "stablecoins" backed by various fiat currencies and help them become practical around the world.
Although several "stablecoins" already exist today most prominently Tether, which is linked to US dollar reserves. They have been faced with scepticism, specifically regarding the validity of those reserves, which Allaire stated Circle would address this area with much more transparency.
Allaire also said Circle was able to turn cash-flow positive for the first time in 2017. It processed $ 75bn of cryptocurrency transactions between December and February, generating revenue of approximately $250m. Its current user base is estimated to be 7 million in more than 200 countries. Earlier in 2018, the company acquired Poloniex, the US cryptocurrency exchange, the deal is reportedly worth an estimated $ 400m worth.
The company plans to expand its team to more than 400 (currently 230) by the end of 2018 and already have offices in New York, San Franciso, London, Dublin, Madrid, Paris, Milan, Hong Kong and Beijing.
This latest funding round brings the amount raised by Circle to more than $ 240m. Existing investors who have increased their investment positions include Accel, Breyer Capital, Digital Currency Group, General Catalyst and IDG Capital. New investors include Blockchain Capital and Tusk Ventures. Goldman Sachs who previously invested in Circle did not participate in this latest round of funding.