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Report: China Bitcoin Mining Giant May Seek a U.S. IPO This Year
Blockchain, Financial Services
China’s second-largest manufacturer of Bitcoin mining hardware could file for an initial public offering in the U.S. this year, Bloomberg reports.
Caanan Inc., which has nixed earlier plans for an IPO in Hong Kong, could begin selling shares in New York in the first half of this year, according Bloomberg. Citing “people with knowledge of the matter,” Bloomberg noted that the discussions are still in their early stages and there’s no guarantee that the U.S. IPO will actually happen.
Beijing-based Bitmain, the largest manufacturer of Bitcoin mining chips, filed for an IPO on the Hong Kong Stock Exchange (HKEX) last year, following astronomical revenue growth over the past few years, surging from US$137.3 million in 2015 to US$2.5 billion in 2017. Its revenue for the first six months of 2018 surpassed an astounding $2.8 billion.
Bloomberg notes that with Bitcoin falling 79 percent from its record peak in December 2017, it’s been “more difficult for cryptocurrency companies to attract stock-market investors and less profitable for miners to generate new coins.” Despite its massive revenue growth, there have been questions about Bitmain’s long-term financial success during a sustained bear market for cryptocurrencies, as TechCrunch noted at the time of its IPO.
Margins are down. Gross margin in the first six months was 36 percent, down from 48 percent in 2017 and 54 percent in 2016. Contributing to that, the cost of sale percentage in the first half of 2018 rose to 64 percent from 51 and 52 percent in 2017 and 2016, respectively.
Bitmain is trying to bat away those concerns by using H1 2018 figures, rather than splitting that period into two quarters. That’s important because the crypto market has plunged massively since January, losing more than half of its value. That has impacted most crypto companies — whether it is exchanges seeing less trading or wallets less traffic — and it is sure to have had a toll on Bitmain.
Despite a recent uptick in Bitcoin prices, the struggles in the cryptocurrency market could raise concerns about the viability of going public right now for a company that generates its revenue from manufacturing Bitcoin mining equipment. Caanan’s application for a listing on HKEX lapsed in November, according to Bloomberg.
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