Aug 13, 2018
Bitmain, the world’s leading cryptocurrency mining company, is filing for an IPO in Hong Kong by September, CoinDesk reports. Bitmain expects to raise up to $18 billion, larger than Facebook’s $16 billion. The company’s new valuation would be $40 – $50 billion new valuation. If the filling process goes well, the company will go public by the end of this year or the first quarter of 2019.
Wu Jihan, founder of Bitmain, when asked about the IPO plan earlier this month, didn’t directly comment. “ICOs are alternatives to stocks. When other industries use IPO to raise money, the cryptocurrency industry leverage ICO to fund,” he said at a Huobi event in South Korea.
On August 4, one day after Wu’s comments, Bitmain formally completed its $1 billion pre-IPO investment registration. Tencent, SoftBank, and the country’s top investment bank China International Capital Corporation participated in the funding.
Bitmain’s full-year profit for 2017 was $1.1 billion. The record has been broken by the company’s first-quarter profit for 2018 already. The company predicts the 2018 full-year profit to be $2 billion.
However, the financial markets are not that optimistic about Bitmain’s IPO. Local crypto industry media Lieyun Finance reports (in Chinese) that the company’s mining service makes up over 90% of the total revenue and profits. Apart from other financing and development consideration, strict domestic regulation on cryptocurrency related businesses and fluctuation of cryptocurrency prices also accelerated the IPO plan.
Canaan Creative, Bitmain’s domestic rival computer hardware manufacturer and the world’s second-largest bitcoin mining hardware maker, is reported to have submitted its Hong Kong IPO plan in May to raise up to $2 billion. The company’s IPO would be the first from the cryptocurrency for Hong Kong. This weekend, the Chinese media massively reported on Canaan Creative’s 7nm ASIC chip for its product series Avalon A9.
Sources from the semiconductor industry say the new 7nm chip is still far behind the design of those used by Apple and Qualcomm, but they remain optimistic about the R&D input and progress achieved.
Ebang, the world’s third-largest mining hardware maker and a competitor to Bitmain and Canaan Creative, made its Hong Kong IPO application in June, one month after Canaan Creative’s filing.
Bitmain, the top in the crypto mining equipment industry, is the last of the leading three that has formally filed for an IPO. In addition to the industrial competition that will grow fiercer, The three equipment and chip manufacturers with similar businesses all going public in Hong Kong would bring huge operation and financial pressure to the companies, as the top three global giants compete to win investors in one regional market.
Meanwhile, Canaan Creative and Ebang have been showing strong financing willingness. Canaan Creative considered an IPO in the mainland by being acquired by electric equipment manufacturer Shandong Luyitong. The plan was turned down as regulatory units commented “great uncertainties.” Ebang was on China’s China’s National Equities Exchange and Quotations but was delisted due to inactive market response.
New technology that could influence competition results needs huge capital injection and other intangible input such as intelligent property. Market share, in the near future, will be a leading element for the mining companies’ development and growth. The market would provide valuable use cases for further research and product upgrade.