Sunday, March 24, 2019

Second Largest Bitcoin Miner Canaan Considers Going Public in the US

Canaan, the second largest Bitcoin hardware miner in China, is now considering an Initial Public Offering in the US, after one filed in Hong Kong failed, according to a report by Bloomberg.

Crypto Companies Facing Uphill Battle

Crypto companies, regardless of the huge amount of profits they are annually reporting have found themselves in an unseemly spot when it comes to going public. No company dealing explicitly with cryptocurrency related matters have been able to push itself up into stock exchanges’ listings, and many are avoiding the onus of breaking the trend.

Following the incredible boom of the 2017 cryptocurrency market, a number of cryptocurrency companies saw to seize the opportunity and promptly filed for IPOs. Canaan, along with known crypto giants such as Bitmain and Ebang reportedly also filed for Initial Public Offerings in Hong Kong last year.

However, the crash of Bitcoin and the general bear market of 2018 have made stock exchanges extremely cautious of listing crypto-related firms on stock exchanges: Hong Kong Stock Exchange (HKEX) inclusive. An anonymous source from HKEX explained the seeming reluctance of the exchange, pointing out that HKEX is cautious of being the first to list a crypto mining firm and have one ‘die on them.’ He said:

“The exchange is very hesitant to actually approve these bitcoin mining companies because the industry is so volatile. There’s a real risk that they could just not exist anymore in a year or two.”

The fact that an application for IPO would also need the approval of not only HKEX but Securities and Futures Commission (SFC) – Hong Kong’s financial regulator – makes it an almost impossible task, according to the source. Since both sign-offs are required for the application to be a success, the odds are consequently increased, and any of the two might inevitably decide to pull the plug.

Seeking Recourse in New York’s Stock Exchange

Canaan’s IPO application in Hong Kong expired in November after six months without hearing, and Ebang’s expired two weeks later. During the bull year of 2017, Canaan reported to have made a profit of 410 million yuan (about $64 million) which is a six times increase of its past figure. With these encouraging statistics, Canaan has decided to add to the $9.1 billion US IPO raised by Chinese companies.

While Canaan is considering a switch to New York’s stock exchange instead, Ebang has once filed a second application to HKEX.

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