Bitcoin Mining Equipment Maker Canaan Files For IPO, Eyes A Billion Dollars
The world’s second-biggest bitcoin mining hardware maker Canaan Inc. is eyeing a billion-dollar IPO in Hong Kong. The company has filed an application for getting listed at the Hong Kong Stock exchange. The proposed offering is backed by giants like Deutsche Bank AG, CMB International Capital Ltd., Credit Suisse Group AG and Morgan Stanley. The preliminary prospectus was posted on Tuesday but it didn’t mention the amount that the company will seek.
Bloomberg News reported on Tuesday that the total valuation of the IPO could be as big as $1 billion. The mining equipment makers wants to be listed as soon as possible, with July being the month they wish to start trading. Last year, the Hangzhou, eastern China, based company raised 1.3 billion yuan in revenue or approx. $205 million. The net income went up to 361 million yuan, which six times their previous figure.
At a time when cryptocurrency companies are looking for new ways to launch their ICOs to avoid regulatory procedures, Canaan is moving the traditional way. The company will be the first from the crypto sector to launch an IPO at the Hong Kong exchange. The company already has an established global presence, capturing about 15 percent of the worldwide bitcoin mining chips and computer equipment market. It is second only to Bitmain, another Chinese company, according to a February report from Sanford C. Bernstein & Co.
The company was established in 2013 and has been selling customized and fast chips for mining digital coins under the brand name ‘Avalon’. The equipment solves math problems quickly and more efficiently. In an April interview, Co-Chairman Jianping Kong said that the company’s hardware is very frequently used in remote locations in very large mining pools that work on cheap electricity. Last year, the company also informed the world about its expansion plans. It would be creating dedicated chips for use in artificial intelligence applications.
The final decisions related to the IPO is yet to be made and there could be changes to the company’s plans as well. Kong declined to comment on the company’s roadmap leading up to the IPO. Note that the company was earlier willing to be listed on an over-the-counter exchange in China called National Equities Exchange and Quotations. It is also known as the New Third Board. It changed its plans to pursue Hong Kong instead.
In 2016, Shandong Luyitong Intelligent Electric Plc, an electrical equipment manufacturer wanted to acquire the company. However, the regulatory uncertainty around the cryptocurrency market during the time cracked the deal. Even though China has said goodbye to crypto exchanges and is now cracking down on the mining industry too, its ASIC-based hardware market is growing exponentially.
In 2017, the market was valued at 7.3 billion yuan from only 50 million yuan in 2013. According to consultants Frost & Sullivan, the market will continue growing at this pace, becoming 4x the current size by 2020, with an estimated value of 28.6 billion yuan.
The IPO would create a new debate between traditional fundraising and ICO-style fundraising, specially in terms of successful cryptocurrency companies.