Bitcoin Mining Firm Canaan Slashes IPO Target — and May Not Go Public Anytime Soon

November 15, 2018 12:00 AM
Bitcoin Mining Firm Canaan Slashes IPO Target — and May Not Go Public Anytime Soon

Chinese Bitcoin Mining Firm Delays IPO

The Hangzhou-based Canaan had been one of at least three Chinese bitcoin mining firms planning to go public on the Stock Exchange of Hong Kong (HKEX), along with Ebang and Bitmain — the crypto industry’s most valuable company.

However, Reuters reports that Canaan’s filing documents lapsed on Thursday, which marked the six months after the firm had initially submitted them to HKEX. According to unnamed sources close to the deal, both HKEX and local regulators were concerned about the firm’s business model and had not yet received satisfactory answers.

Significantly, Canaan had also reportedly slashed its IPO target by a full 80 percent, to $400 million from an initial goal of as much as $2 billion.

The sources cited in the report said that while Canaan can refile its listing application with updated financials, it’s not likely that the IPO would occur before the turn of the year. Ebang, similarly, is no longer expected to list its shares until at least 2019.

“With the bitcoin price dropping so much this year, there’s a lot of uncertainties over their business. If we cannot forecast their financials, how can we sell their IPOs?” commented one senior banker.

Does This Affect Bitmain’s Plans?

Meanwhile, as CCN reported, Bitmain has restructured its board of directors ahead of its planned IPO, which — bear market or not — is expected to raise several billion dollars. That said, it’s not clear when the $15 billion Beijing firm will follow through on its listing plans, which were concretized when Bitmain filed its application documents with HKEX in September.

Some analysts had speculated that Bitmain, which reportedly boasts an overwhelming 75 percent market share in the crypto mining industry, was pursuing an IPO primarily to maintain a competitive edge over upstarts Canaan and Ebang. By going public around the same time as them, Bitmain would not only ensure that it retains a favorable cash position versus its much smaller competitors but would also likely dilute the market and limit the amount of financing that any of the firms could raise. Bitmain, as the incumbent, would benefit from this arrangement.

If this view is correct, then the delay in the Canaan and Ebang IPOs could reduce the urgency with which Bitmain pursues its listing plans, particularly given the overall bearish conditions in the cryptocurrency market.