Cryptocurrency major Bitmain chooses Hong Kong for IPO

Bitmain cofounder Jihan Wu. Photo: Bloomberg

Bitmain Technologies, the world’s largest designer of products used for mining cryptocurrencies, confirmed it was bringing its IPO to Hong Kong in what will be an important test of institutional investors’ interest in the crypto sector.

Bitmain‘s prospectus, investors’ first official look at its financial health, was filed late on Wednesday, and revealed that it made a profit of $742 million for the first six months of this year. The bulk of the company’s revenue came from selling hardware to mine cryptocurrencies, the filing said.

The company said it will use the proceeds of the IPO to invest in research and development and expand its production output.

Bitmain designs different microchips specialised for mining cryptocurrenies and for artificial intelligence applications, as well as manufacturing cryptocurrency and AI hardware, and managing crypto mining farms.

The IPO comes at a time when the cryptocurrency sector is facing a number of headwinds.

The price of bitcoin has fallen 65 percent since its December 2017 peak, and on Wednesday one bitcoin was worth around $6,500. This fall has hurt the profitability of mining, and in turn has been weighing on sales of mining hardware.

In addition, there are regulatory concerns, given the Chinese authorities’ public scepticism about cryptocurrencies.

TEST OF CONFIDENCE

Bitmain is the third, and largest, Chinese maker of bitcoin miners hoping to float in Hong Kong this year. It had 85 percent share of the cryptocurrency mining rig market in 2017 according to Bernstein research.

Canaan Inc, which had 10 percent of the market according to Bernstein and smaller rival Ebang filed their listing documents in May and June respectively, but have yet to complete their IPOs.

As well as testing investor sentiment around bitcoin, Bitmain‘s IPO will be another test of confidence in Hong Kong’s equity market.

The IPO is expected to be the city’s third largest tech float after Chinese smartphone marker Xiaomi Corp’s 1810.HK IPO of $5.4 billion, and that of online food delivery-to-ticketing services platform Meituan Dianping, which earlier this month raised $4.2 biilion..

Like Xiaomi and Meituan, Bitmain said in its prospectus that it had adopted a dual class share structure, and that each share held by the company’s founders, Zhan Ketuan and Wu Jihan, would allow them to exercise 10 votes.

In April, the Hong Kong bourse changed its rules to allow some companies with two classes of shares to list, in a bid to lure listings from large innovative companies.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.