22 July 2019
Bitcoin mining computers are seen in a facility owned by Bitmain, the China-based leader in cryptocurrency mining equipment. Photo: Reuters
Bitcoin mining computers are seen in a facility owned by Bitmain, the China-based leader in cryptocurrency mining equipment. Photo: Reuters

HKEx ‘hesitant’ on bitcoin mining giant Bitmain IPO: report

The Hong Kong stock exchange appears reluctant to approve the initial public offering of China-based bitcoin mining giant Bitmain, according to cryptocurrency-focused news site Coindesk.

Citing a source familiar with the matter, the report said the stock market operator, Hong Kong Exchanges and Clearing Ltd (HKEx), is “hesitant” about clearing the IPO application of Bitmain, as well as those of some other crypto mining firms.

In September, Bitmain officially filed an application to go public in Hong Kong, and there have been expectations in the market of a multi-billion dollar public fundraising by the firm. 

According to Frost & Sullivan, Bitmain is estimated to have had about 67 percent of the market share in bitcoin mining hardware in 2017, and generated 60 percent of computing power.

Bitmain’s smaller rivals, Canaan Creative and Ebang, had applied in May and June respectively for Hong Kong share sales, riding on last year’s cryptocurrency market boom.

Bitmain’s IPO, if materialized, could mark the first time a major cryptocurrency-focused tech firm won regulatory approval and gain listing status. However, the source told Coindesk that HKEx “doesn’t want to be the first exchange in the world to approve this and have one die on them.”

The bourse operator is said to have concerns about the sustainability of the volatile crypto industry and the risk of the business for retail investors, given the cryptocurrency market crash since the beginning of this year.

According to data from CoinMarketCap, as of Dec. 19, bitcoin, the largest cryptocurrency by market cap, has plunged by 80 percent to US$3,775, from its record high of over US$19,000 one year ago.  Ethereum, another high-profile cryptocurrency, slumped by 92 percent to US$103 as of Wednesday after reaching US$1,391 in December last year.

According to crypto news platform Cointelegraph, an HKEx spokesperson dismissed the speculation surrounding Bitmain as “rumors”, without commenting further on the matter.

Founded by entrepreneurs Jihan Wu and Micree Zhang in 2013, Beijing-headquartered Bitmain is said to be the largest producer of chips used for mining cryptocurrencies, known as ASICs, or Application-Specific Integrated Circuit.

As cryptocurrency prices reached record highs in 2017, Bitmain recorded US$2.5 billion in revenue and US$1.2 billion in profit last year, according to its prospectus filed to HKEx.

The company generated approximately US$907 million in profit before taxes in the first half of 2018, despite a slump in bitcoin prices in the period.

Bitmain also reported a US$886.9 million balance of cryptocurrencies denominated in bitcoin, bitcoin cash, ether, litecoin and dash, accounting for 28 percent of its total assets, as of end-June.

CrunchBase data shows that the bitcoin mining giant has raised over US$764 million from investors since founding. As of July this year, Bitmain was reportedly valued at US$12 billion, making it the world’s most valuable blockchain organization.

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