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Chinese firm Canaan Inc., a maker of Bitcoin mining machines continues to face headwinds for it's New York IPO. Already slashed from expectations of $400 million to $100 million it lost it's lead underwriter Credit Suisse.

Canaan Bitcoin mining rigs

A Technician Inspects Backside of a Tower of Cnaan Mining Rigs via South China Morning Post

The Beijing-based Canaan plans to offer 10 million American depository shares at $9 to $11 apiece to raise as much as $110 million, according to an amended filing to the U.S. Securities and Exchange Commission. Canaan previously listed the size of IPO as much as $400 million. The news comes just days after Canaan scheduled the IPO deadline for November 20. 2019.

Canaan Creative is China’s second biggest maker of bitcoin mining hardware, and prior to the United States listing it shelved plans for a Hong Kong initial public offering (IPO). The company was earlier targeting to raise about US$1 billion in Hong Kong.

Based on previous private placements, Canaan has been evaluated in the billions. The lower target for the IPO is seen as a sign of a the weakened outlok for IPO's generally with big hits taken in Uber, Lyft and SmileDirectClub to name a few. Combine that with worsened sentiment around Bitcoin and other cryptocurrencies.

Crypto mining has been robust in 2019 but given the large 'pump and dump" seem in Bitcoin and others this year there are doubts about mining being viable. With the ongoing Sino-US trade war the centralization of mining farms in China is seen as a risk factor.

Bitmain Technologies is the largest maker of specialised mining chips for the industry, and smaller rival Ebang International also filed for Hong Kong IPOs last year.

Canaan was founded in 2013 and sells computer equipment under the “Avalon” brand with fast customised chips that win digital coins by solving complex maths problems. It reported 1.31 billion yuan (US$191 million) of revenue in 2017, according to a Hong Kong exchange filing in May.

With Canaan’s Avalon 1066 it is is said to have an annual loss of around $150, as deep as $700 with lower BTC prices and less rewards. The current loss of the S9 Antminer by competitor Bitmain is at around $500 and changing each day. That is the obvious risk the price and popularity of crypto. Unfortunately for Canaan it's IPO came jut as BTC mining underwent another unexplained downturn. The BTC hashrate is down to 78 quintillion hashes per second, down from a recent high above 104 quintillion hashes.

The sudden drop may be a concerted effort to once again turn down difficulty. The next difficulty adjustment comes in about a week, and if miners keep activity low, they may enjoy another difficulty downturn. With mining’s uncertainty, recent comments saw the attempt of Canaan Mining and its rival Bitmain as desperate moves to secure funds and additional liquidity. Canaan has been plagued by volatile earnings, with a 50% drop in revenues in 2019 despite the pickup in mining. Bitmain, on the other hand, is having leadership problems, as one of its co-founders, Zhan “Micree” Ketuan, was ousted and banned from physically accessing the offices - Bitcoinist

Source: Bloomberg, Bitcoinist

From The TradersCommunity Research Desk

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