Canaan, Chinese largest maker of Bitcoin mining chips is allegedly eyeing New York IPO. According to a Bloomberg report dated 8th January, people familiar with the matter have confirmed of the company’s plan of launching the IPO somewhere in the first half of 2019. The process, however, is said to be in its initial stages.
Earlier there were reports of Canaan launching an IPO in Hong Kong to raise funds of nearly $1 billion. The company even filed an application for the IPO in March 2018. The application submitted at the Hong Kong Stock Exchange, however, lapsed in November 2018.
Mining giants Bitmain and Ebang were also said to have filed an application for the IPO with the Hong Kong Stock Exchange somewhere in June and September 2018, respectively. None have received approval so far by the exchange.
It seems like the Honk Kong Stock Exchange is reluctant of approving Bitmain’s IPO application. According to a CoinDesk report, people familiar with the IPO application filing by Bitmain and Ebang said that the exchange’s decision is pending on the application due to volatility in the industry. Ebang reportedly refilled its IPO application in December 2018 citing a decline in revenue and gross profit in Q3 2018.
Volatility in the industry is one of the main reasons why Canaan also failed to get timely approval on its IPO application from the Hong Kong Stock Exchange. Since December 2017, Bitcoin value has fallen 79% from its record high. This indeed has led to a declined interest among investors in Bitcoin. Nevertheless, Hong Kong Stock Exchange is reported to have expressed its concern over the business model of Canaan at the time of evaluating its IPO application. Certain financial institutions have also expressed their concerns over the declining value of bitcoin and its subsequent effect on the overall working of the company. The financial institutes have said that due to a drop in the price of the bitcoin it has become difficult for them to predict the future of Canaan, which has further added to the uncertainties.
There are also reports of Canaan having slashed its IPO target to $400 million from $2 billion due to reduced demand for mining rigs in the market. Canaan’s move to the US could be a possible sign of its rival Bitmain moving to other markets after having been disappointed by the Hong Kong Stock Exchange. Bitmain for long has been pitching for IPO application but with no luck. Its application has been put on hold several times. People familiar with the matter said that it may take Bitmain more than one and half year to get an approval on its IPO application.
Founded in 2013, Canaan sells computer equipment under the brand name “Avalon”. The company reported revenue of $191 million in 2017, according to the company’s filing to Hong Kong Exchange in May. The company, however, has not commented on the reports of it approaching US for the IPO.