Bitmain Technologies has filed with the SEC for the chance to hold an IPO in the US. The company is one of the largest makers of ASICs that are often used to mine major cryptocurrencies such as Bitcoin. Tencent News, a media organization based in China, was the first to report on this development.
Reports that Bitmain was considering holding an IPO first surfaced in June. According to a Bloomberg report at the time, the IPO was estimated to be able to raise $300m to $500m. The report by Bloomberg indicated that Bitmain was planning to hold the IPO due to the improved performance of the crypto market. A few weeks prior, the price of BTC had hit record highs for 2019.
Another company that plans to hold a US IPO is Canaan, which is the biggest competitor to Bitmain in the ASICs space. According to a Reuters report, the company has filed an IPO worth $400 million on Nasdaq.
Failed Past IPO Attempts
This is not the first time both of these firms have attempted an IPO. Bitmain first attempted to hold an IPO in 2018. However, things did not work out as they had planned. The first catalyst was the 2018 bear run in the cryptocurrency markets. Prices of crypto plummeted and demand for its ASIC miners fell a great deal. At the time, the company was hoping to get $3 billion during the IPO. Besides the collapse of crypto prices, another issue cited was the lack of a solid framework to regulate the crypto sector. Eventually, the company gave up on the plans.
A complication to the Bitmain IPO filing this time is recent internal wrangles. Micree Zhan was recently kicked out of the company by another co-founder of the company, Jihan Wu. These internal wrangles might complicate the approval of the IPO by the SEC.
Canaan tried to go public in both China and Hong Kong in 2018. However, both attempts failed due to doubts that regulators had about its business model and its prospects. The company has been struggling since the end of the 2017 crypto bear run. In H1 2019, the company posted a net loss of $48.2m.
Why Go Public Now
One main reason why these firms might be going public is the imminent rise of CBDCs. China already has plans in place to launch a digital currency, which is likely to take place in 2020. Other central banks around the world are considering launching their own national digital currencies. Most of these currencies will not require any mining rigs.
If the trend continues, nations may clamp down on mining private cryptocurrencies harder, which would make the business models of these two firms redundant. By going ahead with the IPO at this crucial point, the two firms hope they can raise enough funds before their business models tanks. However, none of the firms have received approval yet, only time will tell.
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