Three Chinese mining companies are planning massive IPOs despite falling demand for chips and a continued slide in BTC price. Bitmain, based in Beijing, were exceptionally profitable in 2017, reporting profits in excess of $3 billion despite mass criticism for monopolizing the mining industry. They are looking to raise $3 billion and are claiming that $560 million has already been committed in the pre-IPO. Meanwhile, Canaan Inc., the world’s second largest producer of hardware, is aiming for $1 billion, as is Ebang.
Controversy and Concern
The Bitmain pre-IPO may look impressive in terms of figures, but it has not been without incident. Just a few days ago, Temasek, an investment company owned by the government of Singapore, threatened to withdraw its investment – according to news sources in Asia – due to misrepresentation of facts and figures. While there are no figures to indicate the level of investment committed by Temasek, they certainly have the funds to contribute significantly, with over $300 billion in reported total assets.
The main selling point for these companies is that their technology can be used for other applications – particularly in wider blockchain projects. Reuters reported today (August 27th) that a representative from financial services firm Kapronassia, Wang Leilei, said that the Chinese government is willing to get behind chip production as it is a large part of China’s market.
As the Bitcoin price decreases, so does the profitability of mining itself, which decreases demand for mining chips and miners. The mainland government encourages chip design and production, as that is a segment of China’s market that has been suffering… Bitmain and Canaan chips could also be used for non-Bitcoin applications, like blockchain in general, big data, cybersecurity or AI, which is an advantage for the companies.
Do you think the IPOs will prove successful? Let us know your thoughts in the comments section.