[ad_1]
HONG KONG – The Chinese Bitmain Technologies Holding and Ebang International Holding, the two biggest bitcoin mining machinery manufacturers in the world, should follow the competitors to delay the planned floats on the Hong Kong stock market, analysts warn, as regulatory obstacles and market volatility, interrupted the plans of the encrypted companies to sell shares.
Canaan, another major Chinese producer of bitcoin mining machinery, has left its request for an initial public offering expired Thursday, when the company's deposit – presented for the first time in May – has passed the six months of life, according to the Hong Kong stock exchange.
The Hangzhou-based company is the world's second largest producer of cryptographic currency extraction machines after Bitmain and has reportedly tried to sell its shares for $ 400 million.
It remains unknown why Canaan failed to complete its listing in the last six months, but delayed application has cast a shadow over the future of Bitmain and Ebang, the other two companies with similar business models who also submitted IPO requests to Hong Kong. year.
Bitmain filed an application on September 26, while Ebang filed his documents on June 24, which now leaves the company another five weeks to convince regulators before its application also expires.
"There is a high probability that the IPO application of Ebang drops," said Jasper Lee, CEO at eToro's financial trading platform in Shanghai. "Basically, there's no big difference between Canaan and Ebang: if Canaan were not able to answer the regulators' questions, I do not see how Ebang would be able to do that," Lee said.
The circumstances of the delay in Canaan's IPO are not disclosed, a practice common to Hong Kong, but "this often happens due to issues related to due diligence and disclosure, or due to market conditions when the valuations expected from Legacy shareholders are at odds with Investors are willing to pay, "said Philippe Espinasse, independent expert of investment banks in the city.
Neither company has revealed its assessment in the draft prospectus, but it is estimated to be worth billions of dollars, thanks to the boom in bitcoin prices in recent years. However, the bitcoin price has plummeted by over two thirds this year. On Wednesday, the price of the bitcoin dropped by around 11% overnight to reach $ 5,564 as a new form of cryptocurrency in competition with bitcoins for investor attention. Although it slightly rebounded the next day, analysts said the bear market should continue in the future.
Given the price collapse, the three companies may have been asked to adjust their rating, and Canaan could simply have finished the time before it could come up with a new calculation, Lee said. He added that Ebang, with a deadline as early as December 24, is likely to suffer the same fate, while Bitmain has the opportunity to become public because "they still have a lot of time" to address regulatory concerns.
Other market observers, however, have had a more pessimistic view.
"If it is a conscious decision of the government to let it expire, it is certainly not very positive that Bitmain or Ebang will succeed in their listing," said Zennon Kapron, founder of the Shanghai-based technology consulting and research firm Kapronasia. .
"Those are the bitcoin mining companies that are quite controversial," Kapron said. "Getting an approval will never be easy, so the fact that there is a delay is not entirely surprising."
China, where the three companies sell most of their mining machinery, has banned the trade in domestic cryptocurrencies and has intensified the crypt in recent months. While Hong Kong – a former British colony operating under different laws from the mainland – has yet to enact regulations against cryptocurrencies, the government has shown a growing interest in bringing "virtual goods" as bitcoins into its regulatory network.
Earlier this month, the Hong Kong Securities and Futures Commission announced that it would apply for licenses to companies that manage or intend to manage portfolios that invest in virtual assets, "in light of the significant risks that virtual assets represent for investors ", he said. The financial observer will also prevent retail investors from trading bitcoins through bitcoin funds or exchanges but will keep the door open to professional investors.
"I can imagine that regulators are examining the cryptocurrency companies much more than they would do with the business models they understand," said Leonhard Weese, president of the Hong Kong Bitcoin Association. "The feeling is still that this is just a passing fad, and why allow IPO companies that believe they will go bankrupt soon?"
Bitmain, Canaan and Ebang have tried to present themselves as chip makers that not only produce digital money-making hardware but also serve other industries, with technology such as artificial intelligence and blockchain. But until now, the turnover of bitcoin-related services still makes up the lion's share of their revenue.
This, according to the regulators' point of view, is a problem. "The Hong Kong Stock Exchange is generally quite cautious and risk averse in its valuation process," said Ivy Wong, partner of Baker McKenzie's Capital Markets Practice in Hong Kong.
"Sustainability or at least a strong sustainability record of an enterprise through high and low times is one of the main focal points of the Hong Kong Stock Exchange," Wong said. "It is well known that the cryptocurrency market is still under development [and] it has yet to be tested through low times, even if it is believed to have proven its success [at a] high time. "
After an IPO application has expired, the rules of the Hong Kong Stock Exchange establish that a new application may be submitted within three months as a "continuation" of the original one. But few expect Canaan to make such a move.
"Their numbers in the second quarter and third quarter will not be positive, if they update the financial data could make the listing even more difficult," Lee said.
Canaan has not yet issued any funding for 2018, but it is widely expected that the segment crisis will have had an impact. The company did not respond immediately to Nikkei Asian Review's request for comment, nor did Bitmain and Ebang.
Akane Okutsu, Zach Coleman and Dean Napolitano contributed to this relationship.
