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Bitmain Technologies Ltd., the world's largest cryptocurrency mining company, plans to launch a first public offering in Hong Kong, one of the first major cases where traditional financial markets and the new world of cryptocurrency will collide.
The company's financial statements, which were published in a 438-page record with the Hong Kong Stock Exchange, confirmed Bitmain's intention to make public a transaction that analysts and investors believe could bring in billions of dollars. dollars. But the potential supply comes at a difficult time for the cryptocurrency and public equity markets.
Bitcoin and other digital currencies lost about two-thirds of their value this year after the surge in 2017.
At the same time, Hong Kong has been one of the worst performers in the world, down 16% from January's high. And while Hong Kong has hosted several major IPOs this year, many, including Chinese smartphone manufacturers
Xiaomi
Corp.
and internet startup
Meituan Dianping
– I struggled to maintain the initial gains.
Bitmain, founded in China five years ago by current billionaires Jihan Wu and Micree Zhan, said in its first public record to have generated $ 2.8 billion in revenue in the first half of 2018, nearly 10 times more than one year ago. Earnings increased similarly from $ 83 million to $ 742.7 million.
At the end of June, the company held $ 886.9 million in cryptocurrency holdings, up from $ 56.3 million at the end of 2016 and $ 12.3 million the year before. In comparison, its cryptographic assets more than doubled its $ 343.3 million in cash and cash equivalents, depending on the deposit.
Bitmain has not disclosed a valuation objective or money that it hopes to increase in the offer. This should come during a subsequent deposit on the Hong Kong Stock Exchange.
The company is a major player in the sale of cryptocurrency extraction equipment and provides computer chips and related equipment to other miners. Analysts at Sanford C. Bernstein & Co. estimate that Bitmain controls 85% of the cryptocurrency bullets market, but this figure could be affected by competitors such as Canaan Inc. and Ebang International Holdings Inc., which also public in Hong Kong – extend their offers.
The Bitmain IPO will be a test for other cryptocurrency and blockchain companies that might consider exploring their own IPOs. Blockchain technology is the basis of Bitcoin and other crypto-currencies.
Many of these startups generally prefer a more controversial type of fundraising method called initial offer of coins, hybrid IPO and a crowdfunding campaign. These companies create digital tokens similar to those of bitcoins and sell them to the public, often before they have developed or marketed a product.
"I think this world is melting in time," says Eric Ervin, managing director of Blockforce Capital, a San Diego-based asset management company that focuses on digital assets and channel technology. blocks. "For a company of this size, like Bitmain, it will probably benefit from a better valuation in a market like this one in traditional markets than in an ICO, especially in the current market.
Bitcoin Cash is one of the main positions of Bitmain. It stems from Bitcoin launched in August 2017. The co-founder of Bitmain, Mr. Wu, has been a strong advocate of technology, believing that Bitcoin Cash would solve Bitcoin problems to become a mainstream payment tool.
Bitcoin Cash has recently increased by more than 20% as a result of the Bitmain deposit, according to the CoinMarketCap research site. Nevertheless, it is down about 80% over the year as investors have questioned its use case. Analysts said Bitmain's positions in Bitcoin Cash may prove to be a liability in the future.
Bernstein analysts wrote last month in a research note that Bitmain may need to depreciate the value of its stocks. .
"Last year was nothing but a wild success," Bernstein said. "However, Bitmain's cash flow looks dubious and the company may lose a technological advantage over time."
Write to Steven Russolillo at [email protected]
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