Caixin
Jun 26, 2018 06:24 PM
FINANCE

Bitcoin Equipment Firm Ebang Joins IPO Rush

Chinese manufacturers of bitcoin mining equipment are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines. Photo: VCG
Chinese manufacturers of bitcoin mining equipment are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines. Photo: VCG

* Zhejian Ebang Communication Technology Co. Ltd. hopes to raise $1 billion

* Company accounts for 10.9% of the global bitcoin mining market in terms of computing power sold

(Beijing) — China’s third-largest manufacturer of cryptocurrency mining equipment, Zhejiang Ebang Communication Technology Co. Ltd., has applied for an initial public offering (IPO) on the Hong Kong Stock Exchange, just over a month after competitor Canaan Creative filed its listing application.

Both companies plan to raise up to $1 billion, according to an earlier report from Reuters that cited people familiar with the plans.

Chinese manufacturers of bitcoin mining equipment are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines.

Ebang saw revenues grow over eight times to 979 million yuan ($149.8 million) in 2017, according to its IPO application, filed Sunday. Its net profit attributable to shareholders grew over thirtyfold to 378 million yuan, according to the filing.

The company accounts for 10.9% of the global bitcoin mining market in terms of computing power sold, and 11.0% in terms of sales revenue, Ebang claimed in its filing, citing research from analytics firm Shanghai iResearch Co. Ltd.

Ebang Communication, founded in 2010, originally specialized in telecommunications equipment. In 2016, it introduced the first of its series of Ebit bitcoin mining machines. By 2017, its blockchain business grew to 94.6% of its business by income, up from 42.8% in 2016. Meanwhile, its telecommunication-equipment business slid to represent 5.4% of all business by income, down from 57.2% in 2016.

Ebang attributed its revenue growth to “the rapid growth of our blockchain business as market demand continued to increase for blockchain processing units (BPUs) for bitcoin mining throughout 2016 and 2017.” BPUs are a type of computing hardware developed for cryptocurrency mining to verify transactions.

Ebang listed on China’s National Equities Exchange and Quotations (NEEQ), China’s equivalent of the Nasdaq Stock Market, in 2015 and delisted from the over-the-counter market in March. According to its IPO filing with the Hong Kong Stock Exchange, Ebang said it delisted because its directors thought the trading on NEEQ was “rather inactive.”

China’s second-largest manufacturer of bitcoin mining equipment, Canaan Creative, filed on May 15 to list on the Hong Kong Stock Exchange. Its revenues were 1.3 billion yuan in 2017 and net profit was 361 million yuan, according to its application document. Canaan claimed it represents 22% of global computing power sold to mine cryptocurrencies.

Canaan Chairman Kong Jianping told Caixin in an interview in April the company may also consider a secondary mainland listing by issuing Chinese depositary receipts.

Beijing-based Bitmain, the largest bitcoin mining equipment company in the world, representing more than 30% of global computing power sold to mine cryptocurrencies in 2017, is moving to close a $400 million fundraising round led by Sequoia Capital China in preparation for a planned IPO in Hong Kong or the U.S.

Contact reporter Liu Xiao (liuxiao@caixin.com)

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