Bitmain, Canaan, and Ebang are considered the biggest mining chip producers in China. The three are pursuing listings on the Hong Kong Exchange (HKEx). And even though, the firms are on a different level of getting approved by the listing committee, the possibility of raising billions of dollars through an IPO reveal how far the crypto industry has come.
Data from Stock Market Clock (SMC) reveals that the HKEx boasts a total market cap of around $4.2 trillion. Raising a few billions of investor funds for mining chips from that market share is possible for so many reasons.
Even though Bitcoin mining is an evolving industry, the odds are in favor of those companies who are looking to go public.
Bitmain, for instance, made around $3 – 4 billion profits in 2017. Even though critics believe that these figures were because of the Bitcoin boom late last year, the firm has already posted a $1.1 billion profit for the first quarter of 2018.
The likes of Ebang and Canaan may not boast the same numbers for 2017, but they are not far behind with $141 and $75 billion respectively.
With the profit numbers in their favor, getting listed on the HKEx will likely be the catalyst for future growth and many investors will not want to miss out. The IPO funds target for the trio stands at $3 billion for Bitmain, $1 billion for Ebang and $400 million for Canaan Inc.
Bitcoin bull run
Bitcoin mining companies power the Bitcoin network, a fast-growing market that has the potential to skyrocket at any time. Several factors have the potential to spark a bullish run, and likely a spike in demand for bitcoin mining chips could be one of them.
For instance, many industry experts, including Tom Lee, have predicted that a Bitcoin ETF could be approved in 2019. If this prediction comes true, then a lot of investor funds would be thrown into Bitcoin, and more mining chips will be needed to validate transactions.
Beyond the immediate future, the cryptocurrency market infrastructure is still under construction. Investment around Bitcoin and blockchain projects is going on here and there, and all these have a long-term effect on Bitcoin adoption.
Bitmain, Ebang, and Canaan will profit massively from any bullish run and going public gives investors a chance to grab their share of Bitcoin profits, this time away from the crypto markets.
Future beyond Bitcoin mining
The involved companies are producers of Bitcoin mining chips and also wholesale mining chip producers. This means that their solutions go beyond Bitcoin mining, therefore, raising investor funds through an IPO will not be a hard nut crack.
Bitmain, for instance, is looking to add artificial intelligence mining chips to its offer lists in the coming years. Also, this type of equipment can be applied to the broader development of blockchain applications, big data, cybersecurity, and AI as well as 5G telecoms networks that are coming to China and the rest of the world.
This is an advantage for the firms and one that potential investors will be considering.
Ebang and Canaan Inc. filed an approval to get listed on the HKEx (in May and June respectively). According to reports Bitmain is expected to submit a filing sometime next month. Even though the billion dollar targets by the firms seem huge, they are definitely achievable because of the reasons above.
On the high side, meeting the proposed numbers will be a major win for Bitcoin in the off markets, and we know very well that doing so can lead to a more favorable outcome for the cryptocurrency.
This article was first published on: Aug 27, 2018