Back in early June this year, Bloomberg reported that Bitmain had a valuation of about $8.8 Billion and that its founders were considering an IPO (Initial Public Offering) to list the company on the Hong Kong Stock Exchange. The IPO was seen by many as an avenue for Bitmain to boost its company profile as well as that of the cryptocurrency industry.
The ASIC (Application Specific Integrated Circuit) chip manufacturer of Bitmain is a privately held company headquartered in Beijing, China.
Founded by Jihan Wu and Micree Zhan in 2013, the firm has grown to become one of the biggest player in designing hardware for mining Bitcoin. The firm also operates the large cryptocurrency mining company’s of BTC.com and Antpool.
Talks of a Bitmain IPO
Signs of Trouble for Bitmain’s
However, six months later, these plans of an IPO might be at risk as news surfaced that the Hong Kong Stock Exchange (HKEX) has been reluctant to approve Bitmain’s IPO application.
According to Coindesk, an insider stated that HKEX does not want to approve the IPO due to the volatile nature of the crypto industry. The source went on to state the following:
The HKEX doesn’t want to be the first exchange in the world to approve this and have one die on them.
Representatives from HKEX soon dispelled such news as rumors. A spokesperson of the stock exchange told Cointelegraph that HKEX simply does not respond to rumors.
3 Reasons Why the Bitmain IPO Might Not Happen
‘Where there is smoke, their is fire’ is an appropriate saying to use as we explore the first reason why the IPO might not happen. When word leaks out through a source in the financial industry, it is highly likely that the rumors might just be true. HKEX does not want to be the first mainstream exchange to approve a crypto related IPO that might fail.
Secondly, as we look at the recently concluded Hash Wars that were between Craig Wright’s camp and that of Bitcoin Cash ABC by Roger Ver and Jihan Wu, we find that the event managed to continue for a long time due to lack of regulation in the crypto industry. This fact might result in hesitation from institutional investors who might not want to commit their funds to an unknown future. The lack of regulation means that a similar event might happen when another BCH or BTC hard-fork happens.
Thirdly, rumors are rife that the Bitmain company is neck deep in debt and losses. Its woes might have been accelerated by the current bear market that has seen a reduction in excitement around mining cryptocurrencies on an individual level.
Some of the rumors that have emerged about the firm’s financial woes are as follows:
- $740 Million in Q3 losses excluding cost of financing Hash Wars
- $10 Million in combined costs from both BCH camps for financing the hash wars
- Bitmain allegedly liquidating its stash of BCH to pay off supplier debts
- Lawsuit against Bitmain and BCHABC supporters for allegedly hijacking the BCH blockchain
- Earlier rumors of Jihan Wu losing Executive powers at Bitmain
Conclusion
Summing it up, with rumors of the Hong Kong Stock Exchange being hesitant to list the Bitmain IPO, we have explored three reasons as to why this might result in the venture falling through. We have explored the regulatory concerns with respect to digital assets; the hash wars; as well was Bitmain’s financial woes.