A very disappointing, but not too surprising, setback in the acceptance of bitcoin related business into the mainstream business world in Australian was revealed today. An audited public Bitcoin mining firm which has produced 14,000 bitcoins (worth over $8 million) since 2014, the Bitcoin Group, is withdrawing the second replacement prospectus to list on the Australian Stock Exchange (ASX) and will return the $5.9 million in IPO funds that it raised from investors.
The Bitcoin Group explains that the key reason for the withdrawal of the IPO offer is due to the requirement of the ASX that the firm procure a working capital report from an independent accounting firm, a report not specifically required for a listing on the ASX. The firm’s independent accountant was required to factor in the reduction of newly minted bitcoins released on the occurrence of block halving in July 2016, without regard to the increase in bitcoin price that the firm projected.
The firm noted that the last time block halving occurred (28 November 2012), the bitcoin price increased in value by 1032% in the proceeding 6 months (from US$12.16 to US$125.58). However, ASIC prohibited any forecasting on the bitcoin price which resulted in a report which did not allow for any increase in bitcoin price upon the halving.
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In a message to investors, the Bitcoin Group Directors say they want investors to note that the working capital report did show that without any increase in the bitcoin price being tailored in, the firm has sufficient working capital to meet its objectives over the coming 12 month period; and that the report did not consider the upsides of block halving (increase in the bitcoin price, decrease in difficulty, increase in mining equipment efficiency).
The group also assures investors that it is continuing its bitcoin mining activities and intends to proceed with a new offer after the block halving, when the bitcoin price will reflect the reduced number of bitcoins being created. The group’s directors expect this to occur by September 2016.