Bitmain Seemingly Forced to Abandon Hong Kong IPO Plans

If the applicant fails to hear from the exchange's Listing Committee after the six-month period, the listing lapses.

Chinese Bitcoin mining giant Bitmain Technologies is set to allow its IPO application on the Hong Kong Stock exchange to lapse tomorrow, six months after it filed a draft prospectus. Originally, the world’s largest maker of cryptocurrency mining computers had sought to raise up to $3 billion of new capital and achieve a market valuation of more than $15 billion.

As Dovey Wan, a founding partner of Primitive Ventures, noted on Twitter, the Hong Kong Stock Exchange should show the filing as having moved from the active column to “inactive” status, effective March 26.

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Hong Kong’s listing rules provide that if the applicant fails to hear from the Listing Committee after the six months, the listing lapses.

Bitmain had hoped to become the first cryptocurrency business to list on a major exchange, with an IPO was expected to take place during the first quarter of 2019. But in the six months since the company notified local market regulators of its flotation plans, Bitmain has faced a war on multiple fronts, including declining crypto prices, poor sales and technical performance of its mining hardware.

Questions over the sustainability of Bitmain’s future have been surfaced following its IPO leaked disclosures. According to a prospectus for the offering filed in September 2018, Bitmain received massive pre-orders for their latest Antminer at the peak of the bull market in late 2017. But after it spent a few months to manufacture and ship its chips, the gear has slowed as lower crypto prices, and lack of miner innovation compared to its rivals, have kept orders extremely soft in 2018.

A Bear Market, Intense Competition

The document reveals that although the company brought in more than $700 in profit during the first half of 2018, Bitmain has been making large losses recently, with a net loss of $395 million in Q2 2018 and $500 million spent on failed chips in the last 18 months. The most recent rumors also cast a shadow over the company’s financial health, suggesting it lost about $500 million in the third quarter of 2018.

Given the Bitmain’s issues, the company closed a $442 million pre-IPO funding round from investors last year to strengthen its balance sheet.

Meanwhile, the recent tumble in cryptocurrency prices hurt both the profitability of mining operations and demand for the custom chips. In addition, competition in the mining-gear business has grown more intense, in particular after electronics giant Samsung announced it would be entering the ASIC chip market for crypto mining.

Bitmain, which is based in Beijing and has offices in other cities including Amsterdam, Tel Aviv, and Hong Kong, confirmed in December that it has laid off an undisclosed number of their staff.

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