Mining cryptocurrencies continues to be a big business with bright prospects, big enough for a mining rig manufacturing firm to file for a $1 billion IPO.
Canaan Creative, a major manufacturer of bitcoin mining chips and other computing devices has filed for an initial public offering (IPO) with the Hong Kong Stock Exchange (HKEX) . While the company’s IPO application remains in draft form and it remains unclear how much capital the firm intends to raise, Bloomberg reports the amount to be around $1 billion. If the IPO succeeds with the reported amount, the development will make it the most valuable IPO in the cryptocurrency industry ever. The listing of shares that will be followed by commencement of trading is expected to happen by July. This will be the first ever cryptocurrency IPO for the Hong Kong market.
Financial Figures of Canaan Creative
The company is among the top manufacturers of ASIC chips, used for mining bitcoins and other compatible cryptocurrencies. It is primarily known for its Avalon brand of bitcoin mining chip series. It ranks second with a 15 percent global market share of bitcoin mining chips and computer equipment and trails the Chinese leader Bitmain. Its primary customer base includes large
mining pools that employ hardware to gain bitcoin rewards through the standard mining process. (See also, How Does Bitcoin Mining Work? )
As per the IPO filing, the firm reported an annual profit of $56 million during the year 2017, which was a 500 percent increase over the previous year. It stated annual revenue of 1.3 billion yuan (around $205 million) during the year 2017, which was a gain of 3,000 percent over the previous year.
Earlier Funding and Corporate Developments
During May of last year, Canaan Creative successfully raised 300 million yuan (around $43 million) in Series A funding, which was then the largest ever investment in a bitcoin mining firm. The funding saw participation from leading Chinese investors like Baopu Asset Management, Jin Jiang International Group, and Tunlan Investment. It used the proceeds to expand into a new segment for developing dedicated chips that find use in artificial intelligence applications. The company also has a software enterprise unit, called Hangzhou Canaan, which is eligible for preferential tax treatment. While it paid no income tax in 2016 and 2017, it is eligible for a reduced rate of 12.5 percent between 2018 and 2020.
In 2016, a Chinese listed electrical equipment producer called Shandong Luyitong Intelligent Electric attempted to acquire Canaan, but regulators blocked the deal citing uncertainties.
Bloomberg also reports predictions by Frost & Sullivan that the Chinese ASIC -based blockchain hardware market will grow to 28.6 billion yuan by the year 2020. It jumped from 50 million yuan in 2013 to 7.3 billion yuan in 2017. (See also, Is Bitcoin Mining Still Profitable? )
