Bitcoin’s Plunge and Crypto Bear Market to Challenge Crypto Tycoons Evaluations

As Crypto Price Tumble, The Fortunes Of Crypto Tycoon Might Take A Hit

Many crypto millionaires are about to get a reality test on their tycoons. To see how much these ultra-rich individual’s wealth might be affected, let us look at the cases of bosses of Bitmain Technologies Ltd., Canaan Inc., and Ebang International Holdings Inc.

Three of the largest makers of cryptocurrency mining gear — are all facing the prospect of public-market scrutiny for the first time as they pursue stock listings in Hong Kong. If they proceed, the share sales will represent a major test of whether the fortunes amassed by the likes of Bitmain’s Jihan Wu, Canaan’s Zhang Nangeng, and Ebang’s Hu Dong are sustainable, or destined to fizzle.

While all three companies enjoyed remarkable growth as Bitcoin soared 15-fold last year, the cryptocurrency and most of its rivals have lost more than half their value in 2018 between mounting regulatory scrutiny and concerns over exchange security flaws and market manipulation. Bitmain, Canaan, and Ebang are trying to adapt their technology for use in other fields such as artificial intelligence, but they’ve yet to prove that the new applications are scalable.

Publicly bought shares would offer a real-time gauge of how investors view their prospects.

Notably, Bitmain, the industry’s commanding player, is proposing an IPO that could raise as much as $3 billion. Wu, the company’s contentious 32-year-old leader, said in an interview that he and co-founder Micree Zhan together owned about 60 percent of the business and that it booked $2.5 billion of revenue last year.

Three founders of Canaan — Zhang, Liu Xiangfu and Li Jiaxuan, each control stakes of around 17 percent in their company, while Hu and his family own 68 percent of Ebang, according to exchange filings. Canaan and Ebang have already filed preliminary applications to list shares in Hong Kong, though the timing of the IPOs is unclear and the companies aren’t obligated to pursue them.

Bitfury recorded $450 million of revenue in the 12 months through March, according to a spokesman. Chief Executive Officer Valery Vavilov and co-founder Valery Nebesny share a majority stake in the company

Declining Crypto Prices Reason For Going Public?

Weakening cryptocurrency prices may be one reason why the mining companies are selling shares now so that existing owners can capture some of the gains they’ve made from growing the business to this point. The offerings may appeal to money managers who are bullish on crypto but want to avoid the risks that come with holding virtual currencies, including unwieldy custodial arrangements.

Additionally, the stocks would offer investors exposure to the growth of artificial intelligence, said Kevin Wang, a Hong Kong-based analyst who covers semiconductor companies for Mizuho Securities. The application-specific integrated circuits, or ASICs, designed by Bitmain and its peers for crypto miners are useful for the heavy workloads associated with some forms of AI, such as machine learning.

For likely stock investors, cutthroat competition in the crypto mining industry may be just as large a risk as falling virtual currency prices. The companies that have benefited from the early mover's advantage are losing their technological edge.