The China-based ASIC Bitcoin miner manufacturer Ebang is applying for a $100 million IPO in the US, as per the form filed with the US Securities and Exchange Commission on April 24, 2020.
In this IPO, Ebang is offering Class A ordinary shares at a value of HK$0.001 (US$ 0.00013) per share. The company intends to list its shares on the New York Stock Exchange (NYSE) under the symbol “EBON”.
One of the leading bitcoin mining manufacturers, Ebang has listed Hong Kong-based AMTD Global Markets Limited and US-based Loop Capital Markets as joint underwriters for its IPO.
2019 was worse than 2018
The company reported a revenue of $319 million in 2018 which declined considerably in 2019 to $109 million. One of the leading ASIC (application-specific integrated circuit) chip designers made 82% of 2019 revenue on designing these chips for bitcoin mining, primarily from selling Ebit E12 Series machines and E10 Series machines.
Both the number of these chips and their average price declined in 2019 vs the previous year. While Ebang sold 415,930 mining chips at an average price of $737 in 2018, last year it sold 289,953 chips at less than half of the rate ($304). Ebang reported,
“The decrease in the Bitcoin price in 2018 and the first quarter of 2019 resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines. Although the Bitcoin price started to recover in the second quarter of 2019, our operations generally lag behind the increase of Bitcoin price.”
The company had a gross loss of $30.6 million in 2019 compared to the gross profit of $24.4 million in 2018. The net losses meanwhile have been $11.8 million and $41.1 million in 2018 and 2019, respectively.
Bitcoin price and COVID-19 affecting adversely
In its Form F-1, Ebang reported that its operators are majorly dependent on the price of bitcoin, as such “expected to continue to be significantly impacted by the fluctuation of Bitcoin price.”
Bitcoin’s price has a direct impact on the “market demand” of the company's mining machines, a trend it expects to continue.
The global coronavirus COVID-19 outbreak has also “adversely affected” the price of bitcoin and lower prices “may continue in the near term and adversely affect our business of operations and financial condition.” Ebang said,
“We and our customers have experienced significant business disruptions and suspension of operations due to quarantine measures to contain the spread of the pandemic, which may cause shortage in the supply of raw materials, reduce our production capacity, increase the likelihood of default from our customers and delay our product delivery.”
The US is the way after failed attempts in Hong Kong
This isn’t Enbang’s first attempt to go public. Previously, in June 2018, the company filed for an IPO in Hong Kong and failed the same as Canaan. And just like its China-based rival, Ebang has sharply lowered its fund raising target from $1 billion.
Canaan Creative went public last year and raised $90 million (down from the already cut down targeted amount of $400 million). Since listed on Nasdaq in November, the shares of Canaan (CAN) have taken a beating and are now down by over 50%.
The largest bitcoin mining manufacturer Bitmain also tried the Hong Kong route but failed just like the other two. Last year there were reports that Bitmain is also looking to file for an IPO in the US.