Hong Kong’s HKEX Reluctant To Approve Crypto Mining Giant Bitmains’ Initial Public Offering
Source: Hong Kong Exchange Reluctant To Approve Bitmains’ Initial Public Offering
It seems that the Hong Kong Stock Exchange (HKEX) is hesitant to approve Bitmain’s Initial Public Offering (IPO). Bitmain is the largest cryptocurrency mining company in the market and it is located in China where it has many bitcoin mining farms. The information was released by CoinDesk citing a person with knowledge of the matter.
Different companies in the cryptocurrency space related to the mining industry such as Canaan Creative, Ebang and Bitmain applied to sell shares on the Hong Kong Stock Exchange. However, Bitmain’s bid has been discussed due to the fact that it was the first major crypto company that aimed at going public in one of the most important stock exchanges around the world.
The company’s cryto holdings filed at $800 mln in the prospectus are now less than $80 mln, with predominant weight in BCH (which continues spiraling donw) @HKEXGroup 😱
— BTCKING555 (@btcking555) December 17, 2018
A person that requested anonymity and that is involved in the talks commented:
“The exchange is very hesitant to actually approve these bitcoin mining companies because the industry is so volatile. There’s a real risk that they could just not exist anymore in a year or two. […] The HKEX doesn’t want to be the first exchange int he world to approve this and have one die on them.”
The applications presented by these companies must be approved by the HKEX and the Securities and Futures Commission (SFC) before being listed. At the same time, these companies will have to proceed to a listing hearing to provide further information about share price and other issues.
Until now, Canaan’s application was not approved. Indeed, the company failed to make it into the listing hearing. Ebang’s application will expire soon since the 6-month period will reach an end. It seems that Bitmain’s proposal will not be approved either. In three months, Bitmain’s proposal will expire.
According to Ivy Wong, a partner of the law firm Baker McKenzie, explained that the HKEX focuses on sustainability of the business. This is very important because if the company poses risks to investors, then it will not be approved.
Cryptocurrency mining activities have experienced a negative market in the last few months. This happened because Bitcoin (BTC) and other virtual currencies experienced a massive drop during the last quarter of this year. Several miners have been turning off their miners because the virtual currencies obtained as a reward were not enough to cover the costs of creating them.
This makes it more difficult for Bitmain and these other companies to prove that the business is sustainable. When the market grows, that’s not a problem, but when the market falls, this is a different issue.
In the filling the firm wrote:
“Riding on our success and expertise in ASIC chip design and powerful research and development capabilities, we have extended our focus to the revolutionary field of AI and have achieved promising results.”
Although Bitmain is expanding its business, the main source of revenue of the company is related to mining activities.
These mining companies gathered a lot of money during 2017 due to the crypto boom that the market experienced. Last year, Bitcoin moved from $1,000 up to $20,000.