Canaan, the world’s second-largest bitcoin miner maker, initially intended to raise $200-400 million at its initial public offering (IPO). However, dubious sentiments regarding cryptocurrencies have been affecting the markets all along, therefore, making it very difficult for any cryptocurrency-related businesses to thrive, especially for a company that makes mining machines.
The Chinese governments’ interference in mining farms in China and their directive to centralize these farms has resulted in skepticism and therefore caused panic in the market. In addition to that, Canaan was also under pressure due to the fact that its lead underwriter, Credit Suisse Group AG, backed out. Canaan had plans to go public on the Hong Kong exchange last year, but it failed to raise funds. Thus, after many predictions by experts, Canaan’s ambitious plans were adjusted to some modesty by bringing the $200-400 million range down to $100 million.
The Chinese-based mining giant is eyeing for the perfect time before the expected explosion of the volatile bitcoin by becoming a publicly-traded company by the end of this month. This would allow them to reap the benefits of a bull market and the uptrend of the block mining difficulty. Another advantage of going public now is to avail the cheap prices of electricity as well as older investments.
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The recent endorsement of the blockchain technology by the President of China has given the necessary boost the industry had been requiring for a while. His words were that his country should “take the leading position in the emerging field of blockchain”. If not much, it’s at least a relief from the fear of bitcoin getting banned by the state. This gives the Canaan creative the necessary momentum they needed to proceed with their IPO.
The Hangzhou, China-based manufacturer of the Avalon bitcoin miner targets to offer10 million American depository shares (ADS) at a price range of $9-11 each. It’s the very first that the miner maker would go public on the traditional stock market at the U.S. Securities and Exchange Commission (SEC). That’s a huge offering size given the diluted market value that is $1.5 billion at present and would leave 2.3 billion as outstanding ordinary shares after the IPO.
However, according to the updated filing, each American Depository Share (ADS) would be worth 15 Class A ordinary shares of Canaan. Although the company admitted their losses in the first half of 2019, in the third quarter, they were again making profits. Now, they are determined and looking forward to their IPO.