Hong Kong's financial overseers are expressing skepticism about IPOs that are based on cryptocurrencies. Given that digital currency is still in its infancy, many see crypto-related IPOs as premature, stirring doubts about Bitmain's newest venture.
The Chinese mining giant has said that it would like The aim is to gather more than $3 billion by the close of the IPO slated for March 2019. However, the hesitation from Hong Kong’s financial watchdog highlights the ongoing regulatory hurdles. The legislation needed is still not finalized, causing worry about the readiness of this undertaking.
The regulatory body offers guidance to the Listing Committee of the Hong Kong stock exchange. To receive a listing at the exchange, a hearing with committee members is mandatory. These representatives have up to six months to provide their verdict once all inquiries about the listings are addressed comprehensively.
If the listing isn’t confirmed within half a year, it becomes void. Should Bitmain's IPO face rejection, it would mark yet another considerable obstacle in their long-term strategy.
A Little Background for You
As of late, the mining business is wrapped up in controversy The company is embroiled in legal issues, filing a suit against a suspected hacker in Washington state, accusing them of pilfering about $5 million in crypto from Bitmain's exchange wallets.
Concurrently, Bitmain faces scrutiny for allegedly altering their mining hardware to mine new coins using client resources until they adjust the miners to point to personal wallets, leaving clients with no rewards but substantial electricity bills.
A group exceeding 100 former clients has banded together in a class-action lawsuit against Bitmain. They demand over $5 million collectively to cover their energy costs, legal expenses, and potential damages. Bitmain refutes any allegations of misconduct.
What’s So Great About This Company?
Since its inception in 2013, Bitmain has stood as a colossal force in the production and distribution of cryptocurrency mining gear. The firm has frequently faced accusations of monopolizing the mining sector and setting the stage for a 51 percent attack, though these allegations have been consistently denied by their executives. The entity's valuation exceeds $1 billion, sparked greatly by the Bitcoin surge in 2017 which catapulted demand for their Antminer series.
Antminers stand out due to their clusters of potent ASICs, which efficiently compress data to authenticate cryptocurrency exchanges. Prices start at about $200 and can climb into the thousands based on customer specifications.
The year 2018 saw Bitmain's revenue soar from about $700 million to over $2.8 billion. By June's end, the company reportedly held cryptocurrency assets worth approximately $900 million. Their operations earn about 94 percent of revenue from selling crypto mining equipment and related hardware.
Sharing the Problematic Limelight
Bitmain isn't isolated in facing these challenges in the mining industry. competitor Canaan Creative A $400 million IPO was proposed in the U.S. but eventually fizzled out by late November.
Japanese tech giant SoftBank recently saw its IPO flop Upon launching, it came in at a disadvantaged price of 1,463 yen per stock, notably lower than the anticipated 1,500 yen. Prices have since dwindled further, with single units now priced at roughly 1,282 yen. This represents nearly a 15 percent drop over the last day.
