Chinas Ebang Files For US IPO After Failed Attempts In Hong Kong

Ebang International Holdings, a China-based manufacturer of bitcoin mining machines, has filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) last Friday, following the footprints of its domestic counterparts to attempt a listing overseas.

The Hangzhou-based company, which intends to list under the symbol “EBON” either on the New York Stock Exchange (NYSE) or Nasdaq, set a placeholder amount of $100 million to indicate the size of the IPO, according to a filing with the regulator. The firm filed confidentially on February 14.

The size of the IPO stated in preliminary filings is used to calculate registration fees, while the final offering size could be different.

No pricing terms of Ebang’s IPO were disclosed. AMTD Global Markets and Loop Capital Markets are the joint bookrunners on the deal.

Established in January 2010, Ebang primarily designs and manufactures application-specific integrated circuit (ASIC) chips and fabless integrated circuits (IC) for bitcoin mining machines. The business accounted for 82 per cent of its $109 million revenue in 2019.

The company’s 2019 revenue grew nearly 66 per cent from that of 2018, while the net loss more than tripled from 2018 to reach $41.1 million last year, according to the filing.

The development represents Ebang’s third bid to float shares on a public market, following its two failed attempts on the Hong Kong Stock Exchange (HKEX) due to officials’ concerns about the “sustainability” of miners’ business models given the falling price of bitcoin at that time, said sources cited by Reuters.

The China-based cryptocurrency mining equipment maker had initially filed for an IPO in the Asian financial hub on June 24, 2018 to reportedly raise up to $1 billion. It renewed the draft IPO prospectus with the board on December 20, 2018 before the first application lapsed. But the company eventually shelved the plan as it saw the second attempt expire on June 21, 2019, six months after it was submitted.

Ebang was not the first to have the door shut in its face. Beijing-based Bitmain Technologies, the world’s largest designer of products for mining cryptocurrencies, let its application for a $3 billion Hong Kong IPO lapse in December 2018.

Another $400 million IPO application by Hangzhou-based Canaan, which also sells ASIC microprocessors and blockchain serves, expired in November 2018. Canaan went public on Nasdaq in a downsized offering of $90 million in November 2019.

The flurry of IPO attempts come as market interest in developing blockchain technology has been growing in recent years.

As of December 31, 2019, there were 5,035 cryptocurrencies in circulation with a total aggregate market capitalization of about $193.4 billion, up 48.5 per cent from $130.2 billion as of December 31, 2018, according to a Frost & Sullivan report. A CoinShares Research report shows that Chinese miners contributed over 65 per cent of the computing power on the network of bitcoin, the largest cryptocurrency.

However promising the cryptocurrency market is, companies that produce crypto mining machines still face challenges including potential sharp drops in the crypto price, China’s ever-changing regulations, and the COVID-19 pandemic.

“The significant drop in the Bitcoin price is expected to have a negative effect on the value of our bitcoin mining machine inventory and incentivize us to increase credit sales,” said Ebang in the filing, referring to the March market dive.