Chinese crypto mining giant looks to U.S. IPO

Having stepped away from seeking a Hong Kong Stock Exchange listing, one of China’s large crypto mining hardware makers is now looking towards the U.S.

Citing those infamous “people with knowledge of the matter”, Bloomberg is reporting that Canaan Inc., the second largest maker of Bitcoin mining hardware in China – behind Bitmain – is looking towards a stock listing in the U.S.

As we reported previously, Canaan let its application for a Hong Kong stock exchange (HKEX) listing lapse back in mid-November – at a point when prices for crypto were tumbling, there was increased scrutiny of the environmental impact of mining for cryptocurrency, and some large mining concerns were shutting down. What had initially been mooted as a $2bn floatation has already been downgraded to something in the region of $400m by that point, but – as was reflected in the talk around its competitor Bitmain’s own IPO – the rigorous HKEX procedure for share issuances such as this, and the increased scrutiny surrounding the cryptocurrency industry, dissuaded Canaan from persuing the venture.

In a similar vein, the much larger Bitmain offering – alleged to be in region of $12bn, though never confirmed to be so large – has also hit problems of late. Similar ‘anonymous sources’ have told reporters that regulators in the region are currently reluctant to sign-off on its proposal, in the face of problems the company is facing on multiple fronts the generally depressed trading conditions, and volatility in the market. These problems also include and legal action in the fallout of its support for Bitcoin ABC.

While Canaan’s IPO in Hong Kong isn’t completely dead, it would have to resubmit in order to proceed – effectively resetting the whole process. However, it may be looking to shift its focus to getting in a listing in the U.S. as early as the first half of 2019 – underpinned by sales of its ‘Avalon’-branded ASIC miners.

The thinking behind the shift is unclear, but it may have become apparent – as was inferred in coverage of Bitmain’s proposal – that Hong Kong authorities were simply not willing to take a risk on listing any crypto mining-connected company in the present climate, and that Canaan sees better fund-raising prospects and more accommodating regulators in the tech sector of U.S. stocks.