Ebang International plans to launch Bitcoin exchange this year

This article is from Bloomberg, original author: Zheping Huang

Odaily Planet Daily Translator | Nian Yin Si Tang

Chinese crypto-mining giant Ebang International Holdings Inc. plans to launch an overseas digital-asset trading platform this year, seeking to expand beyond an industry that tends to rise and fall with the price of bitcoin.

Chen Lei, chief financial officer of Hangzhou-based Ebang, a bitcoin mining machine maker, said in an interview that the company’s total revenue in 2020 could grow by about 40% after entering a newer business area of ​​helping customers manage data centers. He also said that the company’s revenue this year could double to $200 million with the launch of a cryptocurrency exchange. Otherwise, Ebang should reach that goal by 2022, Chen Lei added.

On June 26, EBON International was listed on the Nasdaq with the stock code "EBON" and an initial offering price of $5.23. Assuming that the underwriters do not exercise the over-allotment option of up to 2.8897 million shares, the total offering size of its initial public offering of 19.2643 million shares is approximately $100.75 million. However, the stock price fell below the issue price at the opening, with the lowest price at $3.81.

Ebang plans to use the proceeds to develop new mining machines and expand overseas, including setting up a regulatory-compliant cryptocurrency exchange outside of China. Chen Lei expects the exchange to initially attract 10% of total transaction fees from crypto trades.

Previously, insiders of Yibang International revealed that the company has set up a major expansion plan, which may involve the following aspects:

1. Fill a more unique niche in the cryptocurrency industry by continuing to manufacture Bitcoin mining equipment;

2. Plan to establish a cryptocurrency trading platform;

3. Build cryptocurrency mines to achieve diversified operations;

4. Explore how blockchain can be applied to “financial services, education, and healthcare industries.”

Ebang's new exchange will help it cope with the wild volatility of Bitcoin. So far this year, Bitcoin has traded in a wide range between about $5,000 and $10,000. Although crypto trading is active in both bull and bear markets, a sharp drop in Bitcoin prices will obviously directly drag down the business of mining machine manufacturers like Ebang. According to the prospectus, the company's revenue last year was $109 million, about a third of its sales in 2018, and it suffered net losses in both 2018 and 2019. Gross profit was $24.4 million in 2018 and gross loss was $30.6 million in 2019; net loss was $11.8 million in 2018 and $41.1 million in 2019.

Larger rivals such as Bitmain Technologies Ltd. and Canaan Inc. have bet on making chips in the adjacent field of artificial intelligence to reduce their reliance on bitcoin prices, but with mixed results. Ebang International, founded in 2010 by telecom expert Hu Dong, has chosen to move further into the cryptocurrency space, offering clients services such as hosting and maintaining mining machines in data centers. Chen Lei said Ebang is considering applying for licenses for its planned crypto exchange in places such as the U.S. or Singapore, or acquiring an existing exchange operator.

Ebang’s listing comes at a time when tensions between Washington and Beijing threaten to hurt Chinese companies’ access to U.S. capital markets following an accounting scandal at Luckin Coffee Inc., one of China’s smartest startups.

Chen Lei believes the listing is a victory for Ebang’s brand as it seeks to attract more customers from overseas markets including the United States. Currently, nearly 90% of the company’s sales come from China, with most of the rest coming from other parts of Asia.

This article is translated from https://www.bloomberg.com/news/articles/2020-06-29/china-crypto-miner-ebang-plans-to-start-bitcoin-exchange-in-2020 . If reproduced, please indicate the source.