Yibang IPO, the "bell ringing dream" of mining tycoons

summary

Special topic: Ebang IPO, the "bell ringing dream" of mining tycoons. After the third halving of BTC block rewards, the price of BTC did not rise significantly, but began to fluctuate downward. Affected by this, the mining machine market is sluggish, and mining machine manufacturers are in trouble. Ebang International is eager to go public for financing, which may be related to the financial difficulties it faces; and Canaan Creative's stock price has fallen by nearly 90% from its highest point since its listing on Nasdaq; Bitmain, the leader in the mining machine market share, has been unable to go public due to negative news such as "palace fighting".

Market: The market is shrinking and going down. The total market value of digital tokens this week is 267.38 billion US dollars, down 1.51 billion US dollars from last week, a drop of about 0.6%; the average daily turnover rate is 22.6%, down 2.3% from last week. BTC is currently priced at 9162.9 US dollars, down 1.3% from last week, and the average daily trading volume is 18.1 billion US dollars. ETH is currently priced at 229.67 US dollars, up 1.1% from last week, and the average daily trading volume is 7.22 billion US dollars. This week, the BTC balance of exchanges is 2.371 million, an increase of 74,397 from last week. The ETH balance of exchanges is 13.317 million, a decrease of 323,917 from last week. Among the BICS secondary industries, the proportion of media content industry has increased significantly.

Output and popularity: BTC computing power has been reduced. The mining difficulty of BTC this week is 15.78T, the same as last week, and the average daily computing power is 105.93EH/s, down 9.31EH/s from last week; the mining difficulty of ETH this week is 2406.90, up 76.27 from last week, and the average daily computing power is 183.9TH/S, up 4.5TH/S from last week.

Industry: Blockchain was selected as one of the top ten IT information technologies. The UK Financial Conduct Authority requires crypto companies to submit registration applications; Blockchain was selected as one of the top ten IT information technologies that affect Chinese accounting practitioners; Grayscale Ethereum Trust price has fallen 65% from its June high.

Risk warning: regulatory policy risk, market trend risk

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100 million IPO, the "bell ringing dream" of mining tycoons

On the evening of June 26, ebang International (ebang) "rang the bell online" in Hangzhou and officially landed on the Nasdaq of the U.S. stock market, becoming the "second mining machine stock" after Canaan Creative.

After the third BTC block reward halving, the BTC price did not rise significantly, but began to fluctuate downward. Affected by this, the mining machine market was sluggish, and mining machine manufacturers were in trouble.

1.1 Yibang International: Opening price below the issue price

Ebang International was established in 2010 and is mainly engaged in the development and sales of communication network access equipment. With the rise of blockchain in 2014, Ebang International chose to transform and began to develop, produce and sell mining machines, and developed rapidly. In 2015, Ebang International's revenue was 92.14 million yuan and its net profit was 24.236 million yuan; in 2016, its revenue was 120 million yuan and its net profit was 124 million yuan; in 2017, its revenue was 978 million yuan and its net profit was 378 million yuan. In just three years, Ebang International has become the world's third largest BTC mining machine manufacturer, with a market share of about 11%.

After achieving great success in the mining machine market, Ebang International began to test the waters in the capital market. Before its IPO in the United States, Ebang International submitted listing applications to the Hong Kong Stock Exchange twice in 2018 and 2019, but both applications failed because they did not meet the core principle of "listing suitability" of the Hong Kong Stock Exchange.

With the failure of two IPO applications and the arrival of the crypto winter, Ebang International's performance began to decline. According to information disclosed in the prospectus submitted by Ebang International, Ebang International's revenue in 2019 was US$109.1 million, a 200% decrease from 2018; its net loss in 2019 was US$41.1 million, a three-fold increase from 2018.

Therefore, whether from the downturn in the mining machine industry or from the revenue performance of Ebang International, this is not a good time for Ebang to go public. Ebang International's eagerness to go public for financing may be related to the financial difficulties it faces.

EBON International Class A common stock plans to sell 19.26 million shares at a price of $5.23 per share, with a total fundraising scale of approximately $100.75 million and a total market value of $685 million. However, on the opening day, EBON fell all the way, falling to a low of $3.81, and finally closed at $5, a drop of 4.4%. In addition to poor performance, the trust crisis in Chinese stocks in the United States caused by the "Luckin Coffee fraud" may also be an important reason for EBON's break.

1.2    Canaan Creative: Share price fell 85%

As the "first mining machine stock", Canaan Creative's performance on the first day of trading was completely different from that of Ebang International. On November 21, 2019, Canaan Creative (CAN.US) landed on the Nasdaq. The issue price of CAN was US$9. On the opening day, it rose to a high of US$13, a 40% surge that triggered a trading suspension.

However, the subsequent trend of the "first blockchain stock" was surprising. Canaan's stock price has plummeted since then. Although there was a brief rebound during the period, it still could not change the general downward trend. As of June 26, 2020, CAN closed at $1.89, down nearly 90% from its highest point.

In addition, Canaan Creative was shorted twice by short-selling institutions, which also exacerbated the decline in its stock price.

On February 20, short-selling agency Marcus Aurelius Value released a report against Canaan Inc., accusing it of undisclosed related-party transactions and violations involving many customers and distributors. On May 14, US stock research agency White Diamond Research released a short-selling report against Canaan Inc., saying that Canaan Inc. currently has problems such as low profit margins for mining machines, failure to transform its AI chip business, and unreasonable market value.

Whether it is the continued decline in stock prices or the short selling by institutions, Canaan's experience shows that the capital market is concerned about the risks of mining machines, a special business. If Ebang International fails to innovate and make breakthroughs in its products and businesses, the same experience may happen again.

1.3    Bitmain: Continuous internal fighting may make it difficult to go public

The road to listing for Ebang International and Canaan Creative was full of twists and turns, but as the BTC mining machine manufacturer with the largest market share, Bitmain has yet to realize its "dream of ringing the bell."

In September 2018, Bitmain submitted a prospectus to the Hong Kong Stock Exchange, but it also failed because the sales of mining machines accounted for too high a proportion of the company's revenue, which did not meet the core principle of "listing suitability" of the Hong Kong Stock Exchange. It was also in the second half of 2018 that the two CEOs of Bitmain had differences on the future development direction of the company, laying the groundwork for the future "palace fight".

In October 2019, Bitmain submitted an application for listing to the U.S. Securities and Exchange Commission, planning to complete the listing in early 2020. However, Bitmain has been plagued by negative news since then: large-scale layoffs, management shake-ups and multiple changes of legal persons, serious infighting between the two founders, technological stagnation, hoarding of mining machines, and reduced market share. The IPO in the United States seems to be getting further and further away.

Before the battle between Wu Jihan and Zhan Ketuan for the control of Bitmain ends, the probability of Bitmain achieving an IPO is not high. The unstoppable "palace fighting" will also drag down Bitmain's rapid development, and its "bell ringing dream" will be delayed indefinitely.

The listing of Ebang International may boost the morale of the sluggish market in the short term, but the future development of the industry still depends on technological progress and market growth. Even after the bell rings, the mining giants are still waiting for a fierce battle.

2 Market: Market volume shrinks and declines

2.1 Overall market situation: the market is shrinking and moving downward

This week, the ChaiNext Digital Asset 100 Index closed at 824 points, down 1.1%, and the ChaiNext Digital Asset 100X Index closed at 2124.06 points, down 0.1%.

The total market value of digital tokens this week was US$267.38 billion, down US$1.51 billion from last week, a drop of about 0.6%.

The average daily trading volume of the digital token market was US$61.62 billion, down 9.5% from last week, and the average daily turnover rate was 22.6%, down 2.3% from last week.

This week, the BTC balance on exchanges was 2.371 million, an increase of 74,397 from last week. The ETH balance on exchanges was 13.317 million, a decrease of 323,917 from last week.

The market value of USDT is US$9.18 billion, and the premium rate of USDT relative to the US dollar has declined.

2.2 Core Token: DeFi is booming, ETH is rising against the trend

The current price of BTC is $9,162.9, down 1.3% from the previous week and 0.2% from the previous month. The average daily trading volume is $18.1 billion, and the average daily turnover rate is 10.5%.

The current price of ETH is $229.67, with a weekly increase of 1.1% and a monthly increase of 10%. The average daily trading volume is $7.22 billion, and the average daily turnover rate is 27.6%.

The volatility of mainstream digital tokens has dropped slightly this week, and price fluctuations have become more moderate compared to last week. The monthly volatility of BTC has dropped by 1.3% compared to last week; the monthly volatility of ETH has dropped by 0.4% compared to last week.

2.3 BICS Industry: The proportion of media content industry has increased significantly

Among the top five BICS (Blockchain Industry Classification Standard) secondary industries by market capitalization, the proportion of the media content industry has increased significantly, while the market capitalization share of the public service industry has decreased significantly.

The BICS secondary industries with the most significant growth in the number of tokens this week are media content and retail e-commerce, while the most obvious declines are public services and banking services.

2.4 Market view: Bearishness dominates the market, and the market is likely to continue to test downwards

This week, BTC continued to fluctuate downward, and continued to plunge, once falling to above $8,800, and now rebounded to around $9,000. After falling to the moving averages of various levels, the daily level first ran below the moving averages and closely followed the moving averages for two days, but it also basically maintained a negative downward trend. The current market is dominated by shorts, so there is a high probability that it will continue to test downwards.

The market is volatile, so you still need to pay attention to controlling your positions. BTC has completed its halving, and the recent volatile market has provided investors with a more suitable price. It is still a good time to invest in digital assets such as BTC. Long-term holders can consider regular investment or buying on dips.

3 Output and popularity: BTC computing power decreases

BTC hashrate decreased. BTC mining difficulty this week is 15.78T, the same as last week, and the average daily hashrate is 105.93EH/s, down 9.31EH/s from last week; ETH mining difficulty this week is 2406.90, up 76.27 from last week, and the average daily hashrate is 183.9TH/S, up 4.5TH/S from last week.

This week, Google Trends statistics show that the search popularity of Bitcoin is 10, and the search popularity of Ethereum is 12.

4Industry News : Blockchain is selected as one of the top ten IT information technologies

4.1 The UK Financial Conduct Authority requires crypto companies to submit registration applications

The Financial Conduct Authority (FCA) of the United Kingdom reminded British crypto companies that they must submit a complete registration application before June 30 to start subsequent business. Any company that conducted business in the UK before January 10, 2020 and was not registered with the FCA before January 10, 2021 must cease operations.

4.2 Blockchain is selected as one of the top ten IT information technologies that affect Chinese accounting practitioners

On June 20, the results of the 2020 Top Ten IT Information Technologies that will Impact Chinese Accounting Practitioners, hosted by the Shanghai National Accounting Institute, were announced. These information technologies are: financial cloud, electronic invoices, accounting big data technology, electronic archives, RPA (robotic process automation), new generation ERP, blockchain technology, mobile payment, data mining, and online auditing.

4.3 Grayscale Ethereum Trust price has fallen 65% from its June high

Grayscale's Ethereum Trust Fund (ETHE), a crypto asset management company, fell to a monthly bottom of $82.5 this week, down 65% from its year-to-date high of $239 around June 4. The current share price is around $98. In addition, its premium (relative to the spot ETH price of the underlying asset) has also fallen from 948% in early June to 356%.

Notes:

Due to some reasons, some of the terms in this article are not very accurate, such as: token, digital token, digital currency, currency, token, Crowdsale, etc. If readers have any questions, please call or write to discuss.