Another mining machine company, Ebang International, plans to go public in the United States. Is Bitcoin still popular?

Original title: Another mining machine company, Ebang International, plans to go public in the United States. Is Bitcoin still attractive?

Recently, Bitcoin mining machine company Ebang International updated its prospectus. The latest prospectus shows that the company plans to issue 19.32 million shares at a price between US$4.5 and US$6.5, and the expected amount of funds raised is between US$86.94 million and US$125 million. The company is expected to officially land on the Nasdaq on June 27.

If Ebang International is officially listed, it will be the second Bitcoin mining machine company to be listed overseas after Canaan Inc.

Tianyancha data shows that Ebang International was established in July 2018. It is a leading blockchain technology company with strong ASIC chip design capabilities. It has accumulated nearly ten years of industry experience and expertise in the telecommunications business. The company designs, produces and sells blockchain processors or BPUs, which are dedicated computing hardware specifically launched for cryptocurrency mining.

From the perspective of equity structure, before the IPO, Hu Dong, Chairman and CEO of Ebang International, held 41.82% of the shares, and Affiliates of Shubo Qian and Jun Hu held 8.73% of the shares.

After the IPO, Hu Dong holds 35.7% of the shares and has 91.7% of the voting rights; Affiliates of Shubo Qian and Jun Hu hold 7.4% of the shares and have 1% of the voting rights.

The IPO showed that the company's revenue in 2019 was US$1.09, a decrease of 66% compared to US$319 million in 2018; among them, the revenue from Bitcoin mining machines and related accessories was approximately US$89.91 million, accounting for 82.4% of its total revenue, and this part of revenue achieved revenue of US$307 million in 2018, a year-on-year decrease of 70.7%.

In this regard, an industry insider told the Securities Daily reporter: "The revenue of mining machine companies is directly proportional to the price of Bitcoin, so the company's revenue will also fluctuate with the fluctuation of Bitcoin prices."

After reviewing the price trend of Bitcoin in the past two years, the reporter found that from December 16, 2017 to December 15, 2018, Bitcoin depreciated by more than 84%. It once fell all the way to $3,120, and then the price began to rise, recovering to more than $10,000 in the second quarter of 2019, but in October the price fell to around $7,000.

In addition, industry insiders also pointed out that as Bitcoin becomes increasingly popular around the world, mining resources are now gradually drying up.

It is understood that the amount of new bitcoin produced in each round of mining will gradually decrease over time, and eventually no bitcoin will be produced in 2140. Currently, more than 85% of bitcoins have been mined, and it is expected that more than 99% of bitcoins will be mined by 2040, which means that bitcoin mining machine companies will face more intense market competition and a more challenging market environment in the future.

Compared with another mining machine company that has been listed in the United States, Canaan Technology's performance last year was not optimistic. The 2019 annual report shows that Canaan Technology's revenue in 2019 was 1.423 billion yuan, down 47.41% from 2.705 billion yuan in 2018.

In terms of net profit, Canaan Technology suffered a net loss of 1.035 billion yuan in 2019, a huge loss compared with a net profit of 122 million yuan in the same period of 2018. Regarding the sharp decline in performance, Canaan Technology explained that it was closely related to the increase in overall operating expenses and administrative expenses.

According to data from Frost & Sullivan, an international authoritative analysis agency, in the first half of 2019, Canaan Technology accounted for 21.9% of the total computing power of Bitcoin mining machines sold worldwide, ranking second in the world, and Bitmain ranked first.

However, despite having such a high market share, on June 15th (U.S. time), Canaan Inc.'s stock price fell to $1.92 during trading and closed at $1.98, a 78% drop from the issue price of $9, the lowest price since its listing.

In fact, as the number one player in the Bitcoin mining machine industry, Bitmain's financial situation is also not satisfactory. In the first quarter, Bitmain's total operating income was US$1.082 billion, and its revenues in the three months were US$253 million, US$253 million, and US$579 million, respectively.