Canaan Creative considers Hong Kong IPO to expand diversified business

Jianping Kong, Canaan Creative

Canaan Creative, a mainland bitcoin mining machine manufacturer, is about to conduct an initial public offering (IPO) overseas. The company said it is currently evaluating different listing locations, including Hong Kong and the United States, and will make a decision soon.

In February this year, Yao Yongjie, one of Canaan Creative's investors and chairman of Tunlan Investment, revealed to the outside world that Canaan Creative is planning to go public in Hong Kong. If it is finally realized, Canaan Creative will become the first "pure blockchain" concept stock in Hong Kong stocks.

In 2016, Canaan Creative planned to go public on the Shenzhen Stock Exchange through a major asset restructuring in a disguised form of backdoor listing, but the exchange sent three letters of inquiry and the listing was aborted. In August 2017, the company submitted an application for listing on the New Third Board, but gave up the listing again after 2018.

After failing to meet regulatory requirements to list on the mainland’s main board in 2016, Canaan attempted to list on Shenzhen’s New Third Board, a Nasdaq-style venue that is part of the city’s stock exchange. However, the plan will be shelved because of the company’s recent “strategic business shift,” Kong said.

Cryptocurrencies are decentralized mediums of exchange that are not overseen by an authority such as a central bank and are collectively produced by a system of "miners." The software in the cryptocurrency mining machines creates a secure blockchain link that forms the basis of the currency.

Bitcoin was created in 2009 and is the first cryptocurrency and remains the largest. There are currently more than 1,500 such currencies, a number that is growing rapidly.

Hangzhou-based Canaan, which raised its first round of funding worth 3.3 billion yuan ($523 million) in 2016, has seen demand for its mining machines soar in recent years due to a boom in the cryptocurrency industry.

Canaan’s move comes after China tightened regulation of the cryptocurrency space last year by banning fundraising for new blockchain-based currencies, also known as “initial coin offerings.”

However, Kong Jianping said that regulatory crackdown was not the reason why Canaan Creative chose to go public overseas.

“The Shanghai Stock Exchange actually wants us to list there, and we can also consider listing in mainland China by issuing depositary receipts,” he said.

Canaan, which claims to supply 20% of all mining machines worldwide, expects its revenue to top 10 billion yuan this year, up from 1.2 billion yuan in 2017. Canaan’s main competitors are now Beijing-based Bitmain and U.S.-based Bitfury.

Kong Jianping also said that the company plans to diversify its revenue, which currently mainly comes from the sales of mining machines in the domestic Chinese market.

"Canaan will soon add more products, including computer chips not used for bitcoin mining and home appliances with blockchain computing capabilities."

Avalon A841 mining machine: http://www.wabi.com/product/21.html

Canaan Creative https://canaan.io/