In 2018, Bitcoin mining hardware manufacturer Bitmain had plans to become a publicly-traded entity under the Stock Exchange of Hong Kong (SEHK). However, its $3 billion initial public offering (IPO) application expired in March 2019 — with the company pledging to restart the process at a later date.
It is thought that there were several factors behind the firm’s decision to allow its application to expire, including its restructured leadership, staggering losses due to poor business planning, and a lack of confidence from regulators in Hong Kong. However, according to recent reports, the company is renewing its plans to launch its IPO — but this time around, in the United States.
The move seems to have been partly motivated by the recent political unrest in Hong Kong and the entrance of U.S.-based companies like JP Morgan Chase, Facebook, and Signature Bank into the cryptocurrency space.
To launch its IPO, Bitmain will be subject to stringent due diligence checks, which will assess whether the company meets the strict criteria to go public. Beyond this, Bitmain will also need to register with the Securities and Exchange Commission (SEC) and determine the price of its shares, as well as the number of shares to be sold during the IPO. The company will also be forced to open its books to the public, which is likely to be a daunting order for Bitmain — considering its horrendous performance in late 2018.
During its previous attempt at launching its IPO, the crypto-market entered a significant slump — with over $500 billion (or nearly 70 percent of the market value) being deleted through 2018. Naturally, as a supplier of mining hardware in a dwindling market, Bitmain was hit hard. The company witnessed losses of $500 million in Q3 2018.
However, with the market now seemingly recovering again and Bitcoin (BTC) currently just under $10,000, Bitmain seems to have rediscovered its confidence when it comes to launching its IPO. However, with Bitcoin mining only recently improving in profitability, it remains unlikely that faith in Bitmain has been restored just yet.
When it comes to getting its IPO listed, Bitmain is still perceived as a premature company with products that are fast becoming redundant. It has a business model seems unable to weather the tough times. Because of this, the odds of Bitmain successfully raising several billion if its IPO, if approved, remain slim to none.
How do you think Bitmain will perform in its IPO? Does Bitmain still carry the same clout that it once did? Let us know your thoughts in the comments below!