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Questions About A Potential Bitmain IPO



De Silva

The company behind some of the world’s most popular cryptocurrency mining chips and one of the world’s largest bitcoin mining pools is open to going public.

Bitmain, a Beijing-based chip developer and operator of the AntPool bitcoin mining pool, could be receptive to an initial public offering (IPO), according to a Thursday report by Bloomberg. While there are no specific plans in place, the company's CEO, Jihan Wu, said he would be willing to consider an IPO in Hong Kong (or overseas "with U.S. dollar-denominated shares"). A listing could allow Bitmain's backers, including venture capital firms Sequoia Capital and IDG Capital, to realize a return on their investments.

Note: Readers may remember that in April, Sequoia butted heads with Binance because the cryptocurrency exchange allegedly violated an investment exclusivity agreement. IDG Capital was rumored to have been in talks with the exchange – though IDG said it had no relationship with Binance and the exchange denied the allegations. Sequoia and Binance are now engaged in arbitration through the High Court of Hong Kong.

For now, the Bitmain IPO is just an idea floating around, but there are a few interesting questions that we can ask about the theoretical offering. For starters, would the IPO include Antpool, Bitmain's bitcoin mining operation?

Data on the company's profits are not public but, in May, Wu said that Bitmain earned $3.5 billion in revenue (Later, a spokesperson for Bitmain explained that the CEO misspoke and the actual number is $2.5 billion). Despite the $1 billion revision, it would be fascinating to see a breakdown of how much income was derived from Bitmain's sale of cryptocurrency mining hardware and how much of that income came from AntPool.

Additionally, Canaan Creative, a subsidiary of Canaan Inc., filed for its own Hong Kong IPO last month.

Canaan, like Bitmain, has expressed interest in developing chips for artificial intelligence (AI) products. However, according to CoinDesk, Canaan does not use its chips in mining centers like Bitmain.

Altogether, it's slightly bizarre to consider a bitcoin-linked company pursuing an IPO. The volatility of the cryptocurrency could conceivably affect Bitmain doubly as hard because demand for chips is closely linked to bitcoin prices and because the company facilitates a mining pool operation.

It's not immediately apparent how the Hong Kong government would respond to the potential IPO. For what it's worth, in December, the Hong Kong Securities and Futures Commission allowed investment in US bitcoin futures. More recently, the jurisdiction's Monetary Authority said that it "has no plan to issue a CBDC [central bank digital currency] at this stage."

Also, it's good to know that the Hong Kong government recently announced its increased stake in Hong Kong Exchanges and Clearing, per the South China Morning Post. The government now owns six percent of the company, which operates a stock market and futures market in the jurisdiction through its subsidiaries.

Matthew De Silva

Matthew has a passion for law and technology. He graduated from Georgetown University, where he studied international economics and music. Matthew enjoys biking and listening to tech podcasts. He lives in Los Angeles.

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