Chinese ASIC Maker Seeks $1 Billion in IPO
Canaan Creative, the second-largest ASIC manufacturer, seeks $1 billion in funding through the largest crypto IPO and the first in Hong Kong
Canaan Creative, the biggest Bitcoin mining equipment manufacturer after Bitmain, filed for a public offering in Hong Kong on Tuesday.
The company, which controls 15% of the ASICs market, is seeking $1 billion in fundraising after a productive year that had it making revenues of over $200 million. This would be the first time a cryptocurrency-related venture has filed for an IPO in Hong Kong, and the biggest in the world in its niche, not counting ICOs.
Canaan Inc., the parent company based in the Cayman Islands, added that profits reached 361 million yuan (around $56 million) in its filing.
Canaan Creative’s miners have taken the mass mining market by storm, with its Avalon 841 producing up to 13 terahashes per second at 1,290 watts of power consumed per hour.
Its products are also sold to home customers, but such orders are not as numerous. Unlike Bitmain, it appears that Canaan doesn’t use the ASICs it sells, which makes it depend on revenue from sales for its profit.
The company has gotten proposals for acquisition in the past, and in particular one from Shandong Luyitong Intelligent Electric. The deal fell through, however, as “great uncertainties” about China’s regulatory future made Shandong Luyitong back away.
Right now, the market for ASIC mining computers stands at 7.3 billion yuan (~$1.14 billion). Analysts Frost & Sullivan projects this number to explode by three times once 2020 comes around.
However, ASIC mining has become somewhat of an arms race. Bitcoin’s mining profitability won’t always be as high and other cryptocurrencies aim to resist the entire mining rig movement.
If someone discovers how to build a mining rig that could adapt to changes in a blockchain’s algorithm, cryptocurrency developers are in trouble. Similarly, if the crypto market abandons the whole proof of work idea, ASIC manufacturers will go bankrupt.
Even after it managed to establish its IPO in a regulatory haven like Hong Kong, Canaan will continue to be challenged by the future development of each cryptocurrency its miners are made for.
So far, the company seems to be sticking with Bitcoin, leaving Bitmain to be more ambitious about conquering algorithms like Cryptonight, Ethash, and Equihash, all of which want nothing to do with ASICs.