Bitmain — the cryptocurrency mining giant — filed its IPO prospectus with the Hong Kong Stock Exchange (HKEX) on September 26th, 2018, meaning that the filing is automatically set to expire on March 26th, 2019 if it does not move into the IPO hearing phase within the 6-month window.
The expiry of the filing would follow suit with Bitmain’s competitor, Canaan, who already shelved their plans for their IPO with HKEX. The HKEX CEO has also previously expressed doubts about a cryptocurrency mining company’s successful IPO filing at this stage, especially considering the extended bear market and financial reporting problems of Bitmain’s IPO.
Bitmain reportedly suffered roughly $500 million in losses in Q3 2018 after updating its filing with HKEX last month — further pushing the narrative of the filing moving into the hearing stage into doubt.
A Reversal of Fortune
The likely expiration of Bitmain’s IPO filing is a major reversal for the once surging company in the cryptocurrency industry that was set to be its flagship IPO. It remains unclear if Bitmain will seek further IPO opportunities this year amid the reshuffling that the company has been undergoing with its staff and foreign offices.
The company has struggled throughout the cryptocurrency bear market that has seen prices across the board plummet from the meteoric highs at the end of 2017. Should the company seek another IPO opportunity outside of HKEX, the filing would provide more definitive insights into the firm’s financial situation in the latter half of 2018 and early 2019. The reported fiscal aspects of their operation in the initial filing were only up until June 30th, 2018.
The Bitcoin spot price has been consolidating for several months, and the mining market usually serves as a strong indicator of the overall health of the network. Investors are hopeful for a turn around in Bitcoin’s price, and a stronger mining economy leading into the summer could prove an important step in that direction.
Positive Signs For a Struggling Market
Despite the harsh times for the largest mining firm in the industry, some positive signs for the industry have emerged. Electricity prices in Southwestern Chinese provinces are expected to drop due to excess hydropower this summer, sparking Bitmain to invest $80 million (~200k units) of mining equipment into the region.
The influx of the approximately 200k units of Bitmain’s mining equipment into the market should help push the hash rate of Bitcoin higher by a sizeable margin. The move coincides with an emerging trend among other mining operations and independent miners, who are gearing up for opportunities to profit by mining Bitcoin once again following vast shutdowns of mining rigs towards the end of 2018.
Bitcoin’s hash rate has been rising at a steady pace since low points at the end of 2018, and the mining difficulty increased for the first time in 6 weeks over the weekend, after previously remaining stable for over a month.
The uptick indicates more miners have migrated to the chain or turned on their miners after protracted periods of razor-thin margins or operational losses.