Chinese Bitcoin Mining Producer То Seek USD 1bn in Hong Kong IPO - Report

Canaan Creative has reportedly chosen Hong Kong over the US for its public offering.

by Kalina Tekelieva
10 May • 3 min
In Mining

Chinese Bitcoin mining hardware producer Canaan Creative aims to raise USD 1 billion in an initial public offering (IPO) on the Hong Kong Stock Exchange (SEHK), South China Morning Post (SCMP) wrote on Wednesday without quoting its sources.

The Hangzhou-based company was allegedly considering Hong Kong or the US for the IPO. It seems it puts preference on the exchange in Hong Kong, which means that if the offering turns out successful, Canaan will be the first blockchain-related firm to list on the SEHK, according to the English-language daily.

The sources quoted in SCMP’s report asked to remain anonymous, as Canaan has not yet made a public announcement on the matter. Besides, the firm is still to take a final decision about the offering.

Earlier listing plans

Plans to go public have been on Canaan’s agenda for a couple of years now. The company, known for its Bitcoin (BTC) mining chip brand Avalon, agreed to sell its operations to publicly listed Chinese electronic manufacturer Shandong Luyitong in June 2016. However, the acquisition fell through on concerns by the Shenzhen Stock Exchange regulators.

In 2017, Canaan applied to list its IPO on the Chinese startup-focused New Third Board market, but the attempt was again unsuccessful for unknown reasons.

As listing on the mainland has not worked well for the BTC mining chips producer, the company has broadened its horizon. “We ... prefer listing outside mainland China as we are in a global business,” co-chairman Jianping Kong told Reuters on April 6. He underlined that looking overseas has nothing to do with China’s crackdown on BTC, but rather reflects the extended waiting time when a company applies for a share sale. Nevertheless, Canaan might consider a secondary listing in China by issuing depository receipts, according to Kong.

Chipmaking and crypto mining in China

Canaan is deemed the second-largest producer of chips for BTC mining in China and is among the biggest players on the global scene, with competitors like US-based Bitfury. One reason there is fertile ground for the chip making industry in China is that the finance ministry has introduced tax breaks for chipmaker firms. As China seeks to limit its dependence on foreign semiconductor manufacturers, at the end of March, it exempted industry players from corporate taxes for up to five years, with tax rates being halved for the next five years.

The BTC mining sector also finds China attractive for its operations. To a large extent this is due to the relatively low price of electricity in the country. Since crypto mining is a highly energy-consuming operation, building mining centers where electricity is cheap is lucrative. Therefore, China currently hosts some of the largest mining pools in the world.

Meanwhile, the local authorities are reportedly looking for ways to do away with the mining industry on apprehension about the excessive electricity use and the financial risks connected with cryptocurrencies. China has not made any official announcements so far, but if it does shut down mining farms, the industry will be affected on a global scale.