Produced | Odaily (ID: o-daily)

Produced | Odaily (ID: o-daily)

Although it has not come to fruition, blockchain practitioners who have recently been "rectified" by policy dividends have swiped their screens and circulated the good news of "the first stock in the blockchain industry".

Looking at the entire blockchain market, mining machines can be regarded as the only asset targets with physical assets and large-scale capital compliance entry channels. And the "dream of going public" has always been the goal pursued by this industry.

In 2018, Canaan Intellectual Property, Ebang International, and Bitmain submitted their prospectuses to the Hong Kong Stock Exchange successively, but they failed one after another. And Jianan Yunzhi launched attempts on A-shares and the New Third Board in 2016 and 2017 respectively, all of which ended in failure.

What is different from before is that people in the industry have expressed confidence in this listing. It seems that this is Canaan Creative and it is also the closest the industry has come to this dream.

According to data from Frost & Sullivan, the world's largest corporate growth consulting company, as of June 30 this year, Canaan had a 21.9% share of the Bitcoin mining machine market in terms of computing power, and a market share of 23.3% in terms of mining machine sales. Both ranked second. Bitmain ranks first, with a market share of 64.5% in terms of mining machine sales and 65.2% in terms of computing power.

Unlike Bitmain, which has attracted the attention of the global media, and Wu Jihan, whose every move makes headlines frequently, Canaan Creative, the inventor of ASIC mining machines, and its founder Zhang Nangeng (Pumpkin Zhang) rarely have stories circulated in the public.

The blockchain industry is an industry with rapid talent iteration and KOL "retirement" faster. This year's so-called boss may be ignored or even disappeared next year. Today, there are very few people who still remember how Canaan has been going all the way since 2011.

secondary title

Beihang Ph.D. dropped out of school to develop ASIC, planting the seeds of computing power war

image description

(Pumpkin Zhang: Zhang Nangeng)

Back in 2011, Bitcoin mining chips have gone through several iterations in the initial stage: from personal computer CPU mining, GPU mining, to the era of area programmable gate array (FPGA).

image description

(Screenshot of Pumpkin Zhang’s account)

At that time, the outside world knew little about his true identity, so he was called "Pumpkin Zhang" according to his ID, and this title has continued to this day.

Due to the good performance of the mining machine, Pumpkin Zhang’s career went smoothly. Even going abroad, many foreigners also come to him to buy mining machines.

Soon, however, Pumpkin Zhang encountered a strong challenger: American Butterfly Labs.

Dr. Beihang dropped out of research and development, and the first ASIC mining machine was born

In June 2012, "Butterfly Lab", an American organization specializing in the development of Bitcoin mining machines, announced that it was preparing to develop a centralized circuit (ASIC) mining machine with performance far superior to mainstream FPGA mining machines at that time, and promised to launch it in October of that year. Delivery of the first batch of ASIC mining machines. Butterfly Labs received a million dollars in crowdfunding as a result.

Since mining revenue can increase exponentially, ASIC mining machines are undoubtedly a major benefit for miners at that time. But to Pumpkin Zhang, it was like a heavy hammer.

He began to think about how to contend with it.

In a later interview, Pumpkin Zhang said that the research on ASIC mining machines at that time was for "world peace" and to prevent mining machine manufacturers from monopolizing more than 51% of the computing power of the Bitcoin network and causing harm to the network.

image description

（Yifu Guo）

In September 2012, Pumpkin Zhang and Guo Yifu announced the development of ASIC mining machines, and demonstrated the 60G/s mining machine samples they manufactured.

Pumpkin Zhang, who loves Japanese animation, also named this new mining machine "Avalon".

Odaily Note: Avalon, English name Avalon, is the strongest defensive weapon in the Japanese anime "Fate".

In order to raise funds, the two launched a pre-sale policy: order first, but the specific delivery time is uncertain; even if it is not shipped later, there will be no refund.

This is indeed a "overlord clause" today, but at that time the miner group was a small circle, which was very different from today's "industrialization". Everyone actively placed orders, and the first batch of 300 units were all pre-sold, with a unit price of 1299 Dollar.

In October of the same year, their opponent Butterfly Labs failed to deliver the ASIC mining machine as scheduled and repeatedly delayed, which also gave the two a chance to breathe.

However, the research and development of Pumpkin Zhang was not smooth, and the mining machine that was supposed to be unveiled at the end of the year also encountered difficulties. In order to overcome the problem, Pumpkin Zhang wanted to take a year off from school, but was rejected by his tutor, and he failed to get approval after many communications.

Should we continue to study mining machines, or return to campus with a refund? After weighing it up, Pumpkin Zhang chose the former. For this reason, he had one year to graduate and chose to drop out of Beihang University.

In January 2013, approaching the Chinese New Year, with all our efforts, the world's first ASIC mining machine was finally successfully developed, and orders were delivered one after another.

Since then, the two names of Avalon and Pumpkin Zhang have also been included in the history of Bitcoin development, marking the entry of Bitcoin mining into a new era of ASICs.

The computing efficiency of ASIC chips is a hundred times or a thousand times that of corresponding CPUs, which also planted the seeds for future computing power wars.

This year, Pumpkin Zhang was just 30 years old.

Guo Yifu, another technical partner of Avalon, is gradually being forgotten.

Yifu Guo’s LinkedIn account shows that he was the co-founder of the Avalon project from April 2012 until January 2015. But after Jianan Zhizhi was established, Guo Yifu has faded out and has no shareholding.

And no one has told his story.

Avalon mining machine comes out, pumpkin Zhang open source hardware solutions

With the delivery of the first generation of Avalon mining machines, miners ushered in the spring.

Some people paid back their capital after only a few days of mining, and then continued to mine, and some people chose to transfer the mining machine at a price several times higher. The first batch of mining machines also made these early players earn a lot of money.

Some people paid back their capital after only a few days of mining, and then continued to mine, and some people chose to transfer the mining machine at a price several times higher. The first batch of mining machines also made these early players earn a lot of money.

On February 2, 2013, the pre-sale of the second batch of 600 mining machines began, priced at 75 bitcoins (about 1,700 US dollars), and is expected to be shipped on April 4 of that year; on March 25, the third batch of 600 mining machines The machine pre-sale starts, the price is 75 bitcoins ($6900), and the delivery date is after the second batch.

In April of this year, Pumpkin Zhang did two major events in his life.

image description

(enterprise check)

Li Jiaxuan chose the word "Jia", which has the same pronunciation as "Jia", and Zhang Nangeng chose the word "Nan" in his name. The English name "Canaan" of "Jianan Yunzhi" is derived from a Japanese animation "Canaan Canaan".

Second, Pumpkin Zhang announced the termination of the sale of the overall mining machine, focusing only on the R&D and production of chips, and open-sourced all hardware solutions except the chip of the Avalon mining machine on the Internet.

Affected by the open source of Avalon mining machines, hundreds of mining machine assemblers, large and small, appeared in the market.

Should have taken the lead in the mining machine market, why did Canaan withdraw?

secondary title

The industry has just established, after the cold winter, the rise of competing products

After announcing its focus on chip development, Jianan Zhizhi launched the fourth batch of pre-sales. Pumpkin Zhang said that the chips can arrive in 9 to 10 weeks after the pre-order.

image description

It is a pity that the day failed, and the chips were not delivered to the mining machine assembler as scheduled. These companies that waited for the rice to be cooked also went bankrupt due to overdue delivery of mining machines, credit bankruptcy, and eventually closed down.

(Mining machine assembler applies for Canaan Intellectual Property)

The explanation given by Pumpkin Zhang is that it is irresponsible to reproduce the first generation of chips due to the increase in mining difficulty and the progress of other manufacturers' production technology.

But this reason failed to convince everyone, because while delaying delivery to ordinary processors, Canaan Zhizhi sent a batch of 10,000 chips to Switzerland in July of that year; at the end of August, another batch of 20,000 chips The order is sent out. There are even conspiracy theorists who believe that Canaan Zhizhi used the pre-sale of chips as an excuse to raise funds to develop chips for its own use.

In addition, the third batch of mining machines failed to be delivered as scheduled. By the time of delivery, the market had turned cold, and many miners were severely damaged.

(Condemning Pumpkin Zhang and Guo Yifu)

(Condemning Pumpkin Zhang and Guo Yifu)

image description

(Left: Roasted Cat Right: Xiaogui, founder of Beep News)

Roasted Cat, whose real name is Jiang Xinyu, researched ASIC mining machines at the same time as Pumpkin Zhang, and was also the second person in the world to create ASIC mining machines. The American Butterfly Laboratory mentioned above did not develop it until June 2013.

Jiang Xinyu is a student of the junior class of the University of Science and Technology of China. He initiated crowdfunding on the Bitcoin forum bitcointalk in the name of friedcat (roasted cat), and used it as shares in the development of friedcat mining machines, and anchored with Bitcoin. This process was Many people regard it as the first attempt of ICO in China.

The founder of Bitmain, Wu Jihan, also saw this opportunity and invested 60,000 yuan in Roasted Cats, earning thousands of times the profit, and completed the primitive accumulation of capital.

This year, the roasted cat mining machine was successfully developed, which can dig out nearly 40,000 bitcoins per month, and the computing power market has become the world of roasted cats. Due to the large and concentrated computing power, the community has twice panicked about 51% attacks within two months.

Return to the front of the assembly machine and regain a victory

Later, Pumpkin Zhang decided to return to the mining machine assembly front. On November 15, 2013, the second-generation Avalon mining machine was auctioned online, using 55 nm technology. The starting price on the official website was 8,000 RMB, and it was still a spot mining machine, which was delivered by SF Express the next day. At this time, the Roasted Cat was gradually losing ground.

While a group of mining machine manufacturers are fighting, the market is gradually turning cold.

At the end of 2013, the central bank and other five ministries and commissions issued the "Notice on Preventing Bitcoin Risks", stating that Bitcoin is not issued by monetary authorities, does not have monetary attributes such as legal compensation and mandatory, and is not a real currency.

After the price of Bitcoin reached $1,150 in November of that year, it began to fall in a waterfall, with a half-month decline of nearly 50%.

Under the dual effects, the market demand for mining machines has dropped sharply, and the industry is coming to a cold winter. Canaan Yunzhi's life is also difficult, and it has begun to prepare for the winter.

In December 2013, Liu Xiangfu joined Jianan Zhizhi as a co-founder, and Liu Xiangfu increased capital by 50,000 yuan.

Looking at the industrial and commercial records, in January 2015, Zhang Nangeng, Li Jiaxuan, and Liu Xiangfu held 33.4%, 33.4%, and 33.2% of the shares respectively.

The following stories have been repeatedly written by many media.

In May 2013, Wu Jihan and chip expert Zhan Ketuan established the mining machine company Bitmain.

This year, Wu Jihan was 27 years old.

History is always similar. Every cold winter is a trial and an opportunity. In 2015, Bitcoin plummeted again, and the mining industry was devastated. Roasted Cat, which was favored by many bigwigs and supported by a lot of money, disappeared this year. This is still an "unsolved mystery of the industry" today.

secondary title

Continuous financing, tortuous listing, impact on the first share of mining machines

After going through the cold winter, Canaan Zhizhi has also deeply understood the importance of capital. In order to prepare sufficient funds for chip development, Jianan Zhizhi began to receive external financing at high frequency.

image description

secondary title

Optimistic about Canaan Yunzhi, Kong Jianping increased his holdings many times

Kong Jianping, the co-chairman of Canaan Zhizhi today, entered the company during the financing process in 2015, and in February 2016, he acquired a total of 3.5% of the shares held by Yao Yongjie and Yinglan Investment. Kong Jianping explained that it was because he was "optimistic about the Pumpkin Zhang team", so he continued to invest in the acquisition of other shareholders' shares.

Yao Yongjie, who joined Jianan Zhizhi at the same time as Kong, has sold shares several times and has always been a financial investor.

We compared the shareholdings of five Canaan executives during the IPO period of the Hong Kong stock market and the IPO period of the US stock market, as shown in the figure below:

It can be seen from the above figure that Zhang Nangeng and Li Jiaxuan have the most shares, with 16% and 16.2% respectively, but the shareholding of another co-founder, Liu Xiangfu, has dropped sharply. At the same time, Kong Jianping's equity also rose sharply.

According to foreign media Coindesk, on February 12 this year, Liu Xiangfu had left his day-to-day management position and no longer served as a member of the executive board of Canaan Inc., the holding company of Jianan Yunzhi, and Sun Qifeng was replaced as the executive director. There are differences with the overall strategic development of the company.

According to Coindesk, Canaan's management hopes to continue to build the company into a manufacturer focused on cryptocurrency mining and artificial intelligence chips. Canaan itself does not mine or operate a mining pool. The leadership hopes to maintain this. This state, in order to better realize the IPO.

However, Liu Xiangfu, who has a background in computer technology, believes that in the blockchain industry, there is no way to completely separate hardware and software. As a company that produces mining machines, it cannot be completely cut off from the business of mining farms and mining pools.

According to the US stock IPO prospectus, in June 2019, Urknall Ltd., wholly owned by Liu Xiangfu, sold a total of 165,335,556 ordinary shares, including 54,446,667 ordinary shares to Wlyl Ltd. (Kong Jianping), and Root Grace Ltd. (owned by EnguangLi). ) sold 16,666,667 common shares.

The founder has a net worth of 4 billion and is on the Hurun Rich List

As of now, Canaan Zhizhi is still under the control of Zhang Nangeng, one of the founders.

Canaan Yunzhi implements the CEO responsibility system under the governance of the board of directors. The CEO has always been Zhang Nangeng. Previously, Canaan Yunzhi has revealed that this is also to ensure the stability of the company's strategy and tactics.

According to the prospectus, Canaan’s IPO in the U.S. will adopt a dual shareholding structure of Class A ordinary shares and Class B ordinary shares, that is, each Class A ordinary share has 1 voting right, and each Class B ordinary share has 1 voting right. Entitled to 15 votes; Class B common stock is convertible into Class A common stock at any time, but Class A common stock cannot be converted into Class B common stock. Holders of Class A common stock and Class B common stock have all the same rights, except for voting rights and conversion rights.

Chairman and CEO Zhang Nangeng owns all of the Class B ordinary shares in the absence of an overweight allocation. This also means that Zhang Nangeng will maintain control over the listed entity through the AB share model with different rights for the same share, provided that there are no major changes in the current senior management and corporate equity structure.

In fact, as early as 2016, Jianan Zhizhi planned to go online on the Shenzhen Stock Exchange through the wholly-owned acquisition of Lu Yitong (stock code: 300423), an A-share listed company, for its 100% equity.

However, due to the suspicion of “backdoor” and the fact that the policies at the time were not favorable to blockchain companies, Canaan Yunzhi was also asked by the Shenzhen Stock Exchange many times, and the final listing plan was still put on hold.

In August 2017, Jianan Zhizhi applied for listing on the New Third Board. After three rounds of inquiries, it still failed to go public as expected. In May 2018, Canaan Zhizhi formally submitted a prospectus application to the Hong Kong Stock Exchange, intending to list on the Hong Kong Main Board in the form of red chips. However, after 6 months, the official website of the Hong Kong Stock Exchange classified Canaan Zhizhi's listing application as "invalid", and the listing plan was stranded again.

In June and September of the same year, Ebang International and Bitmain successively submitted IPO prospectuses to the Hong Kong Stock Exchange, but both failed to achieve their wishes. This led to today's Canaan Yunzhi listing in the United States, hitting the first blockchain stock.

After several years of development, Bitcoin mining tends to be "industrialized", with a large amount of funds running into the market, and mining machine manufacturers continue to introduce new ones. Canaan Yunzhi currently ranks second in the market, and the net worth of Zhang Nangeng, Li Jiaxuan and Liu Xiangfu has doubled.

In October 2019, the Hurun Research Institute released the 2019 Hurun Report and the Hurun Global Unicorn List respectively. According to the Hundred Rich List, in the field of blockchain, Jianan Zhizhi has three people on the list. Among them, Liu Xiangfu and Zhang Nangeng are both worth 3.9 billion yuan, and Li Jiaxuan is worth 3.8 billion yuan. There are a total of 494 unicorn companies in the world on the list, and the number of unicorns in the blockchain industry is 11. Canaan ranked fourth with a valuation of 20 billion yuan.

In any case, after several ups and downs, Canaan and its founding team are indeed the ones who persevere and laugh till today in this ever-changing industry.

And whether it can be successfully listed, and if it is listed, how will the follow-up performance be? What actions will its competitors take? Odaily will continue to pay attention.

References:

References:

"Bitcoin mining machine Avalon, an ideal land covered in clouds and mist"

"Pumpkin Zhang and His Jianan Yunzhi: Three Choices to Miss an Era"

"Hong Kong Stock IPO Failed, Science and Technology Innovation Board and US Stocks Become Canaan's Next Direction"