On June 26, US Eastern Time, Ebang International was officially listed on the NASDAQ exchange in the United States, becoming the second listed mining machine manufacturer in the world. In November last year, Canaan Technology became the first mining machine manufacturer in the world to be listed on NASDAQ in the United States. Looking back at the performance of Canaan Technology, the first share of mining machines:
(Data source: Oriental Fortune Network)
(Data source: Oriental Fortune Network)
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(Data source: Oriental Fortune Network)
U.S. stocks are not the way for mining machines to save the market
"It is easy to go public in the U.S. stock market, but it is difficult for mining machines to save the market." This may be the most straightforward portrayal of the two major mining machine manufacturers after they were listed on the U.S. stock market. Compared with Ebang International, Canaan Technology, which has a larger business volume, has shrunk by 80% within half a year after listing, and the follow-up trend of Ebang International seems to be a foregone conclusion.
Judging from the development of mining machine manufacturers in the past two years, due to the high dependence of their main business sectors on mainstream digital currencies, corporate income fluctuates greatly due to its influence, and mining machine companies cannot win the favor of the US stock capital market, resulting in breakouts . The transformation of enterprise structure has become the most important factor for the sustainable development of mining machine manufacturers.
The road to listing and financing, in essence, is more of a helpless move by mining machine manufacturers. The road to listing and financing can not only realize the realization of the fixed assets of the enterprise, exchange equity for funds without interest, but also bring more attention to the enterprise itself. According to the prospectus submitted by Yibang International to the Hong Kong Stock Exchange, Yibang International's annual revenue in 2017 was 977 million, and it began to decline at a rate of 2018. The revenue of that year was only 319 million. In 2019, it fell short of the previous one again. Half of the year, only 109 million. The state of loss-making revenue urgently needs the inflow of funds to promote the transformation of enterprises.
After the road to listing and financing suffered two setbacks in the Hong Kong stock market, Ebang International chose the easier US stock market for listing.
Compared with A-shares and Hong Kong stocks, the entry threshold for U.S. stocks will focus on the company's development prospects, and even if it has suffered losses before, it will not hinder its listing on U.S. stocks.
According to the prospectus of Yibang International, Yibang International applies the definition of "emerging growth companies" defined by the U.S. Securities Law and is eligible to reduce the reporting requirements of U.S. stocks for listed companies.
*What is an "Emerging Growth Company"?
Emerging growth companies, namely emerging growth companies. In 2012, the then U.S. President Barack Obama signed a bill called the "2012 Entrepreneurship Promotion Act", referred to as the JOBS Act. In this bill, the definition of "emerging growth companies" is: the operating income of the most recent fiscal year Companies under $1 billion, and not limited to U.S.-based companies.
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(Photo source: Xinhuanet)
For Ebang under the current background, lowering the listing standards and successfully listing only represents the beginning. Key issues such as how to develop and how to transform the company urgently need to be resolved. To meet the expectations of market capital, there is still a long way to go.
According to Ebang International's NASDAQ listing prospectus, the company's business in the mining machine hosting sector is expanding rapidly. In 2018 and 2019, the operating income of this sector was US$7.692 million and US$15.728 million, a year-on-year increase of 104.47%. As a percentage of total revenue, it rose from 2.4% to 14.4%. In addition, Ebang International said that it will develop other digital currency mining machines one after another to reduce its dependence on Bitcoin.
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(Miner Power Consumption Ranking, Source: QKL123)
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Mining machine business is not sustainable
Affected by the halving of Bitcoin, the mining cost of mining machines has increased, and the impact of the special background of the epidemic, the disadvantages of the single main mining machine business framework of mining machine manufacturers have become more and more obvious. 80% or even 90% of the main income sources of mining machines account for Compared with the erratic digital currency market, the prospect is worrying, and mining machine manufacturers need to fundamentally solve the problem of weak mining machine business continuity.
Taking Yibang International as an example, the business framework of Yibang International mainly involves three major sectors: sales of Bitcoin mining machines and accessories, mining machine hosting and maintenance services, and telecommunications network fees. In 2019, the sales revenue of Yibang International mining machines and accessories accounted for 82.4% of the total revenue. Mining machine hosting and maintenance service revenue accounted for 14.4%.
According to the prospectus, Yibang International has suffered losses for two consecutive years. In 2018 and 2019, its operating income was US$319.0 million and US$109.1 million, with net losses of US$11.8 million and US$41.1 million; From profit to loss in 2019. According to data from the annual report of Canaan Technology Company, Canaan Technology’s net profit in 2018 was RMB 122 million, and its net loss in 2019 reached RMB 1.035 billion.
The reason for this situation is related to the trend of Bitcoin market. At this time, after the halving of the market, the flood season has not yet arrived, the cost of miners has skyrocketed, and the successive implementation of national regulatory policies has also affected the business of mining machine manufacturers.
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Review of listing of mining machine manufacturers in recent years
Bitmain: The industry leader failed to go public
On September 26, 2018, Bitmain officially submitted the prospectus to the Hong Kong Stock Exchange. Due to the special nature of mining machine manufacturers, the listing was ultimately unsuccessful.
It is reported that Bitmain has submitted an application to the US Securities and Exchange Commission (SEC) and will continue its listing, but Bitmain, which is caught in internal turmoil, must have no resources in the short term.
Canaan Technology: After three failures, it finally became the first blockchain stock
In 2016, Canaan planned to list on the Shenzhen Stock Exchange through the wholly-owned acquisition of A-share listed company Luyitong, but it was shelved due to suspicion of "backdoor" and regulatory issues; in August 2017, Canaan applied for listing on the New Third Board. On September 4, seven ministries and commissions including the central bank jointly issued the "Announcement on Preventing the Risks of Token Issuance and Financing", clarifying that ICO is essentially an illegal public financing without approval. In May 2018, Canaan Zhizhi formally submitted an application to the Hong Kong Stock Exchange, and the business did not meet the listing suitability and became invalid.
On November 21, 2019, Canaan Zhizhi was officially listed on the Nasdaq Exchange in the United States under the name of Canaan Technology (CAN).
Yibang International: Delisted from the New Third Board for debt management and listing
On August 19, 2015, Ebang International was listed on the New Third Board, and its net profit increased by 15.5 times from 2015 to 2017; On December 20, 2018, Ebang International submitted a listing application to the Hong Kong Stock Exchange again, but according to the information disclosed by the Hong Kong Stock Exchange on June 21, 2019, the listing application became invalid again.
Both application failures were due to the failure to meet the listing suitability.
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The status quo of the transformation of mining machine manufacturers is difficult
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(Jianan Yunzhi patent information statistics, image source: Qichacha)
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(Bitmain patent information statistics, image source: Qichacha)
Choosing AI chips or continuing to develop mining machines is also the main point of conflict within Bitmain.
In addition, it is undeniable that no matter how the main development line is chosen, the profit model based on mining machines still cannot be changed in a short period of time.
Different from Bitmain and Canaan, Ebang International has chosen to expand its product range from the blockchain industry. According to the prospectus information, Ebang International plans to expand its business to the blockchain technology and virtual currency industry. The upstream and downstream markets of the chain are expanded, and the use of blockchain technology in non-virtual currency industries is promoted.
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In the high-bubble digital currency market, the development of mining machine manufacturers has already fallen into a quagmire. Judging from the feedback from the US stock listing of Ebang International and Canaan Technology, the US stock market does not pay the bill, and the poor performance of the digital currency market cannot make the US stock market The stockholders go to buy the bill. Moreover, using capital accumulation to awaken market confidence cannot fundamentally solve the problem. Compared with the digital currency bubble market, the relatively standardized system and mature and stable system of the stock market will bring some beliefs. Black cats and white cats can meow, and both A-shares and US stocks have money. After all, who is not a listed company?
