Plans for world’s largest cryptocurrency IPO shelved

[alyssa85]

https://www.ft.com/content/fb814562-4c8f-11e9-8b7f-d49067e0f50d

Bitmain Technologies’ application for a blockbuster initial public offering has lapsed, after the fall in the price of bitcoin spoiled the fortunes of the provider of equipment for cryptocurrency mining.

Bitmain filed to list its shares in Hong Kong in September, setting the stage for what was expected to be world’s largest cryptocurrency IPO. The Beijing-based company, which makes and sells kit for cryptocurrency mining, had been planning to raise up to $3bn in the listing, according to bankers.

Bitmain’s prospectus detailed three years of phenomenal growth, with revenues surging ninefold, to $2.84bn, in the six months to the end of June 2018. But the plunge in the price of bitcoin — which is currently trading at less than one-quarter of the value of its December 2017 peak — has spooked investors. Bitcoin’s current price makes mining it virtually unprofitable.

A discrepancy between the numbers Bitmain showed private investors and those in the prospectus sparked further concerns.

Bitmain’s woes have been compounded by its own cryptocurrency holdings: in addition to selling mining kit, the company has significant cryptocurrency holdings, including bitcoin and ethereum, which is currently trading at about one-sixth of the levels seen in May 2018.

I did some digging about this discrepancy and found the following:

https://www.ft.com/content/e82fb9e0-d3a8-11e8-a9f2-7574db66bcd5

In its IPO prospectus, Bitmain stated 2017 net profits as $701.4m. In documents published ahead of a $422m pre-IPO funding round, just one month earlier, Bitmain said that year’s net profits were $1.1bn.

It looks like they were overstating profits to their venture capitalists, but dared not do the same to the Hong Kong Stock exchange. Which made people wonder about the whole operation.

[Mr.Ease]

It looks like they were overstating profits to their venture capitalists, but dared not do the same to the Hong Kong Stock exchange. Which made people wonder about the whole operation.

To me it looks like an updated prospectus, and the timing of 1month could very well be the culprit. Crypto is quite volatile, and it could be true that in 2017 Bitmain pulled in 1.1Billion in Technical profits being held in cryptocurrencies.
The end of 2017 had moon-landing Bitcoin prices.

A few months later and there was a 50% decline. So, it just could be that they were updating the prospectus to reflect the current situation.

I would suppose they pulled the IPO because there just wasn't enough interest from the Chinese. Who could blame them tho - Bitcoin’s current price makes mining it virtually unprofitable.

Then again - They could have been fudging numbers...
- Lie to a U.S. investor and they stick you with lawsuits.
- Lie to a Chinese Investor and they stick your head on a stake.

[HumanRemainsTransfer]

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[Kakmakr]

The almost 80%+ drop in the price since 2017, sunk a lot of promising ICOs and IPOs, because most of them calculated the future profit on a Bitcoin price that would grow and grow every year. I invested in some good ICOs that failed because of that, but that is the risk you take with high risk investment in Crypto currency projects. 

Nobody could ever anticipate what would happen with the price in the future and you prepare for some drop in the price with your projections, but never for a 80%+ drop in the price. Timing is everything, just imagine if it was launched prior to 2017 when we had the massive increase in the price.