Bitcoin Mining Hardware Manufacturer Terminates IPO Filing Process

Justine Pope

Reuters - Canaan Inc., the first company to manufacture Bitcoin-specific Application-Specific Integrated Chips (ASICs), has failed to complete their IPO application, and due to a six month time lapse since the opening of their filing, the IPO will not be completed at this time.

Canaan filed their IPO application six months ago. Initially, their IPO fundraising goals started at $2B, but after the cryptocurrency markets continued to slide, they revised their figures to $1B, then $400M. 

Canaan's History

Since 2013, Canaan has been one of the largest producers of large scale mining equipment. Unlike many other competitors, their equipment must be bought in bulk, targeting large-scale Bitcoin mining operations. They offer cutting-edge 7 nm chips, that promise hashing capabilities of up to 20 TH/s, all in an open-source package.

Although Canaan’s current IPO application won’t be finished, they can refile their application at any time. Canaan is one of three mining manufacturers filing IPO’s on the Hong Kong Stock Exchange. The others are Ebang and Bitmain, whose IPO has caused quite the stir in the cryptocurrency space. Bitmain is still in the filing process.

IPO Woes

It does not seem like the lapse in application was due to regulation issues. The changes in the IPO fundraising targets hints that they might be having trouble convincing investors to participate in the IPO.

In addition, regulators seem to be warming up to cryptocurrency. Two weeks ago, the Hong Kong Securities & Futures Commission (SFC) issued a statement that they would be looking to expand their work with “virtual assets” companies. Their aim would be to help clean up the grey area surrounding cryptocurrencies, that exists “in light of the significant risks virtual assets pose to investors.”

Some people close to the deal are casting doubts on the future of the IPO. A senior equity capital markets banker, who wished not to be named, explained:

with the bitcoin price dropping so much this year, there’s a lot of uncertainties over their business. If we cannot forecast their financials, how can we sell their IPOs?

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.