Bitmain’s crypto mining rival plans $1-billion IPO

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Cryptocurrency mining hardware is a hot market, with many manufacturers reporting shortages of supply to fulfill orders. Now, Canaan Creative, China’s second-largest mining hardware manufacturer, hopes to capture a large chunk of the market and is preparing to launch an initial public offering (IPO) on the Hong Kong Stock Exchange (SEHK). The target for the IPO is a cool $1 billion.

As reported by the South China Morning Post, Canaan Creative could become the first blockchain startup to be listed on the SEHK. However, some sources have indicated that the decision has yet to be finalized. Canaan had previously considered an IPO in the U.S., and is now considering taking its IPO to the Chinese mainland where it might be listed on the Shanghai Stock Exchange.

In 2016, Canaan received a valuation of $523 million after it raised $43 million in a Series A funding round. If it is able to raise the $1 billion it could be looking for, it would be an increase of over 100% from that valuation.

Canaan reports that it currently manufactures around 20% of all of the Bitcoin mining hardware sold around the globe. In 2017, according to unaudited reports, it produced $64 million in net profit. Company officials anticipate a year-over-year gross revenue increase of over 700% this year, which would give it gross revenue of around $1.57 billion.

Canaan is competing with Bitmain, which produces a variety of mining equipment for different cryptocurrency algorithms. It manufacturers hardware used in mining of Ethereum, Litecoin and other Proof-of-Work altcoins. Last year, the company reported operating profit of $4 billion, strictly from the manufacture of mining rigs.

Bitmain has a wide reach, and is currently working on plans to start mining operations in several countries. It plans on launching operations in the U.S. through its Ant Creek subsidiary, and also has announced that it will expand into Canada and Switzerland.

If Canaan’s IPO is successful, it would tie for eighth place for the highest IPO among tech companies. Zynga held its IPO in 2011, raising $1 billion. In 2004, Google held an IPO that attracted $1.6 billion. The largest IPO to date for tech companies was conducted by Facebook in 2012 when it raised $16 billion.