‘Reluctant’ Hong Kong Stock Exchange puts Bitmain IPO in limbo

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It seems each week brings more bad news for Chinese crypto miner Bitmain. Coindesk reports an anonymous participant to Bitmain’s initial public offering (IPO) talks claiming that the Hong Kong Stock Exchange (HKEX) is “reluctant” to give their approval, citing market volatility.

Despite being celebrated as the first crypto company to attempt to go public, the source was quoted as saying, “The exchange is very hesitant to actually approve these bitcoin mining companies because the industry is so volatile. There’s a real risk that they could just not exist anymore in a year or two.”

In addition to Bitmain, Canaan Creative and Ebang also submitted IPO bids. Canaan Creative’s application has now lapsed, so that leaves Ebang and Bitmain to convince HKEX that they will be viable companies for the long term. Bitmain has a lot of explaining to do if it hopes to convince the exchange.

The first step to convincing HKEX is to show the market will persist beyond its current downturn. In its IPO application, Bitmain noted it holds Bitcoin Core (BTC), Bitcoin Cash (BCH), Ether (ETH), Litecoin (LTC) and Dash. All of these cryptocurrencies have been decimated in the time since, highlighted by Bitmain’s support of BCH after the contentious November 15 fork and the hash war that followed. None of this is solid evidence that Bitmain is supporting strong, stable digital currencies for HKEX to have faith in.

The second step would be to simply convince the stock exchange that Bitmain is a strong company despite the current market. That’s a task they also do not seem to be failing at. Last month they removed their co-founder from their board of directors, stopped receiving new ASIC chips because of mounting debt, got named in a lawsuit for their actions during the hard fork, and had to shutter their Israeli office. This does not sound like a company investors would want to buy into, and HKEX is mindful of that.

Bitmain needs IPO money now than ever, because without it, their death spiral is a foregone conclusion. With this hesitancy from HKEX, it looks like Bitmain might have made more bad decisions than they’ll be able to survive.