Altcoin News: Bitmain IPO at Risk? Chief of the Hong Kong Stock Exchange Sows Doubt
January 24th, 2019 by Marko Vidrih on ALTCOIN MAGAZINE
Charles Li Xiaojia, CEO of Hong Kong Stock Exchange HKEX, has made indirect criticisms of the Chinese mining companies Bitmain, Canaan, and Ebang, which have submitted an IPO application to its trading venue. He called for a sustainable business model.
At the World Economic Forum in Davos, Charles Li Xiaojia, CEO of the Hong Kong Stock Exchange (HKEX), was interviewed by journalists on the possible IPOs of crypto-mining companies Bitmain, Canaan, and Ebang, as the South China Morning Post reported today. All three Chinese companies applied for an IPO at HKEX last year.
It depends on the business model
Li indirectly responded that listing a company on the HKEX depended on whether the business model was appropriate.
“If a company has made billions of dollars through business A but suddenly wants to run business B without showing any performance, or says business B is better, then I do not think business A will be sustainable.”
With this, Li seems to allude to the fact that the three Chinese companies earned a golden nose as part of the recent crypto-bubble through mining businesses, but in the face of dwindling profits in the bear market, but now rather their artificial intelligence (AI) division in the foreground.
For example, Bitmain claimed in its IPO application to be a “strong challenger in the AI chip industry”. In 2017, the company introduced its KI chip series called Sophon. However, this does not seem to bring in any money yet. According to Bitmain’s IPO application, 99.9 percent of all profits in the first half of 2018 came from mining products and services.
Further, Li pointed out that a business model that was barely regulated in the past and was lucrative could be less successful in the future as regulation increases. China, the country where all three major mining companies are headquartered, is known for its extreme anti-crypto measures. For example, in September 2017, all of the country’s exchanges had to cease operations.
IPO approval doubtful
Even before Li’s statements in Davos, the IPOs of the mining companies stood on shaky legs. An insider told Coindesk, the HKEX, in December slow down with a license, because the industry is so volatile and one can not rule out that the companies went bankrupt after one or two years.
In addition, Bloomberg recently reported, citing anonymous sources, that Canaan had abandoned his plans in Hong Kong and is now seeking an IPO in New York instead.ž
Author: Marko Vidrih
Image via Shutterstock
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