Update: Canaan successfully listed at the lower end of their IPO trading range, raising a total of $90 million.
Canaan will ring the bell on November 21st to become the first mining machine hardware designer to list publicly. The Canaan IPO will issue 10 million shares to the public at a price between $9 and $11. If Canaan’s NASDAQ IPO gains sufficient interest from investors, the company will raise roughly $100 million.
Canaan IPO Intensifies Hardware Market Competition?
Hongzhou-based Canaan officially filed an IPO application with the SEC on the 28th of October. The Canaan IPO intends to raise $100 million and list under the ticker symbol CAN. Canaan is currently the second-largest designer of Bitcoin ASIC mining machines globally with their IPO application estimating they hold a market share of 23.3%. However, one source commented to MinerUpdate that $100 million is not sufficient capital to change the dynamics of the hardware market.
currently holds the dominant share of the market with research in the Canaan
IPO filing estimating their share to be 64.5%. In their IPO application to the
SEC, Canaan noted Bitmain’s access to funding as a key advantage that Bitmain has
held to date.
“Bitmain has raised multiple rounds of financing from investors and therefore has established certain funding advantages over us. Given that the leading IC foundry, namely TSMC, typically has limited production capacity and reserves such capacity for customers who are able to make prepayments first, Bitmain has been able to reserve more production capacity by relying on its funding advantages to offer larger amounts of prepayments” (p. 106)
Pavel Moravec, co-founder of Slush Pool, also noted the extraordinary demand for chips to produce Bitcoin ASIC hardware. Noting that “the whole world strives to increase hashing power”, financing certainly plays an important role for ASIC designers in securing sufficient chips from foundries to meet market demand.
It has been evident this year that market demand for Bitcoin ASICs has far outstripped the amount of chips Bitcoin ASIC designers such as Canaan can secure. This has resulted in latest-generation mining hardware trading at significant premiums on the secondary market which has been highlighted from data provided by mining hardware broker Blockware Solutions.
IPO to Follow?
Since the Canaan IPO application, it has been rumoured that Bitmain has privately applied to list. Bitmain may be concerned about their market share of the Bitcoin ASIC hardware market diminishing after the Canaan IPO.
Bitmain co-founder Jihan Wu recently acknowledged that their “mining equipment’s market share is declining”. Their share of the hardware market was estimated to be 77% in 2017.
Bitmain IPO rumours has only been one development placing the firm in the headlines. Jihan Wu returning and coordinating the dismissal of co-founder Micree Zhan highlighted turbulence unwrapping at the firm while the detainment of MicroBT founder Zuoxing Yang has also been linked to Bitmain.