Ebang files an IPO application with the SEC to list on the Nasdaq or NYSE under the ticker symbol “EBON”. If the application is successful, Ebang will be the second Bitcoin ASIC mining machine manufacturer to go public.
Competition among mining rig manufacturers has been intensifying. The leading designers of Bitcoin ASIC rigs have been rolling out more powerful and efficient models while also being forced to cut costs in response to potential waning demand.
Ebang has further heated up the competition among manufacturers after filing an application with the SEC to go public with an intended raise of $100 million. Canaan was the first and only ASIC designer to go public after raising $90 million in a NASDAQ IPO last November.
Ebang intends to list on the New York Stock Exchange or NASDAQ and trade under the ticker symbol ‘EBON’. Chicago-based Loop Capital Markets and Hong Kong based AMTD Global Markets are the underwriters listed for the deal.
Second IPO Attempt for Ebang
Originally founded in 2010, Ebang started by providing access devices in the telecommunications industry. The company began investigating the blockchain industry in 2014 and released their first Bitcoin ASIC mining rig in December 2016. Ebang was restructured in 2018 before it filed for what turned out to be a failed attempt to IPO on the Hong Kong Stock Exchange.
Ebang’s most powerful mining rig currently available is the Ebit E12+ which has an advertised hash rate of 50 TH/s with an energy efficiency of 50 J/TH. By comparison, the most powerful model currently available on the market is the Antminer S19 Pro with over double the hash rate power at 110 TH/s and an energy efficiency of 29.5 J/TH.
Ebang has struggled to stay at the forefront of the industry when it comes to delivering the most powerful and efficient mining rigs. The Ebit E12+ ASIC mining rig utilizes 10 nm Samsung chips. Both MicroBT and Bitmain have advanced to developing mining rigs using 7 nm Samsung chips and 7 nm TSMC chips respectively. The IPO prospectus notes that Ebang have completed designs for their 8nm and 7 nm chips with the 8 nm chips ready to be mass-produced when “market conditions become suitable”.
Ebang reported revenue of $109 million in 2019. For comparison, market leader Bitmain has reportedly generated $300 million revenue in the first four months of 2020. However, a larger portion of Bitmain’s business is transitioning to the development of AI chips whereas Bitcoin mining machine manufacturing and services accounted for over 96% of Ebangs 2019 revenue.
Bitcoin Price Performance Tied to ASIC Designer Performance
The IPO prospectus emphasizes the importance of the price of Bitcoin on the financial performance of mining machines manufacturers. Fluctuations in the price of BTC are identified as a key risk which could hurt ASIC rig sales.
“The demand for, and pricing of, our mining machines are therefore affected by the expected economic returns of Bitcoin mining activities, which in turn are primarily driven by, among other factors, the Bitcoin price. The price of Bitcoin has experienced significant fluctuations over its short existence and may continue to fluctuate significantly in the future.”
Bitcoin price is the most important variable impacting the performance of miners. Price increases serve to widen margins for miners while price declines push their returns towards or below breakeven levels.
With the block subsidy halving twelve days away at the time of writing, the Bitcoin price has been recording significant upward movements in the run-up. Bitcoin price has appreciated over 20% from yesterday’s open on April 29th.
If these bullish conditions can continue, it will alleviate the pressure both miner and mining manufacturers have been experiencing in recent months. The mid-March BTC price drop which resulted in the Bitcoin price dropping over 50% within two days removed roughly 16% of computing power from the network.
With the cost of production per Bitcoin mined set to effectively double when the block subsidy halves, many miners have been scrambling to upgrade to the most efficient latest-generation hardware. However, if the rate of recent price increases continues, we may even observe many miners remaining profitable with S9s post-halving.