Reignited Talks of Canaan IPO Pose Significant Threat to Bitmain

After applications to list on the Hong Kong Stock Exchange expired for both Bitmain and Canaan, rumours emerge that Canaan are considering the United States or Shanghai for a listing. A successful public share issuance will likely intensify the competition between the two leading bitcoin mining hardware suppliers.

After applications for an IPO on the Hong Kong Stock Exchange (HKEX) fell through for the two leading bitcoin ASIC hardware suppliers, rumours are emerging that Canaan Creative is considering the United States for a listing. Both Bitmain and Canaan had filed to be listed on the HKEX but both failed to follow through as their six-month application lifespans lapsed.

The Hangzhou-based company is the second largest supplier of bitcoin mining hardware which retails under the brand name “Avalon”. The company is second only to Bitmain.

There have been reports that Canaan has been in touch with both the New York Stock Exchange and Nasdaq for potential listings.

A Canaan IPO in China?

However, there have also been recent rumours that Canaan was considering a listing on a recently added trading board on the Shanghai Stock Exchange. The board, named the Science and Technology Innovation Board, has been noted to be similar to listings on the Nasdaq and the board serves the purpose of facilitating funding for local technology startups.

Crunching Canaan’s Numbers

Documents filed for the HKEX IPO application reported Canaan earned revenue of over 1 billion yuan in 2017. Revenue figures for 2018 are unknown but the company is rumoured to have generated 3 billion yuan.

Canaan recently raised a Series B funding round. The amount raised by Canaan was undisclosed but it is believed to be in the range of hundreds of millions of USD resulting in a valuation of several billion USD. It is also believed that the funding round was comprised of investors in previous rounds.

Bitmain versus Canaan

With Bitmain failing to follow through on their IPO application, Canaan successfully completing an IPO in either the United States of Shanghai would likely pose a significant competitive threat.

Unlike Bitmain, Canaan does not have a division dedicated to its own proprietary mining operations. But with the vast majority of Bitmain’s revenue coming from hardware sales, Canaan competes with the segment of Bitmain’s business that provides the lion’s share of revenues.

With access to the funding that comes with a public share issuance, Canaan may have the resources to overthrow Bitmain as the leading bitcoin mining supplier.