Bitcoin miner manufacturer Ebang has filed for a $ 100 million Initial Public Offering (IPO) with the US Securities and Exchange Commission (SEC).
Ebang IPO reported a 66% drop in revenues in 2019
Bitcoin mining chip producer Ebang has filed for a $ 100 million IPO in the United States. The firm is seeking to distribute Class A ordinary shares at face value of $ 0.00013 per share. Ebang plans to list on either Nasdaq Global Market or the New York Stock Exchange under the ticker EBON. Earlier, the company sought to conduct a $ 1 billion IPO in Hong Kong. It submitted the filing in June 2018, and the offering had been halted by the end of the year.
In 2019, 82% of Ebang’s revenues came from its application-specific integrated circuit chips and fabless integrated circuits for miners. The annual revenue for the mining firm was $109 million as compared to $ 319 million in 2018. Declining demand for mining hardware amid falling crypto prices resulted in a 66% drop in growth for Ebang. The mining manufacturer saw gross profits of $ 24.4 million in 2018 and $ 30.6 million in gross losses the next year. Ebang’s chip sales fell from 415,930 at an average price of $ 737 to 289,953 chips for $ 304 on average.
Ebang’s filing asserts that demand for its products is directly tied to fluctuations in the price of Bitcoin:
“Market demands and unit price of Bitcoin mining machines correlate with the economic returns of Bitcoin mining machines and are primarily affected by the Bitcoin price. A rise in the Bitcoin price will generally increase the market demand for Bitcoin mining machines, which in turn will allow us to price our products higher, and vice versa.”
Ebang added:
“The decrease in the Bitcoin price in 2018 and the first quarter of 2019 resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines. Although the Bitcoin price started to recover in the second quarter of 2019, our operations generally lag behind the increase of Bitcoin price.”
Demand for Ebang products depends on the fluctuations in the price of Bitcoin
According to the IPO filing by Ebang, market demands and unit price of Bitcoin mining machines equate with the economic returns of Bitcoin mining machines and are primarily affected by the BTC price. A rise in the Bitcoin price will generally increase the market demand for Bitcoin mining machines, which in turn will allow the company to price the products higher, and vice versa. The filing further states that the decrease in the price of bitcoin in 2018 and the first quarter of 2019 resulted in a material decrease in the sales volume and the average selling price of the Bitcoin mining machines.
The Bitcoin mining manufacturer also mentioned in its filing that the firm has completed the design for its proprietary 8 nanometers (nm) and 7 nm ASC chips. The filing noted that it is ready to mass-produce the 8 nm units as soon as the market conditions become suitable.
In November 2019, mining manufacturer Canaan Creative raised $90 million in an IPO — less than one-quarter of its $400 million targets. Since launching on Nasdaq for $9 per share, Canaan’s stock price has fallen over 50% to trade for $4.23.
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