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Bitcoin and other cryptocurrencies are often the topics of headline news stories on almost a daily basis. This industry continues to capture the attention of insider investors as well as the general public given its growth and high level of exposure over the past few years.
According to a recent report on Bloomberg.com by Crystal Tse and Blake Schmidt, Canaan Creative is in the news for its plan to offer a $1 billion-dollar IPO. This company is the second-biggest maker of Bitcoin mining hardware. Its immediate goal is to raise the $1 billion in funds to expand its growing business interests in the crypto industry.
The company is based out of China and the report adds that the short-team goal is to begin trading in Hong Kong as early as this July. There is no official word from Canaan as to the size and the timing of the actual IPO. However, in its filing on Tuesday is was reported that the company generated 1.3 billion yuan (the equivalent of $203.8 million) in revenue in 2017 with profits growing to 361 million yuan. This numbers were released by the Cayman-based parent company, Canaan Inc.
If everything goes according to plan, this would be the first Hong Kong IPO in the cryptocurrency industry according to the Bloomberg report. It is estimated that Canaan Creative controls about 15 percent of the global market for Bitcoin mining chips and computer equipment. Its Chinese competition, Bitmain has a higher market share according to a report from Sanford C. Bernstein & Co. released this past February.
Canaan began operations in 2013 selling equipment under the brand name “Avalon”. Its specialty was producing fast and customized chips that win digital coins through the ability to solve complex math problems. Its target market is often times remote locations that can house large mining facilities that run on low electrical costs as relayed from the company’s co-Chairman Jianping Kong in an interview with Bloomberg last month. The founder and CEO of Canaan are NG Zhang. Last year, Canaan announced that it was turning its attention to the production of ‘dedicated chips for use in artificial intelligence applications’ according to this report.
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The current word out of Canaan is that no final decisions on the planned IPO have been made and the offering could still change. Kong has not commented on any details in the company’s preparations for this offering. Last year, it had started plans to list the company on China’s National Equities Exchange and Quotations. This is an over-the-counter market referred to as the New Third Board. The Hong Kong IPO plans appear to be taking things in a new direction.
Details also released in this week’s filing included in the Bloomberg report state that Canaan’s software enterprise unit, Hangzhou Canaan currently enjoys preferential tax treatment after paying no income tax in 2016 or 2017. It will receive a rate of 12.5 percent from 2018 through 2020. The overall blockchain hardware market in China is estimated to be 7.3 billion yuan according to 2017 figures.
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