$40M Deficit in 2019, Hard for Bitcoin Miner Maker Ebang to File for U.S. IPO?

Ebang, a Chinese Bitcoin ASIC chip manufacturer, is looking to go public with new shares. The company has filed with the U.S. SEC for a $100 million IPO.

The Prospectus shows Ebang had revenue of $109 million and a $41.1 million deficit in 2019. In addition to the financial data, the prospectus reveals many secrets of Ebang. For example, the company plans to launch its exchange business overseas. And its main business, mining machinery, is facing the risk of falling behind. Before filing for IPO, Ebang even faces many lawsuits as well.

Another Chinese bitcoin miner maker Canaan’s revenue in 2018 and 2019 is $380 million and $204 million respectively. While the revenue of Ebang is about half of that of Canaan.

In terms of company scale, research investment, sales volume, Ebang is equivalent to a half Canaan. In 2019, Ebang sold mining machines equivalent to 5.97 million TH/s, while that of Canaan reaches 10.5 million TH/s.

In contrast, the number of employees and research expenditure of Ebang is far more than half of that of Canaan. The prospectus shows Ebang hires 240 employees by the end of 2019, while Cannan hires 286 employees.

“In the optimistic view, Ebang attaches more importance to research and invests more in development; If, in a pessimistic view, Ebang’s input-output ratio in research is worse. ”

Said a commentator. In fact, Ebang’s telecom business still generated 1% – 3% of its revenue in the past two years. Part of the research expenditure may come from the telecommunication business.

As a chip maker, Ebang’s latest generation of 8nm and 7nm chip miner completes the design in 2019, but it has not been released so far as well as the DASH and Monroe mining machines designed in 2018 and 2019 have not yet been sold.

Generally speaking, when seeking to file for IPO, bitcoin miner maker enterprises will tell a ‘good story’ to the capital market. Bitmain and Canaan are both talks about the stories of AI layout. But Ebang promises it would expand its mining machine custody and mining farm business.

At present, the mining machine custody is another major business of Ebang in addition to the sale of the mining machine. In 2019, Ebang’s revenue from mining machine custody reached $15.72 million, accounting for 14.4% of the total revenue.

The prospectus shows Ebang’s electricity charge for the custody of mining machines is $0.04 per kWh, which is a middle price in the industry. And the company also said frankly that the current custody clients are all from miner buyers. Ebang also reveals its plan to launch the crypto exchange business in the near future.

Of course, the prospectus points out the risks of the plan: the Chinese government forbids any entity to operate or engage in the crypto exchange business, so Ebang will focus overseas market.

The failure of two files for the Hong Kong IPO made Ebang have to find another way. And Nasdaq, which has accepted the bitcoin miner maker, has naturally become the next destination of Ebang.

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