Bitcoin mine risk spread mining company IPO

With the rapid growth of the company in the mining machine stir IPO, is now facing more uncertainty.

Since this year, including the mainland, Chia Nan Yun Chi bit, Tianhe International and a number of block chain tokens mining machine manufacturers are launched in the Hongkong market listing plan; however in bitcoin nearly a year of the bear market, the development of three typical mining company IPO are not smooth, as of November 27th, bit continent, Tianhe International companies apply for state display processing, and Jia Nan Yun Chi has disappeared from hearing information.

Institute of 21 century capital believes that although many mining company in recent years under the background of ecological active tokens and achieved good earnings growth, but in the face of bitcoin as a representative of the asset price volatility risk of encryption, such enterprises will lead to performance of machine stability makes it hard to keep for a long time, and this kind of enterprises after the listing price valuation it is highly dependent on the mining industry boom encryption assets, the level of acceptance, it will impact the IPO in between institutional investors.

But we also believe that some plans of IPO mill company still has a greater degree of transformation and development space in the vertical field of chip, block chain technology etc..

The whole company Mengsui mills

In recent years, bitcoin encryption assets has more and more attention at the same time, mining company acquired development than expected in recent years.

This year 5 month, Chia Nan Yun Chi submitted to the HKEx IPO application, the material shows that established in 2013 Jia Nan Yun Chi for many years engaged in integrated circuit design and chip independent research and development, and in the process of mining industry hot tokens, Chia Nan Yun Chi also achieved rapid growth.

According to the prospectus, Chia Nan Yun Chi 2015 years to 2017 years in recent years the revenue was 0.48 billion, 3.16 billion and 13.08 billion yuan; while net profit amounted to 0.02 billion, 0.53 billion and 3.61 billion yuan, the annual compound growth rate of nearly 15 times.

Coincidentally, the world’s largest ASIC company, based on its bit encryption assets also created a staggering growth. Data show that in 2015 years to 2017 years, the revenue from the 1.37 bit, the rapid growth of billions of dollars to 25.17 billion dollars, and a 328.20% compound annual growth rate of 2018 in the first half of this year, operating income growth, a bit further to 28.45 billion dollars.

Proposed by the new board of the international Ebang fought in H shares also hit a huge income, during the period from 2015 to 2017, its operating income increased from 92 million yuan to 979 million yuan.

We believe that the huge mining demand rapid expansion as the representative of bitcoin encryption assets bring ecological, is the main reason for taking its income boost, increase further pushing up their performance potential and since last year, the currency innovation bifurcation event.

However, the mining machinery manufacturers IPO seems to have also been airness. In November 15th, November 15th, valid for 6 months Scarlett Nan Yun Chi submitted in May this year, the IPO application has passed; in the three quarter of this year, originally planned listing, bit also chose to terminate the IPO plan; and in June IPO application submitted Ebang international IPO has yet to progress, and the validity of the deadline is near.

IPO resistance and bitcoin encryption of asset price substantial retracement are not unrelated.

According to statistics, bitcoin dollar price from 2017 years 12 months 17 days 19650.02 dollars / month fell to 11 2018 as 27 3672.32 dollars / month, the cumulative retracement has reached 81.01%. Bitcoin and other asset prices to influence obviously the encryption machine upstream manufacturers to bring the multiple.

On the one hand, its pricing and encryption of asset prices are highly relevant, and with the encryption of asset price avalanche, estimates the miners to buy mining machine when a return cycle will be stretched, even its cost price is higher than the cost of the asset price + encryption, its demand not only dropped to the freezing point, and its stock was “by catty sale” message are also frequent appear, which will impact directly on the machine manufacturers sales.

On the other hand, many vehicle manufacturers accept encryption and its assets to pay, also holds the encryption and encryption of assets, assets fell to suffer a greater loss of assets. For example, the bit of the prospectus shows that the first half of 2018 the company collective inventory impairment of $253 million at the same time, also provided encryption assets impairment of $103 million; and by the end of June, the mainland stock bit $887 million worth of encrypted assets, compared with its net assets is more than 9.71%.

“The risk behind the IPO mine

The mining cost benefit of large area caused by upside down assets plummeted in the case of encryption, the industry usually referred to as mine.

In fact, similar to bitcoin mine had occurred. By the end of 2013, bitcoin from 1200 yuan / month skyrocketing reached 8000 yuan / month, only a single month in November rose as high as 473.63%, and jointly issued the “notice” on guard against the risk of bitcoin in the people’s Bank and other five ministries, bitcoin prices fell rapidly, causing many miners lose everything.

Institute of twenty-first Century capital believes that a large area of volatile encryption assets and the occurrence of mine, the difficulty of IPO mill enterprises will further increase.

On the one hand, bitcoin round high retracement level and selling pressure plate pressure digestion is more serious than in 2013, which may also lead to bitcoin and other blocks in a more long chain token price downward channel, and reduce long-term mining marginal revenue will lead to mining demand continued to decline, it will be on the machine the performance of the company to bring down.

On the other hand, investors need to IPO enterprises to achieve stable performance and future income can be expected, but sustainable, sharp fluctuations in encryption assets, this is expected to reach stability obviously.

But we also think, because of the block chain machine usually has a strong ability of processing, has some technical advantages of mine enterprises usually in chip manufacturing, block chain and other fields, for example, in March 23rd this year, the Great Wall released strategic consulting with the Ministry of science and technology of the “2017 China Unicorn enterprise development report” and even will be $1 billion valuation bit, included and ranking 107.

We believe that in the bitcoin mine risk is further market awareness under the background of mining companies now rely on its sales revenue accounted for relatively large to attract investors to achieve IPO success probability, contrary to its more vertical field through the development of business transformation, in order to reduce the dependence of the encryption assets boom, the future is still possible to re go on the road IPO.

(source: twenty-first Century economic report)

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