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How Is Bitmain's Potential IPO Going?

Bitmain is facing reluctance on the part of stock exchange operators as it seeks to launch its IPO, per CoinDesk.

In September 2018, Bitmain applied to sell shares in its company on the Hong Kong Stock Exchange (HKEX), making it one of the first crypto companies to approach an IPO. Though there has been no official news about Bitmain’s application since then, CoinDesk has recently reported that an anonymous source “involved in the talks” between HKEX operators and Bitmain noted that the exchange is “very hesitant” to approve the application.

The reason is that HKEX doesn’t want to approve an IPO for a crypto startup only to see that startup fail. The plummeting price of bitcoin is probably not helping to reassure HKEX officials of Bitmain’s long-term prospects.

In that sense, Bitmain’s uncertain IPO may be another example of the conventional finance industry shunning crypto, or at least of a mainstream financial institution proving unwilling to stake its reputation on a crypto startup.

The conventional stock market has been volatile in recent months, creating enough challenges for stock exchange operators. There is little for a stock exchange like HKEX to gain from approving a crypto company’s IPO, but there is something to lose if that IPO was to go south and make the exchange look reckless for having allowed it to happen.

On the other hand, plenty of companies from outside of the crypto industry also go belly up following IPOs. In that sense, it’s not as if approving the IPO of a company like Bitmain presents a unique risk.

And if crypto companies can’t execute successful IPOs because stock exchanges won’t approve them, we’ll be stuck in a world where crypto startups continue to rely on ICOs for funding.

Why Does Bitmain Matter?

Bitmain was founded in 2013 and is headquartered in Beijing. It is one of the single biggest crypto enterprises in the world and designs and manufactures computer chips that are optimized for cryptocurrency mining. If you want to mine bitcoin today, you need a specialized mining computer of the type that Bitmain sells.

Bitmain also runs two bitcoin mining pools, BTC.com and Antpool, which combine to contribute nearly 30 percent of the total mining pool hashrate for all of Bitcoin, according to recent data from Blockchain.com. Mining pools allow cryptocurrency miners to share mining resources and rewards. Given that the chance of successfully mining a new bitcoin on your own is relatively small unless you own massive numbers of bitcoin miners, mining pools are another important tool for most people who mine bitcoin.

Bitmain’s fortunes were flying high a year ago when the value of bitcoin peaked and demand was surging for bitcoin mining hardware. The company reported revenue of $2.5 billion and profits of about $1.2 billion in 2017 before adjusting for expenses. With the downturn in the crypto market that started in the first months of 2018, however, Bitmain’s profits have waned.

2019 Investments in Crypto and Blockchain Startups at $850 Million

Source: Reuters

According to data compiled by Pitchbook for Reuters, venture capital investment in crypto and blockchain startups has reached $850 million so far this year.

EEA Launches 'Token Taxonomy Initiative'

The Enterprise Ethereum Alliance has announced a "Token Taxonomy Initiative" to develop universal definitions for tokens to encourage their interchangeability across blockchain platforms. Members of the initiative include Microsoft, R3, ConsenSys, IBM, EY, Accenture and Intel.

Gemini Adds Support for SegWit

Source: Gemini

Gemini Trust, a New York-based cryptocurrency exchange, has announced support for Segregated Witness (SegWit) addresses and transaction batching. As a result, customers can now use SegWit addresses for bitcoin deposits and withdrawals, ideally improving processing times and lowering bitcoin withdrawal fees.

Nestlé and Carrefour to Share Product Data With Consumers Via Blockchain

Source: Nestlé

Food producer Nestlé and retailer Carrefour will equip the packaging of a French instant mashed potato product with a QR code that provides blockchain-based data about its origins to consumers. The pilot was developed in conjunction with IBM Food Trust.