TL;DR: On the near eve of a groundbreaking US initial public offering (IPO), the world’s second-largest cryptocurrency mining rig manufacturer Canaan adjusted placeholder expectations by $300 million, down 75%, from projections published just last month.
Canaan Adjusted IPO Placeholder Expectation by 75%
Amendment No. 2 to Form F-1 in its Securities and Exchange Commission (SEC) Registration Statement, China-based Avalon mining rig manufacturing company Canaan revealed it dramatically adjusted expectations for next week’s scheduled IPO. It now expects to raise ‘only’ $100 million from US investors, three times less than its initial estimate at the end of October.
The $100 million figure is derived from depositary prices ranging $9 to $11 a share for an issuance of 10 million in total. That placeholder could be adjusted further as the process moves forward due to a host of factors, including notoriously fickle cryptocurrency speculative market prices, energy costs, and the general mood worldwide of regulators. In the meantime, Canaan is aiming for being valued at slightly more than $1 billion. Roughly 2 billion outstanding shares will eventually be offered to the general, accredited public via Nasdaq, assuming all goes well.
Meanwhile, the crypto mining industry at large is bracing for a halvening, wherein the block subsidy/miner’s reward drops by half. Traditional wisdom has it that the baked-in formula can be a good thing for so-called Proof of Work, ASIC-mining cryptocurrencies, among the most prized by speculators, but, as always, past performance does not assure the future. Some analysists are already beginning to raise concerns about early May of next year’s 50% reward haircut for miners.
Rival Bitmain, the global mining leader also based in China, has reportedly filed its own SEC application for an IPO in the United States, but the company has been rather lowkey about its prospects and might be waiting to watch Canaan test American finance waters in this regard.
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