Chinese mining rig maker Canaan Inc. raises $90 million in US IPO

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(Image credit: Bigstock/David Tran)

After a volatile market debut on Nasdaq, Hangzhou-based cryptocurrency mining rig maker Canaan Inc. raised $90 million on Thursday, falling short of its $100 million target.

Why it matters: Canaan was the first major bitcoin mining rig marker to list on the public markets, and its initial public offering (IPO) was seen as a bellwether for other Chinese blockchain startups.

  • Several blockchain startups from China were expected to go public in the US and Hong Kong this year, but many have delayed or even scrapped their plans due to the sluggish cryptocurrency market in the first half of 2019.
  • The crypto market has been showing signs of thawing over the past few months, prompting some Chinese blockchain companies, including Ping An’s fintech arm OneConnect and mining rig maker Bitmain, to revive their IPO plans.

Details: Canaan priced its shares at $9 each, at the low end of the expected range, and raised $90 million, missing its $100 million target which had been a drastic downsize from its original $400 million goal.

  • The company’s shares popped within the first hour of trading, but soon after fell below its offering price and closed at $8.99.
  • Weeks before its IPO, the company lost one of its lead underwriters, Credit Suisse, and downsized its fundraising target.
  • This is the third market that Canaan has filed an application to, after scrapping its plans for IPOs in Hong Kong and mainland China.

Context: Founded in 2013, Hangzhou-based Canaan specializes in blockchain servers and ASIC microprocessor solutions for bitcoin mining use. The company said in its prospectus that it is the second-largest mining machine maker in the world after Bitmain in terms of computing power, according to consulting firm Frost & Sullivan.

  • Canaan’s performance has been heavily influenced by bitcoin prices, which slumped in early 2018 and remained lackluster into the first half of 2019. Its sales fell 96% in the first quarter, according to a report by Renaissance Capital.
  • The company booked $177 million in sales for the 12 months ended September 2019.

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