Bitcoin mining machine maker Canaan Creative filed for an initial public offering in the U.S., seeking to raise $400 million.
In a Securities and Exchange Commission filing this week the Chinese company that makes machines to mine for digital tokens and for artificial intelligence applications, said it wants to list on the Nasdaq exchange. Credit Suisse and Citigroup are acting as the Chinese chip technology company's underwriters in its U.S. offering.
Times are not booming for Canaan
Canaan is heading into its IPO at a time when its financials are shrinking rather than growing. For the first half of this year, Canaan reported revenue of $41.9 million, which according to one report, is more than 85% lower than the first half of 2018. Meanwhile, its gross profits declined about 97% in the same time frame on a year-over-year basis. It ended the first six months of this year with $39.4 million in cash, according to its SEC filing.
The Chinese company is no stranger to trying to raise capital through the public markets, but success has escaped it so far. According to Reuters it tried to go public via a reversed merger in China three years ago and last year it filed to list in Hong Kong but nothing came of it.
Canaan operates in a volatile market
Canaan operates in a very volatile market with the price of bitcoin and other digital currency going through wild swings both up and down. Just last week the price of bitcoin surged as much as 40% after Chinese President Xi Jinping said the country should "seize the opportunity" blockchain technology affords it.
Rewind a few years and demand for bitcoin and everything associated with it was skyrocketing. Bitcoin mining companies and the suppliers of the hardware to support that made money hand over fist. Back in 2017 Bitmain, the bitcoin mining company made close to $4 billion in profits. But when the price of bitcoin plummeted so did the demand. Even with the price of digital tokens increasing in recent months, the market hasn't returned to the early days of the bitcoin craze.
Canaan describes itself as the second largest bitcoin mining machine maker in the world and said it will use proceeds from the IPO for AI and blockchain research and to pay down its debt.