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Chinese Bitcoin Miner Maker Ebang Hits Nasdaq with Expansion Blueprint

On June 26, Ebang International Holdings —  bitcoin mining equipment manufacturing company was listed in the Nasdaq market with ticker NASDAQ: “EBON”. 

                   The first day of trading of NYSE : EBON, share closed nearly 14% down from the listing price.

Ebang offered 19.3 million shares at the price of $5.23 each and raised $101 million putting the valuation of the company at $685 million.

The company plans to use the raised funds for setting up mining farms, operations to mine bitcoin and other cryptocurrencies for themselves, and to also set up a cryptocurrency exchange while also exploring the idea of implementation of blockchain in various industries like healthcare. 

Ebang earlier tried to list itself on Hong Kong Stock Exchange (HKSE) but the process was reportedly delayed because of Ebang’s involvement in a financial crime case. The firm was also involved in a court case for not being able to fulfill an order of cloud computing servers.

In the history of the last 3 years of the bitcoin mining industry, Ebang has failed to grow its share of the Bitcoin mining industry in terms of TH/s sold. Ebang accounted for 5% TH/s solid in 2017 and 2018, but only accounted for 4% of TH/s sold in 2019.  

Ebang competitor Canaan (NYSE: CAN) listed at Nasdaq in late 2019, listed at $9 and currently trading at $1.89 signaling a market cap of $300 million which makes it around half of the currently estimated market cap of Ebang. To put a fair comparison, CAN accounted for 15% of TH/s sold in 2018 and 12% of TH/s sold in 2019 which is much larger than the share of Ebang in the same years. Yet, the company is trading for currently half the valuation of Ebang – which opens the situation to possibilities: Either Ebang is overvalued or CAN is undervalued. 

Ebang representative, however, believes that Ebang and Canaan are fundamentally different.

“According to public information disclosed by Canaan Inc., its key development direction is focusing on AI. Although we are peers in Bitcoin mining machine industry, Ebang focuses on the blockchain industry chain, integrating the digital economy industrial ecosystem.”

The leader of the Bitcoin mining industry — Bitmain has been trying to get listed for years but the company has a lot of conflicts and issues internally going on which keeps on delaying its listing. 

Ebang’s business is mainly divided into two parts. The first one is the telecommunication services where the company is involved in data communication and fiber optics. Primary customers include China Mobile, China Telecom, and China Unicom.

Part two of their business is the blockchain business of manufacturing ASICs for Bitcoin mining for which Ebang contracts heavily with Samsung for sourcing chips.

Ebang managed to do a timely fundraise with Bitcoin halving recently done last month and when industries have started to emerge from the pandemic. It’s fair to say that a lot about the Bitcoin mining industry depends on the price of Bitcoin as when the Bitcoin prices plummet, then miners are forced to capitulate their operations as the cost of mining becomes more than the price of Bitcoin. 

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