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Bitmain

Why Bitmain Struggles to get Listed on Hong Kong Stock Exchange

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Why Bitmain Struggles to get Listed on Hong Kong Stock Exchange

At the end of last month, China’s ASIC producer, Bitmain, applied to be listed on the Hong Kong Stock Exchange using a weighted voting rights (WVR) structure.

President of the Hong Kong Information Technology Chamber of Commerce said that virtual currency is a highly speculative activity, and extremely high risk, even if most of their business comes from the apparently safe transactions of mining machine sales.

He also said that the fixed costs of cryptocurrency enterprises are a concern, especially because they are already greater than those needed for simply dealing in cryptocurrency transactions.

Furthermore, he points out that declining virtual currency prices will lower returns produced on the mining machines themselves.

Does cryptocurrency affect Bitmain’s listing?

As for Bitmain, their main source of income is in the sales of ASIC mining machines rather than in transactions, the link they have to the world of virtual currency is undeniably crucial.

Almost all the risks revolve around cryptocurrency. Their self-operated mining revenue means at least some of their assets are in digital form. The ever rising and falling price of these digital assets makes them impossible to truly measure in value. Who would invest in that?

Because of mainland China’s restrictive policies on virtual currencies and related enterprises, it’s unsurprising that the vast majority of them are registered abroad. This also means that investors’ returns are not guaranteed and that these companies, should they have the desire, can easily just walk away without honoring any commitments.

Bitmain is keen to shift its ground, deepening ties and cooperation with the authorities and moving away from solely relying on mining machine sales.

Whatever the current environment, Bitcoin is important for China. With transactions becoming more and more common, the need for a regulatory framework and greater supervision also increases.

What Bitmain needs to be placed on the HK Exchange

Exchanges on the mainland are all parts of one economy and therefore follow a similar strict system, but Hong Kong is different. It has good conditions for such enterprises – a more open and free market, and the greater access and connections to the global economy.

The deciders will take a closer look at the company’s finances, what jurisdictions they operate in, their accounting, current market value etc. The list goes on. For Bitmain, the exhaustive conditions present some difficulties and may limit their access to the HK exchange.

Ashton Felix is currently a contributing writer for multiple crypto news sites. He got his big break when he mined his first bitcoin back in 2012. He enjoys learning about new technology and travels throughout Asia in his spare time. Ashton immediately fell in love with the culture and people of China. He is currently based out of Shenzhen and is fluent in Mandarin.

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