Bitcoin mania triggers fundraising rush by China

Jump in cryptocurrency prices feeds market boom


Reuters March 10, 2021
After touching record high of just under $20,000 in late November, bitcoin stalled and even went below $17,000. PHOTO: REUTERS

HONG KONG/ SHANGHAI:

Bitcoin mania has fuelled a surge in fundraising by Chinese companies seeking to expand their cryptocurrency operations or move into the red-hot sector.

From large listed companies tapping public markets to smaller players raising funds from venture capitalists, a jump in cryptocurrency prices and signs of growing acceptance of the technology by mainstream institutions have fed the market boom.

Chinese bitcoin mining machine manufacturer, Ebang International Holdings, which debuted on Nasdaq in June, conducted two fundraising rounds in February alone, raking in $170 million, even after a previous offering in November.

Newcomer Code Chain New Continent Ltd, a Chinese waste recycling company, raised $25 million in February through a share placement to fund a foray into bitcoin mining.

In private markets, “competition is white hot and filled with sharp elbows,” said Jehan Chu, Managing Partner at Hong Kong-based blockchain venture capital firm Kenetic Capital. “Every good quality funding round is oversubscribed within a week of it being announced.”

The market has flourished despite complicated official attitudes towards cryptocurrencies in China.

Cryptocurrency exchanges are banned and mining frowned upon, but there is strong official support for developing blockchain technology, which underpins cryptocurrencies such as bitcoin, but is also the key to new innovations in areas such as trade finance, supply chain management and anti-counterfeiting.

This has contributed to the emergence of attractive crypto projects in China, say investors, although many companies still list and raise money overseas.

Ebang plans to use its new capital to expand into cryptocurrency mining in its own right, to open cryptocurrency exchanges in Singapore and Canada, and to launch a Robinhood-style platform for bitcoin trading.

Canaan Inc, another Nasdaq-listed Chinese maker of bitcoin mining machines, is also expanding into mining, where powerful computers are used to verify bitcoin transactions and compete for a bitcoin reward.

Bitcoin, the world’s largest cryptocurrency, has surged over 300% in value since the fourth quarter of last year.

“Bitcoin prices present us with a unique opportunity to establish mining operations,” said David Feng, co-CEO of newcomer Code Chain, which has ordered 10,000 bitcoin mining machines.

The Chinese rush comes as Coinbase, the biggest US cryptocurrency exchange, filed last month for a Nasdaq listing. Regulatory approval would represent a landmark victory for cryptocurrency advocates seeking mainstream endorsement.

Published in The Express Tribune, March 10th, 2021.

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