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Yibang vs. Why are Chinese encryption companies listed in the United States?

At 09:30 in the evening of June 26th, Beijing time, Yibang International (EBON) officially landed on the US stock Nasdaq, becoming the second Chinese mining machinery manufacturer to be listed on the US stock market after Jiannan.

However, Yibang International’s shares fell first and then rose after the opening, falling as low as $3.81 (with an amplitude of 27.15%), but then gradually rebounded to close at $5.00, down about 4.40%, with a turnover of 692700 and a turnover rate of 0.53%. The total market capitalization is $655 million. Since the Nasdaq market closed down 2.59% at 9757.22 yesterday, from this point of view, Yibang International’s share price did not outperform the market.

It is worth mentioning that the first Chinese mining machine manufacturer to list on Nasdaq was Jiannan Technology, which successfully raised $90 million by selling 10 million shares at $9 a share in November 2019. Similar to Yibang International, Kanan Technology is not doing very well on NASDAQ. According to the latest data, Kanan Technology shares fell 2.44% to $1.89 at the close of trading on June 26, 2020, and the total market capitalization shrank to $296 million.

In fact, the road to listing of Jiannan Technology is not smooth. Credit Suisse, its lead underwriter, announced its withdrawal from underwriting as Garnan entered the final stages of its IPO sprint. Some analysts say that Credit Suisse’s withdrawal is mainly due to unsuccessful fund-raising and failure to get revenue, while the reason for the repeated decline in the amount of capital raised by Jiannan Technology, the aforementioned person pointed out, is mainly due to the strong relationship between the main business of Jiannan Technology and the price of Bitcoin. The price of Bitcoin has fallen as domestic policy has tightened this year, which has exacerbated the decline in the price of mining machines, so expectations of valuations and fundraising have shrunk.

In addition, on March 4, local time in the United States, Jiannan Technology was also subject to a class action lawsuit by shareholders, and the plaintiff also sued the underwriters of the IPO, including Galaxy Digital, China China Renaissance Capital Investment (China Renaissance Securities), Huatai Financial Holdings (Huatai Financial Holdings), China Bank International Financial CMB International Capital), and so on. However, Credit Suisse (Credit Suisse), one of the lead underwriters of Jiannan Yunzhi’s initial public offering, withdrew from the market a few days before IPO and was not sued.

For Yibang International, the hardships encountered by the listing of Jiannan Technology have provided them with a lot of experience and lessons to let them know what to do and what not to do now. But at the same time, the listing of Yibang International will obviously bring more competitive pressure to Jiannan Technology. According to John Todaro (John Todaro), director of institutional research at TradeBlock, Yibang International is better than Garnan Technology in terms of financial performance and stock price movements. Although the mining industry has been under tremendous pressure since the third block award was halved in Bitcoin history, with the advent of the high water season, many miners are coming back online, making it easier for Bond International to profit from rising bitcoin prices.

A company representative of Yibang International believes that the company’s core business is fundamentally different from that of Jiannan Technology. He claims:

According to the public information disclosed by Jiannan Technology, their main business development direction is artificial intelligence. Although on the surface we are colleagues in the field of bitcoin mining, Yibang International is more focused on the blockchain industrial chain and the integration of the digital economic ecosystem. “

Why did Chinese encryption companies choose to be listed in the United States?

Judging from the current situation, many Chinese encryption companies have chosen to list in the United States. As John Todaro said, it is very important for China and am companies to enter the US stock market. After all, the United States is still the most liquid public stock market at present, and more cryptocurrency companies (not necessarily mining machine manufacturers) may join the “IPO competition” in the future.

“many cryptocurrency projects and companies are decentralized, so it may be futile for them to choose an initial public offering, so these projects and companies will not choose to go public. On the other hand, there are many centralized companies like Coinbase in the encryption industry that are now strong enough that they are likely to choose an initial public offering in the next few years. “

For many domestic encryption companies choosing to list in the United States, TokenInsight chief analyst Johnson Xu (Johnson Xu) said that the main reason is regulatory uncertainty, so they have to seek financing abroad, and the United States has become the preferred place for financing for these companies.

It is worth mentioning that in addition to Chinese encryption companies, South Korean counterparts are also exploring the way to go public. On June 24th, South Korea’s cryptocurrency exchange Bithumb also hired Samsung Securities as its underwriter to prepare for the IPO listing.