SHANGHAI / HONG KONG (Reuters) – Bitcoin mania has fueled a boom in fundraising by Chinese companies looking to expand their cryptocurrency operations or move to the red-hot sector.
From large listed companies exploiting public markets to smaller players raising funds from venture capitalists, a rise in cryptocurrency prices and signs of growing acceptance of the technology by mainstream institutions have fueled the boom in the market.
The Chinese manufacturer of bitcoin mining machines, Ebang International Holdings, which debuted on Nasdaq in June, conducted two fundraising rounds in February alone, raising $ 170 million, even after a previous offer in November.
Newcomer Code Chain New Continent Ltd, a Chinese waste recycling company, raised $ 25 million in February through a share placement to fund an invasion of bitcoin mining.
In private markets, ‘competition is white-hot and filled with sharp elbows,’ said Jehan Chu, managing partner of blockchain venture capital firm Kenetic Capital in Hong Kong. “Every round of good quality funding is re-signed within a week of being announced.”
The market has flourished despite complicated official attitudes towards cryptocurrencies in China.
The exchange of cryptocurrencies is banned and exploitation is exploited, but there is strong official support for the development of blockchain technology, which supports cryptocurrencies such as bitcoin, but is also the key to new innovations in areas such as trade finance, supply chain management and counterfeiting.
This has contributed to the rise of attractive crypto projects in China, investors say, although many companies still make money overseas and raise money.
Ebang plans to use its new capital to expand in its own right to cryptocurrency mining, to open cryptocurrency exchanges in Singapore and Canada and to launch a Robinhood-style platform for bitcoin trading.
“Ebang’s growth story is very attractive to institutional investors … fundraising by all industry players is getting busier thanks to the bitcoin bull,” said Guo Yi, chief operating officer of Univest Securities, which endorsed the transactions, and helped raise money collect for several others. Chinese crypto players.
Canaan Inc., another Chinese manufacturer of bitcoin mining machines listed by Nasdaq, is also expanding into mining, where powerful computers are used to verify bitcoin transactions and to compete for a bitcoin reward.
Bitcoin, the world’s largest cryptocurrency, has risen more than 300% since the fourth quarter of last year.
“Bitcoin pricing offers us a unique opportunity to establish mining operations,” said David Feng, co-CEO of newcomer Code Chain, which ordered 10,000 bitcoin mining machines.
“EUPHORIC ATMOSPHERE”
The Chinese rush comes when Coinbase, the largest US cryptocurrency exchange, was submitted for a Nasdaq listing last month. Regulatory approval will be a major victory for lawyers seeking cryptocurrencies who want mainstream endorsement.
“Everyone can experience this euphoric atmosphere in the market, and the listing of Coinbase will further lift the mood,” said Jiang Changhao, co-founder and chief technology officer of Beijing-based Cobo, a crypto-supervisor and wallet service provider. .
Cobo plans to launch a new round of venture capital financing this month to fund international expansion, targeting tens of millions of dollars because Jiang said, “the market is strong and our business is growing very, very fast.”
Kenetic Capital’s Chu said that official support for blockchain and the use of the technology in major initiatives by giants such as Ping An and Ant Financial, was a factor in the number of high quality blockchain and crypto projects in China.
But the recent price increases have given competition in the sector a napalm “, he said.
Yet the entry of some Chinese companies into the crypto-space has raised investors’ eyebrows.
Last month, short sellers Hindenburg Research and Culper Research claimed that the Chinese blockchain company SOS Ltd had made false allegations about its cryptocurrency business, according to SOS ‘allegations “distorted, misleading and unfounded”.
Guo of Univest Securities said the market has no tolerance for fraud, but there is nothing wrong with Chinese companies jumping on the bitcoin bandwagon.
“If people do not show Elon Musk (founder of Tesla) for signing bitcoin, what’s wrong with Chinese companies accepting it?”
Reporting by Samuel Shen and Alun John; edited by Richard Pullin