SHANGHAI / HONG KONG (Reuters) – Bitcoin mania has fueled an increase in fundraising by Chinese companies looking to expand their cryptocurrency operations or move into the hot sector.
From large publicly traded companies to smaller players raising funds from venture capitalists, rising cryptocurrency prices and signs of growing acceptance of technology by mass institutions have fueled the market boom.
Chinese bitcoin mining maker Ebang International Holdings, which debuted on the Nasdaq in June, conducted two rounds of fundraising 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 placement to fund a foray into bitcoin mining.
In private markets, “competition is hot and full of sharp elbows,” said Jehan Chu, managing partner of Hong Kong’s blockchain venture capital firm Kenetic Capital. “Each round of good quality funding is oversubscribed within one week of the announcement.”
The market has flourished despite complicated official attitudes towards cryptocurrencies in China.
Cryptocurrency exchanges are banned and mining is rejected, but there is strong official support for the development of blockchain technology, which underpins cryptocurrencies such as bitcoin, but is also key to new innovations in areas such as trade finance, supply chain management and -counterfeit.
This has contributed to the emergence of attractive cryptographic projects in China, say investors, although many companies still list and raise money abroad.
Ebang intends to use its new capital to expand into the cryptocurrency mine itself, to open cryptocurrency exchanges in Singapore and Canada, and to launch a Robinhood-style platform for bitcoin trading.
“Ebang’s growth story is very appealing to institutional investors … fundraising by all players in the industry is increasingly crowded due to the bitcoin bull,” said Guo Yi, COO at Univest Securities, who subscribed. transactions and helped raise money for a few other Chinese crypto-players.
Canaan Inc., another Chinese bitcoin extraction machine maker listed on the Nasdaq, is expanding into mining, where powerful computers are used to check bitcoin transactions and compete for a bitcoin reward.
Bitcoin, the world’s largest cryptocurrency, grew by more than 300% in value in the fourth quarter of last year.
“Bitcoin prices give us a unique opportunity to set up mining operations,” said David Feng, co-CEO of the new Code Chain, which has ordered 10,000 bitcoin mining machines.
“EUPHORIC ATMOSPHERE”
The Chinese rush comes as Coinbase, the largest cryptocurrency exchange in the US, filed last month for a Nasdaq list. Approving the regulation would be an important victory for cryptocurrency supporters seeking general approval.
“Everyone can feel this euphoric atmosphere in the market, and the Coinbase listing would lift the mood even more,” said Jiang Changhao, co-founder and chief technology officer of Beijing’s Cobo, a crypto-custody and wallet service provider.
Cobo plans to launch a new round of venture capital funding this month to fund international expansion, aiming for tens of millions of dollars, because, Jiang said, “the market is optimistic and our business is growing very, very fast.”
Kenetic Capital’s Chu said official support for the blockchain and the use of technology in major initiatives by giants such as Ping An and Ant Financial have been a factor in China’s number of high-quality blockchain and crypto projects.
But the recent rise in prices has “poured napalm” on competition in the sector, he said.
However, the entry of Chinese companies into the cryptographic space has raised the eyebrows of investors.
Last month, short sellers Hindenburg Research and Culper Research claimed that Chinese blockchain company SOS Ltd had made false claims about its cryptocurrency business, with SOS’s allegations being “distorted, misleading and unfounded”.
Guo from Univest Securities said the market has zero tolerance for fraud, but there is nothing wrong with Chinese companies switching to bitcoin.
“If people don’t tell (Tesla founder) Elon Musk that he approved Bitcoin, what’s wrong with Chinese companies accepting it?”
Reporting by Samuel Shen and Alun John; edited by Richard Pullin