Blockchain Stocks: Don't Forget About the Mining Stocks
There are a total of three major bitcoin mining companies in the market. Including Bitmain, Canaan, and Ebang. Which two of the three companies are already listed on Nasdaq.
Bitmain
Bitmain is the only company that has not yet been listed on Nasdaq, but it is one of the largest and first bitcoin mining company in the market.
As the two founders of Bitmain, Ketuan Zhan and Jihan Wu have served as CEOs together for a long time. Because of the disagreement between the two, they came to an agreement of Ketuan Zhan served as chairman, and Jihan Wu "retreated to the second line".
However, on October 28, 2019, things changed dramatically and Jihan Wu returned to the front line. The legal representative and executive director of Beijing Bitmain Technology Co., Ltd. Which is the main operating entity of Bitmain, were changed from Ketuan Zhan to Jihan Wu.
It can be seen that although the two parties have sat down to negotiate, they both want to take the initiative to make the other party compromise. If you can't give in to each other, the fighting may not end so quickly.
Seeing that Canaan and Ebang, which rank second and third in the mining machine industry, have been listed one after another, if Bitmain continues to fight like this, the industry leader will be handed over.
Canaan (CAN)
On November 21st, 2019, Canaan landed on Nasdaq with an issue price of US$9.00. On the opening day, Canaan rose to a maximum of US$13.00, and a 40% surge triggered the trading suspension.
As the "first Mining Machine stock", the industry also expects Canaan to deliver a different answer in the capital market, bringing surprises to the blockchain industry. But the reality is extremely cruel. Since then, Canaan's stock price has started to fall sharply. Although there was a short rebound in the middle, it still could not stop the general downward trend.
On February 20, 2020, Marcus Aurelius Value, a short-selling agency, released a report against Canaan, accusing it of undisclosed related party transactions and violations involving many customers and distributors.
The day after the report was released, the American law firm Schall Law announced that it would investigate Canaan. Immediately afterwards, two American law firms Rosen and Bragar Eagel Squire joined the queue one after another, and posted a notice on Yahoo looking for investors from Canaan, calling on investors to contact the law firm to file a class action.
On May 14, Canaan Technology suffered another short selling. US stock research organization White Diamond Research released a short-selling report on Canaan, saying that Canaan Technology currently has problems such as low profit margins of mining machines, failure to transform AI chip business, and unreasonable market value.
Since then, Canaan's share price has fallen to $2.40, which is 81% lower than its highest point.
Ebang (EBON)
Ebang has become the second mining machine manufacturer to land on Nasdaq after Canaan (CAN.US). It was first born in January 2010, when its business was mainly the production and development of communication network access equipment. Until the end of 2016, it launched its first Bitcoin mining product, Ebit E9+, and entered the mining industry.
Compared with Canaan, Ebang's business is also slightly single. One of the main concepts of Canaan when it went public was the AI chip, trying to get rid of investors' impression of its single mining machine business and to shape the image of a new technology company. According to the prospectus of Ebang, its main business is still the production and sales of mining machines, with a relatively simple business structure.
The prospectus shows that the company sold a total of 415,900 mining machines in 2018, and the sales of mining machines dropped to 290,000 in 2019. Revenue in 2019 was US$109.1 million, down 65.8%. The net loss in 2019 was US$41.07 million, which was a substantial increase year-on-year.
Ebang's share price has fallen to $4.17, which is 47% lower than its highest point.
Long-term valuation
Bitmain was once valued at 14 billion U.S. dollars; Canaan’s undisclosed equity transaction price before the listing also reached 20 billion yuan, and the last public financing before Canaan’s listing was valued at 1 billion U.S. dollars. At present, Canaan's stock price corresponds to a valuation of only 300 million US dollars, and the market structure has not changed significantly. It is significantly undervalued in the medium and long term, especially when compared with the newly listed Ebang valuation of US$540 million.
if you are optimistic about Bitcoin for the long term, it might be a good idea to allocate part of the funds to Canaan's stock. The current stock price provides investors with an opportunity to outperform Bitcoin in a bull market.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.