Bitcoin mania triggers fundraising rush by Chinese players

SOLAI

09/03/2021 08:01

By Samuel Shen and Alun John
    SHANGHAI/HONG KONG, March 9 (Reuters) - 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  EBON.O , 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  CCNC.O , 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
 BTC=BTSP , but is also 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.   
    "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, COO at Univest
Securities, which underwrote the deals, and has helped raise
money for several other Chinese crypto players.
    Canaan Inc  CAN.O , 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  BTC=BTSP , 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.
        
    "EUPHORIC ATMOSPHERE"
    The Chinese rush comes as Coinbase, the biggest U.S.
cryptocurrency exchange, filed last month for a Nasdaq listing.
Regulatory approval would represent a landmark victory for
cryptocurrency advocates seeking mainstream endorsement.
 urn:newsml:reuters.com:*:nL4N2KV3U7 
    "Everyone can feel this euphoric atmosphere in the market,
and Coinbase's listing would lift the mood further," said Jiang 
Changhao, co-founder and chief technology officer of
Beijing-based Cobo a crypto custodian and wallet service
provider.
    Cobo plans to launch a new round of venture capital funding
this month to finance international expansion, aiming for tens
of millions of dollars because, Jiang said, "the market is
bullish and our business is growing very, very rapidly."
    Kenetic Capital's Chu said official backing for blockchain,
and the use of the technology in major initiatives by giants
like Ping An and Ant Financial, were a factor in the number of
high quality blockchain and crypto projects in China.
    But the recent price surge had "poured napalm" on to
competition in the sector, he said.   
    Still, the entry of some Chinese firms into the crypto space
has raised investor eyebrows.    
    Last month, short-sellers Hindenburg Research and Culper
Research alleged Chinese blockchain firm SOS Ltd  SOS.N , had
made false claims about its cryptocurrency business, allegations
SOS said were "distorted, misleading and unsubstantiated".
 urn:newsml:reuters.com:*:nL4N2KW53V  
    Guo of Univest Securities said the market has zero-tolerance
toward cheating, but there's nothing improper about Chinese
companies jumping on to the bitcoin bandwagon.    
    "If people don't point figure at (Tesla founder) Elon Musk
for endorsing bitcoin, what's wrong with Chinese companies
embracing it?"    

 (Reporting by Samuel Shen and Alun John; editing by Richard
Pullin)
 ((Alun.John@thomsonreuters.com; +852-28415827;))