SHANGHAI / HONG KONG (Reuters) – The Bitcoin mania has fueled a surge in fundraising by Chinese companies looking to expand their cryptocurrency operations or enter the red-hot sector.
From large listed companies leveraging public markets to smaller players raising funds from venture capitalists, a surge in cryptocurrency prices and signs of a growing acceptance of the technology by major institutions have fueled the rise of the market. market.
Chinese bitcoin mining machine maker Ebang International Holdings, which debuted on Nasdaq in June, held two rounds of fundraising in February alone, raising $ 170 million, even after an earlier offering in November.
Newcomer Code Chain New Continent Ltd, a Chinese waste recycling company, raised $ 25 million in February through a stock placement to fund a foray into bitcoin mining.
In private markets, “the competition is hot and full of sharp elbows,” said Jehan Chu, a managing partner at Hong Kong-based blockchain venture capital firm Kenetic Capital. “Each round of good quality funding is oversubscribed one week after its announcement.”
The market has flourished despite complicated official attitudes towards cryptocurrencies in China.
Cryptocurrency exchanges are banned and mining is frowned upon, but there is strong official support for the development of blockchain technology, which underpins cryptocurrencies like bitcoin, but is also key to new innovations in areas such as trade finance, the management of the supply chain and the fight against counterfeiting.
This has contributed to the emergence of attractive crypto projects in China, investors say, although many companies are still listing and raising money abroad.
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 trading bitcoins.
“Ebang’s growth story is very attractive to institutional investors … fundraising by all industry players is becoming more active thanks to the bitcoin bull,” said Guo Yi, COO of Univest Securities, which signed the deals and has helped raise money for several others. Chinese crypto players.
Canaan Inc, another Chinese manufacturer of bitcoin mining machines listed on Nasdaq, is also expanding into mining, where powerful computers are used to verify bitcoin transactions and compete for a bitcoin reward.
Bitcoin, the world’s largest cryptocurrency, has risen more than 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 the newcomer Code Chain, which has commissioned 10,000 bitcoin mining machines.
The Chinese fever comes as Coinbase, the largest U.S. cryptocurrency exchange, filed last month for listing on Nasdaq. Regulatory approval would represent a historic victory for crypto advocates seeking general endorsement.
“Everyone can feel this euphoric atmosphere in the market, and the listing of Coinbase would further lift spirits,” 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 financing this month to fund international expansion, targeting tens of millions of dollars because, Jiang said, “the market is bullish and our business is growing very, very quickly.”
Kenetic Capital’s Chu said that official endorsement of blockchain and the use of the technology in major initiatives by giants such as Ping An and Ant Financial were a factor in the number of high-quality crypto and blockchain projects in China.
But the recent price hike had “dumped napalm” on competition in the sector, he said.
Still, the entry of some Chinese companies into the crypto space has caught the attention of investors.
Last month, short sellers Hindenburg Research and Culper Research alleged that Chinese blockchain company SOS Ltd had made false claims about its cryptocurrency business, allegations that SOS said were “distorted, misleading and without foundation.”
Guo of Univest Securities said the market has zero tolerance for cheating, but there is nothing inappropriate about Chinese companies jumping on the bitcoin train.
“If people don’t target (Tesla founder) Elon Musk for backing bitcoin, what’s wrong with Chinese companies embracing it?”
Reporting by Samuel Shen and Alun John; Richard Pullin edition