SHANGHAI / HONG KONG (Reuters) – Bitcoin craze has fueled an increase in fundraising by Chinese companies that want to expand their cryptocurrency operations or move into the hot sector.
From large listed companies taking advantage of public markets to smaller players raising funds from venture capitalists, a jump in cryptocurrency prices and signs of growing acceptance of technology by major institutions have fueled the boom of the market.
Chinese bitcoin mining machine maker Ebang International Holdings, which debuted on the Nasdaq in June, held two rounds of fundraising in February alone, racking up $ 170 million, even after a previous bid in November.
New Continent Code Chain New Continent Ltd, a Chinese waste recycling company, raised $ 25 million in February through a placement of shares to fund a foray into bitcoin mining.
In private markets, “the competition is full of heat and full of strong elbows,” said Jehan Chu, managing partner of Hong Kong’s blockchain venture capital firm Kenetic Capital. “All rounds of good quality funding are underwritten too much within a week of being announced.”
The market has prospered 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, supply chain management and the fight against counterfeiting.
This has contributed to the emergence of attractive cryptography projects in China, investors say, although many companies still list and raise money abroad.
Ebang plans to use its new capital to expand into cryptocurrency mining on its own, to open cryptocurrency exchanges in Singapore and Canada, and to launch a Robinhood-style platform for bitcoin trading.
“Ebang’s growth history is very attractive to institutional investors … fundraising by all industry players is increasingly active thanks to bitcoin bitcoin,” said Guo Yi, COO of Univest Securities, which signed the agreements and has helped raise money for other Chinese cryptographers.
Canaan Inc., another Chinese maker of Nasdaq bitcoin mining machines, 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 offer us a unique opportunity to establish mining operations,” said David Feng, co-CEO of the new Code Chain, which has commissioned 10,000 bitcoin mining machines.
“EUPHORIC ATMOSPHERE”
The Chinese rush comes when Coinbase, the largest cryptocurrency exchange in the United States, filed for trading on the Nasdaq last month. The passage of the regulations would represent a major victory for cryptocurrency proponents seeking primary membership.
“Everyone can feel this euphoric atmosphere in the market, and Coinbase’s price would further boost the mood,” said Jiang Changhao, co-founder and chief technology officer of Beijing-based custody and portfolio services provider of cryptography.
Cobo plans to launch a new round of venture capital financing this month to fund international expansion, with the goal of tens of millions of dollars because, according to Jiang, “the market is bullish and our business is growing very, very fast. “.
Chu of Kenetic Capital said official blockchain support and the use of technology in large giant initiatives such as Ping An and Ant Financial were a factor in the number of high-quality cryptocurrency and blockchain projects in the world. China.
But the recent rise in prices had “poured napalm” on competition in the sector, he said.
However, the entry of some Chinese companies into the cryptographic space has raised the eyebrows of investors.
Last month, short sellers Hindenburg Research and Culper Research, alleged Chinese blockchain companies SOS Ltd, had made false claims about their cryptocurrency business, according to allegations that SOS said they were “distorted, misleading and unfounded. “.
Guo of Univest Securities said the market has zero tolerance for scams, but there is nothing wrong with Chinese companies jumping on the bitcoin bandwagon.
“If people don’t point to Elon Musk (founder of Tesla) for approving Bitcoin, what if Chinese companies adopt it?”
Report by Samuel Shen and Alun John; edited by Richard Pullin