Ebang filed for a $100 million IPO with the Securities and Exchange Commission in April, 2020 stating its goal is to become a globally prominent blockchain company. Ebang designs ASIC chips and integrated circuits for Bitcoin mining machines. The company was a leading Bitcoin mining producer by computing power in the global market in 2019, according to Frost & Sullivan.
Ebang raised $101 million by offering $19.3 million shares at $5.23 and has a market value of $685 million, according to Renaissance Capital.
In 2018, Ebang had a gross profit of $24.4 million in 2018, but then dropped to a gross loss of $30.6 million in 2019. The value of Ebang’s Bitcoin mining machines is directly correlated to the price of Bitcoin. If mining operations are turning a profit, then Ebang has a broader client base. However, if miners start to close because of a drop in the value of Bitcoin — which could be brought on by a steep difficulty increases, a block reward halving, or typical market volatility — Ebang’s client pool shrinks with it. Towards the end of 2018, Bitcoin faced a harsh price drop which likely contributed to the reversal of Ebang’s performance from 2018 to 2019. Given that 82% of Ebang’s 2019 revenue came from mining machines, this is a significant weakness for the company.
“We cannot assure you that we will be able to generate net profit or positive cash flow from operating activities in the future,” the listing reads. “Our ability to achieve profitability will depend in large part on our ability to control expenses and manage our growth effectively, to achieve a more stable performance given the significant fluctuation and volatility of the Bitcoin price and Bitcoin mining machine business, and to maintain our competitive advantage in the Bitcoin markets.”
Ebang laid out in its initial IPO filing with the SEC that its strategy moving forward is to capitalize off its cutting edge technology. The filing mentioned expanding into new business opportunities in the crypto and blockchain industry, strengthening branding, and expanding production capacity. An Ebang representative told Cointelegraph in an interview the company also plans on opening mining farms and a cryptocurrencies exchange.
By Emily Mason