Tag: bitcoin

Why Nobel laureate Richard Thaler follows Warren Buffett’s advice to avoid bitcoin

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While no one can definitively say where the next financial bubble will occur, Nobel Prize-winning economist Richard Thaler says he’s avoiding making this particular investment: bitcoin.

Thaler, known as the “father of behavioral economics,” is a vocal skeptic of bitcoin as a currency. In a new episode of the Freakonomics Radiopodcast, Thaler tells host Stephen Dubner that when it comes to investing, he follows billionaire investing mogul Warren Buffett’s simple advice.

“Warren Buffett says a lot of smart things, and one of the things he says is, don’t make investments in things you don’t understand,” Thaler says. “And I have no clue [when it comes to bitcoin].”

Bitcoin is just one of many forms of cryptocurrencies that are used as digital currency and are accepted by a select amount of businesses and merchants, but is not considered legal tender in the U.S. Bitcoin is also currently the world’s most valuable virtual currency by market value, trading at more than $6,700, according to industry website CoinDesk,which tracks prices from several exchanges.

Thaler notes that although the US has taken action to make big banks more stable since the 2007 financial crisis, he doesn’t understand why people would invest in a volatile currency like bitcoin. Though it was once valued over $19,000 at its record high, Thaler says he doesn’t think “that the intrinsic value of bitcoin is worth thousands of dollars.”

“‘Stay away’ is the best advice,” says Thaler.

In 2014, Buffett also warned people to stay away from bitcoin, calling it a “mirage”:

It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view.

This year, Buffett made clear that his opinion on bitcoin and other cryptocurrencies remains the same: “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said, later referring to bitcoin as “rat poison.”

Nobel Prize-winning economists Robert Shiller and Joseph Stiglitz have echoed these sentiments, warning that the rise of cryptocurrencies resembles a bubble and that the anonymity of bitcoin can lead to “nefarious activity.” While some people have profited off of their investment in bitcoin, billionaires such as Bill Gates, Jamie Dimon and Mark Cuban are cautious to recommend it.

“I don’t know why anyone engaged in strictly legal activities would want to use a currency that is so volatile,” Thaler says.

Source: Make It, CNBC.com.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trillion dollar wipeout: world stocks’ worst first half since 2010

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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If last year’s financial markets boom was down to a ‘Goldilocks’ global economy, 2018 has so far been all about the bears, with the worst start to a year for worldstocks since 2010.

A grizzly mix of US-China trade tensions, central banks turning off the money taps and cooling growth in hotspots including Europe has wiped a trillion dollars off MSCI’s 47-countryworld index.

A pumped-up dollar, which has had its best first half in three years, and a 16% leap in oil prices have played a big role too clobbering emerging markets particularly hard.

Argentina’s peso and Turkey’s lira have been shredded 30 and 17%, respectively, Chinese stocks have entered bear market territory and EM equities have slumped 10%, or 17% excluding a brief January surge.

“People just woke up to the fact that something has changed,” said London & Capital’s Chief Investment Officer Pau Morilla-Giner.

As well as the escalation in global trade tensions “there has been a realisation that the big central banks aren’t thinking about stimulating the economy anymore, they are trying to build up capacity in case of recession.”

GRAPHIC: World stocks have worst H1 since 2010.

Still, it hasn’t been a doom-fest everywhere.

One Wall Street bellwether, the S&P 500, is clinging on in positive territory and while the trade jitters have sapped the Dow Jones Industrial, the Nasdaq has set records this month.

As a set, the FAANGs (Facebook, Amazon, Apple, Netflix and Google) are up almost 40% despite having $400 billion wiped off their combined value in March when it was revealed Facebook misused 50 million of its users’ data.

Netflix has more than doubled in price this year, Amazon is up 45% and Facebook is fully recovered and up over 11%. Also, for all the pressure heaped on China in recent months, its tech giant Alibaba is up 11%.

Yuan To Avoid?

Among the major currencies, the dollar is up almost 3% against the euro and nearly 2% versus the safe-haven yen.

For emerging markets that rise has been a wrecking ball. On top of the ailing lira and peso, Brazil’s real is down 14%, India’s rupee 7%, South Africa’s rand 10% and – despite the oil rally – Russia’s rouble 9%.

Having been the stars of 2017, MSCI’s EM equities index is down 8% and local currency and dollar-denominated EM bonds have fallen 6% and 5% respectively.

What has caused the most concern though has been China.

Stocks there entered a bear market this week having dropped 20% from their January peaks, while the yuan has just had its worst month on record.

With China the biggest consumer of industrial commodities, its misfiring economy has also contributed to the respective 9 and 15% declines in the price of copper and zinc, used in things like pipes and galvinised steel.

“What tends to move markets the most tends to be issues with China,” said Sharmin Mossavar-Rahmani, chief investment officer for private wealth management at Goldman Sachs, saying it was both her biggest short-term and longer-term worry.

“These tensions with the US are not going to disappear, they are just going to ebb and flow,” she said, adding the economy was also imbalanced and had very high debt levels.

Another 2017 high-flier, cryptocurrency Bitcoin, has lost 60%, but even traditional safe havens have failed to provide protection over the last few months.

Another two US interest hikes have seen Treasuries cost holders 3% this year and German Bunds and gold are both down 4%.

Italy’s government bonds meanwhile have plunged 13% this quarter as an anti-establishment government took charge in Rome and the European Central Bank confirmed its mass bond buying programme will end this year.

In contrast to Wall Street and Japan’s Nikkei’s solid first halves, euro zone stocks are down too, having lost roughly 6%.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin skids below $6,000, hits lowest level since November

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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 Bitcoin‘s value slid to its lowest level since November on Friday, as waning investor interest and recent negative headlines from global regulators weakened demand for the cryptocurrency and most of its rivals.

Virtual currencies, including the best-known and biggest, bitcoin, have been stuck in a downward trend for most of 2018 after last year’s frenzied interest fizzled.

Recent hacks and the “cyber intrusion” of cryptocurrency exchanges in key Asian markets has also encouraged investors to exit.

Bitcoin fell to as low as $5,774 on the Bitstamp exchange, the lowest since Nov. 12. It was last up 0.7 percent at $5,891.

So far in 2018, bitcoin has tumbled almost 60 percent after soaring more than 1,300 percent last year. It is now down 70 percent from its December peak.

Other cryptocurrencies also slid on Friday. Ethereum’s ether, the second-biggest cryptocurrency by value, fell 4 percent to $416, its weakest since April. Ripple’s XRP also dropped 4 percent to $0.44, a 2018 low, according to Coinmarketcap.com.

“The frenzy surrounding crypto has ebbed and flowed with prices,” said Will Hobbs, Head of Investment Strategy at Barclays Smart Investor.

“None of the crypto currencies currently fulfil any of the criteria that we would look for in an investible asset and we would continue to advise extreme caution. The rout in crypto currencies is still not finished,” he said.

The Bank of England on Thursday warned banks and insurers that they should be wary of crypto assets because they can be highly volatile and vulnerable to fraud.

After cryptocurrency prices surged in 2017 big institutional players were predicted to step into the industry, but most have waited on the sidelines amid regulatory worries and as they weight up whether investor interest is more than a fad.

The total market capitalisation of cryptocurrencies has fallen to around $230 billion from a peak of around $800 billion in January.

Still, money continues to be plouged into the sales of new digital currencies. Sales jumped to $13.7 billion in the first five months of the year, nearly double the amount raised for the whole of 2017, according to a report released on Thursday.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin falls after hackers hit South Korean cryptocurrency exchange Coinrail

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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South Korean cryptocurrency exchange Coinrail said it was hacked over the weekend, sparking a steep fall in bitcoin amid renewed concerns about security at virtual currency exchanges as global policy makers struggled to regulate trading in the digital asset.

In a statement on its website on Monday, Coinrail said its system was hit by “cyber intrusion” on Sunday, causing a loss for about 30 percent of the coins traded on the exchange. It did not quantify its value, but in an unsourced report local news outlet Yonhap news estimated that about 40 billion won ($37.28 million) worth of virtual coins were stolen.

The heist at Coinrail, a relatively small South Korean cryptocurrency exchange, sent the price of bitcoin tumbling to two-month lows as it once again highlighted the security risks and the weak regulation of global cryptocurrency markets.

South Korea is one of the world’s major cryptocurrency trading centers, and is home to one of the most heavily trafficked virtual coin exchanges, Bithumb.

On the Luxembourg-based Bitstamp, bitcoin was last trading at $6,790.88, down a sharp 10.8 percent from Friday, having fallen roughly 65 percent from its all-time peak hit around mid-December 2017.

Investors and regulators were jolted earlier this year after Japan’s cryptocurrency exchange Coincheck was hacked in a high-profile theft of over half a billion dollars worth of digital currency.

In 2014, Tokyo-based Mt. Gox, which once handled 80 percent of the world’s bitcoin trades, filed for bankruptcy after losing bitcoins worth around half a billion dollars. More recently, in December last year, South Korean cryptocurrency exchange Youbit shut down and filed for bankruptcy after being hacked twice.

Warning

Global policy makers have warned investors to be cautious in trading the digital currency given the lack of broad regulatory oversight.

“Coinrail is not a member of the group that promotes self regulations to enhance security. It is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Kim Jin-Hwa, a representative at Korea Blockchain Industry Association.

In South Korea, 14 major local cryptocurrency exchanges adopted measures aimed at better protecting users in January this year, including restrictions on creating more than one account.

Coinrail said the balance 70 percent of virtual coins are now secure in its “cold wallet”, which operates on platforms not directly connected to the internet. It wasn’t immediately clear whether the lost coins were stored in the more insecure ‘hot wallet.’

Korea Internet & Security Agency, currently carrying out the investigation with police, said only four of the country’s largest exchanges are subject to the Information Security Management System certification (ISMS) requirement.

The ISMS is a system that certifies protection of personal information at companies with average daily visitor of over 1 million.

“Coinrail, as of June this year, hasn’t been certified with the ISMS, as it isn’t mandatory (for the organization to do so),” the local regulator said in a statement.

Coinrail confirmed in its statement that the exchange is fully cooperating with a police investigation into the hacking, and that trading has been suspended for now. The company wasn’t immediately available for further comments.

Coinrail was the 98th largest cryptocurrency exchange that trades more than 50 different virtual coins, according to Coinmarketcap.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Buffett bashes bitcoin as thriving on mystique, favours stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Billionaire investor Warren Buffett on Monday said buyers of bitcoin, which he has characterised as “rat poison squared,” thrive on the hope they’ll find other people who will pay more for it.

Likening bitcoin demand to the tulip bulb mania in 17th century Holland, Buffett, the chairman and chief executive of Berkshire Hathaway Inc, said the mystique behind the cryptocurrency has caused its price to surge.

“If you don’t understand it, you get much more excited,” Buffett said on CNBC television. “People like to speculate, they like to gamble.”

He said investors now are much better off owning US stocks, whose prices are elevated but not in a “bubble,” and it would take a “nanosecond” for him to choose stocks over 10- or 30-year US government bonds now yielding around 3%.

Read: Three lessons Buffett offered at the latest Berkshire Hathaway meeting

Charlie Munger, Buffett’s longtime business partner and a Berkshire vice chairman, is also no bitcoin fan, describing it as “worthless artificial gold.” He likened it to Oscar Wilde’s definition of fox hunting, calling it “the pursuit of the uneatable by the unspeakable.”

Buffett, 87, and Munger, 94, spoke two days after they presided at Berkshire’s annual shareholder meeting in Omaha, Nebraska, which was expected to have drawn more than 40,000 people.

It was the first meeting since Berkshire elevated longtime executives Greg Abel and Ajit Jain to vice chairmen, making them top contenders to replace Buffett as chief executive.

Buffett said their promotions have been “very, very good” for the company.

Berkshire has said its board knows who would become chief executive if the need arose.

One of its members, Microsoft Corp co-founder Bill Gates, said on CNBC “it’s not a horse race” between Abel and Jain.

Buffett renewed his desire to spend some of Berkshire’s low-yielding cash on a major acquisition. He said he would be happier if Berkshire had $30 billion of cash and equivalents, not the $108.6 billion it reported holding at the end of March.

“If a $100 billion deal came along that Charlie and I really liked, we’d get it done,” he said.

Buffett revealed last week Berkshire had bought about 75 million additional Apple Inc shares in the first quarter, adding to the 165.3 million it already owns. It now has a 5% stake in the iPhone maker, trailing only Vanguard Group and BlackRock Inc.

Buffett said he would be happy to see the Apple share price fall if it would spur repurchases.

Munger, meanwhile, said Berkshire may have been “a little too restrained” in buying Apple, saying “it’s reasonably priced and strong.” He added: “I wished we owned more of it.”

Buffett also said the list of CEO candidates has been “narrowed down” for the healthcare venture between Berkshire, Amazon.com and JPMorgan Chase. He said choosing the CEO will be “by far the most difficult decision we will make.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Warren Buffett dismisses bitcoin, says buying it not investing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Buying bitcoin is not investing, said Warren Buffett, CEO of Berkshire Hathaway, as reported by Business Insider.

According to the report in the American business news website, Buffett in an interview with Yahoo Finance said, “There’s two kinds of items that people buy and think they’re investing,” he said. “One really is investing and the other isn’t.”

He suggested that buying a farm, an apartment house would be perfectly satisfactory investment. “If you buy something like Bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more,” he said.

This isn’t the first time that Buffett has expressed his disagreement on the growing cryptocurrency market. Earlier, he made an argument dismissing the digital currencies in 2014 during an interview with CNBC.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What are cryptocurrencies?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Cryptocurrencies are digital or virtual currencies that can be used as a medium of exchange and are trying to fit into the traditional currency space.

As of today, cryptocurrencies are bought using legal tender and the value of one unit depends on the rise or fall in demand for the particular cryptocurrency.

Let’s take Bitcoin for example

Bitcoin, the world’s biggest and best-known cryptocurrency, has seen its share of booms and troughs in its valuation.

Bitcoin comes under the umbrella of cryptocurrencies. Litecoin, Ripple, Dash, among others, are also other examples of this form of digital currencies.

In two months Bitcoin saw a slump and rise, just like any other volatile market. The cryptocurrency in March was trading at nearly $8,200 per unit after touching its near four-month lows of $7,676. The entire cryptocurrency market was seen losing sheen and has lost over $60 billion in value in just one day, CNBC reported.

One of the key factors for this is due to the banning of the currency in various countries. Search giant Google, following Facebook’s suit, said that are planning to ban advertisements related to cryptocurrencies, which led the market dip.

Now, after the slump, the prices jumped on Thursday, led by a surge in bitcoin to two-week highs, with people active in the market citing a squeeze on traders who have bet against prices, given a lack of obvious news to trigger the gains.

How are cryptocurrencies introduced in the market?

Cryptocurrencies are introduced into the market much like a stock market offering, and are called Initial Coin Offering (ICO).

If one buys cryptocurrency in exchange of legal tender money, the cryptocurrency unit can be used wherever it is accepted, and all transactions are done virtually.

Are cryptocurrencies and cashless transactions the same?

Cryptocurrencies and cashless transactions may seem similar in many ways. But there’s a catch. Even though cashless transactions are also synonymously termed as digital payments there is a clear difference between the two.

Cashless transactions are authorised and tracked by the user’s bank account, making it as good as a transaction by legal tender currency. The bank provides their customers debit and credit cards, internet and mobile banking facilities.

Some banks, such as IDBI, have also started providing their customers virtual cards instead of the plastic cards that are used today.

Digital wallets, such as PayTM, are also a legitimate means of payment in India,  as the user links their bank account to the wallet to make payments.

In the case of cryptocurrencies, one unit of the cryptocurrency will hold the value of the legal tender currency sum, as per the market tide.

This means the value of one unit of the digital currency can range from Re 1 to Rs 1,00,000 or even higher, depending on its market value.

For cashless transactions, the value remains the same as that of the legal tender, which is authorised by the government.

In terms of legality, digital currencies are illegal in India and South Korea, among other nations. The United States, on the other hand, is looking into the idea of proposing cryptocurrencies.

If cryptocurrencies are banned, will it pose a threat to payment gateways?

That said, it does not mean that if a country bans cryptocurrency, it won’t pose a threat to the cashless gateways. For instance, India’s central bank reiterated that cryptocurrencies will be deemed illegal in its April policy meet.

NS Nappinai, Cyber Law Advocate, told CNBC-TV18, the move can take into account the payment system, i.e., payment wallets and debit or credit systems and said that “all of it can be blocked.”

In Budget 2018, Arun Jaitley, Finance Minister, said the government is looking for ways to regulate the cryptocurrency market.

Nappinai said she wouldn’t call this a ban. However, it “will effectively close the doors for a lot of cryptocurrency exchanges or brokerage platforms.”

The US, however,  is considering to roll out the ICO of OilCoins in the first quarter of this year. This will be the world’s first compliant and legal tender cryptocurrency as it will be supported by verified oil reserves and the exchange, the price of one OilCoin will be backed and decided by the authorities. OilCoins will work like tokens, where each unit of the currency will represent the value of one oil barrel.

With a superpower economy such as the US taking the lead, it is likely that other countries will follow suit.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoins worth $3 million stolen from Coinsecure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Coinsecure, an Indian cryptocurrency exchange, said nearly $3 million were stolen from its bitcoin wallet, the biggest reported so far in the country’s fledgling virtual currency market.

The theft is expected to further weaken trade in cryptocurrencies, which the government has likened to “Ponzi schemes” that offer unusually high returns to early investors.

Coinsecure, which has over 200,000 users trading on its platform daily, said that around 438 bitcoins, which were stored in a password-protected virtual wallet were siphoned off to an unknown destination on the internet after the details were leaked online.

“We regret to inform you that our bitcoin funds have been exposed and seem to have been siphoned out to an address that is outside our control,” the company said in a statement posted on its website.

Legal experts said there was a need to regulate the virtual currency market, instead of imposing restrictions on its trade.

“It is for reasons like these that there is a need to regulate crypto-exchanges,” said Anirudh Rastogi, founder and managing partner at TRA Law, a firm that specialises in emerging-technology businesses.

“Pushing the exchange business out from the formal economy to the informal cash economy to operate under the radar will worsen the problem, not solve it,” Rastogi said.

Coinsecure said it would compensate customers for losses from its existing funds.

Bitcoins in India were trading at 480,000 Indian rupees, or about $7,359 on Friday, according to cryptocurrency exchange Coinome, well below its international market price of about $7,771.

The Reserve Bank of India has already dealt a blow to the crytocurrencyexchanges, barring banks from facilitating trade on virtual currencies and mandating them to unwind their existing relationship with exchanges within three months.

Elsewhere in Asia, Vietnam and South Korea have also suffered millions of dollars worth of fraud and embezzlement in some of the cryptocurrency businesses. Earlier this year, one of Japan’s cryptocurrency exchanges was hit by a daring $530 million theft of digital money.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bitcoin price jumps to two-week high, leads broad crypto surge

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Cryptocurrency prices jumped on Thursday, led by a surge in bitcoin to two-week highs, with people active in the market citing a squeeze on traders who have bet against prices, given a lack of obvious news to trigger the gains.

On the Luxembourg-based Bitstamp exchange BTC=BTSP, bitcoin rose as much as 17% at one point in mid-morning European trading. By 1250 GMT, it was up 11% at $7,705, its highest level since March 29.

Other cryptocurrencies like Ethereum .MVETH and Ripple .MVXRP also rose sharply, gaining more than 10 percent. EOS, another virtual currency, rose more than 30 percent, according to CoinMarketcap.com, which tracks the industry.

After rocketing to almost $20,000 in December, bitcoin’s price has fallen this year on the back of worries about a regulatory clampdown and concerns it is a speculative bubble that is now deflating.

That has prompted some traders to bet heavily against – to short – bitcoin and other cryptocurrencies.

After their prices stabilised in recent days and rose earlier on Thursday, those shorts were squeezed out of their positions, forcing the price upwards.

Two people active in the cryptocurrency market said the biggest moves in trading of bitcoin had occurred on the Bitfinex exchange before spreading to other platforms.

“People overshorting on Bitfinex so bit of a squeeze there,” said Charles Hayter, founder of cryptocurrency analysis website CryptoCompare.

Sentiment towards cryptocurrencies has improved in recent days and prices were consolidating, which can lead the price to suddenly “explode” higher, said Naeem Aslam, an analyst at ThinkMarkets who owns and trades virtual currencies.

Other analysts said there was no obvious news behind the move, although one cited recent reports prominent billionaire trader George Soros had decided to start trading cryptocurrencies.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Cryptocurrency miner Canaan eyes IPO; bets on China’s push for chip industry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Canaan Creative, one of the world’s top cryptocurrency mining equipment makers, said it was considering an initial public offering and expected China’s push to promote the domestic chip industry to help drive growth for the company.

Hangzhou-based Canaan has seen a surge in demand for its mining machines amid a boom in cryptocurrencies, with bitcoin spiking more than 1,300% in 2017. The price of the digital currency has, however, halved so far in 2018.

Canaan shrugged off the recent volatility stemming from growing scrutiny of the sector, betting lower prices would bring in more demand. The company says it supplies around a quarter of the global bitcoin blockchain computing power.

Canaan is considering an IPO in Hong Kong or the United States, co-chairman Jianping Kong said in an interview.

“We … prefer listing outside mainland China as we are in a global business,” Kong said, without giving details on when or how much it expects to raise.

The company had in 2016 tried to list on the mainland through a 3.06 billion yuan ($485 million) back-door listing, but cancelled the plan after a regulatory deadlock. It also scrapped another plan to list on the New Third Board in China, Kong confirmed on Friday.

Kong said the decision was not driven by China’s regulatory crackdown on bitcoin, but because listing in the country takes too long, adding Canaan may consider a secondary mainland listing by issuing depository receipts.

“As an integrated circuit company, we are supported by government policies,” he said.

China’s semiconductor push 

China has introduced tax breaks for chipmakers producing in the country in a bid to cut dependence on foreign manufacturers as trade tensions with the United States soar.

This bodes well for makers of high-end chips used in cryptocurrency mining as China is also home to one of the world’s largest centres for such mining —where people solve complex mathematical puzzles with computers in order to be awarded virtual coins.

While cryptocurrency trading has come under scrutiny in China amid worries of financial risks, an underground ecosystem of peer-to-peer platforms has sprung up to allow bitcoin trading to thrive.

Canaan’s clients include individuals in China and companies outside the country, with many of its machines ending up in electricity-rich areas that have formed large bitcoin mines, such as Xinjiang, Inner Mongolia, Sichuan and Yunnan.

N G Zhang, the company’s 35-year-old founder and CEO, said Canaan employs around 200 in Beijing and Hangzhou, mostly in chip research and development, and is hiring more.

Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017.

Its main competitors include US-based Bitfury and Beijing-based Bitmain, which makes the “AntMiner”.

Canaan is now looking to add more products to its portfolio, such as home appliances with blockchain computing power and AI functions like “coin-mining TVs” that mine cryptocurrencies “while you sleep”, Kong said.

Canaan is developing its own AI chips and planning to launch equipment to mine other cryptocurrencies such as litecoin.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow