Bitcoin Group Cancels IPO after ASX Raises Liquidity Concerns, Refunds Investors

After its year(s)-long endeavor to be the world’s first publicly listed bitcoin miner, Australian bitcoin mining firm Bitcoin Group Ltd., has been forced to withdraw its IPO.

The move comes after the Australian Securities Exchange (ASX) sought the miner to make a fresh offer. The exchange wasn’t convinced the company had enough liquidity to make it through its first year on the market.

The cryptocurrency miner confirmed that it would be refunding the AUD $5.9 million it raised from its IPO offering, back toward investors. The company pointed the finger at the ASX for not considering the expected price increase of bitcoin following the upcoming block halving in July 2016.

According to the miner, the ASX demanded a capital report from an independent accounting firm, even though the report wasn’t mandatorily necessary for a listing.

In an update to its investors, the company stated:

The key reason for the withdrawal of the offer is due to the requirement of the ASX, that Bitcoin Group procure a working capital report from an independent auditing firm, a report not specifically required for a listing on the ASX.

The miner proceeded to provide the capital report from an independent accountant to reveal that the price increase of the cryptocurrency wasn’t considered in the report.

[T]he independent accountant was required to factor in the reduction of newly minted bitcoins released on occurrence of block halving in July 2016, without regard to the expected increase in bitcoin price.

Crucially, the investor update revealed that the working capital report confirmed that the miner had sufficient working capital to meet its objectives over the 12-month period, even if the bitcoin price swell wasn’t considered. Notably, the working capital report which proved to be the catalyst for the miner to withdraw its IPO, identified that it had no regard to the potential upside of block halving, for the miner.

The investor update further added:

The last time block halving occurred (28 November 2012), the bitcoin price increased in value by 1032% in the proceeding 6 months (from US$12.16 to US$125.58). Unfortunately, ASIC prohibited any forecasting on the bitcoin price which resulted in a report which did not allow for any increase in bitcoin price upon the number of bitcoins available to be mined halving in July 2016.

Finally, the miner noted that it expects the price of the cryptocurrency to respond to the July 2016 halving, with the price increase expected “to occur by September 2016.”

Bitcoin Group’s Directors “intend to proceed with a new offer after block halving to allow time for the bitcoin price to reflect the reduced number of bitcoins being released,” the statement confirmed.

Altogether, the company has now delayed its public float by no fewer than six times. The miner also came short of its intended goal of raising AUD $20 million for its IPO –when it was offered this year – to see only AUD $5.6 million raised.

Featured image from Shutterstock.

Last modified (UTC): March 9, 2016 1:25 PM

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Samburaj Das @sambdas

Samburaj is the Editor for CCN, among the earliest and foremost publications covering blockchain, cryptocurrency and financial technology news. He has authored over 1,500 articles for CCN and is invested in Bitcoin. Email him samburaj(@)ccn.com or find him barely tweeting @sambdas

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