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Bitcoin Group Releases New Prospectus, Delays IPO

Last Updated March 4, 2021 4:46 PM
Samburaj Das
Last Updated March 4, 2021 4:46 PM

Australian bitcoin miner Bitcoin Group has released another prospectus, now filed with the Australian Securities and Investments Commission (ASIC), a move that also saw the company postpone its initial public offering on the Australian Securities Exchange (ASX).

Cryptocurrency miner Bitcoin Group  has released yet another prospectus while delaying its listing on the ASX to address concerns put forth by the ASIC. The company was asked by the commission to appoint an “appropriately qualified independent expert” to explain the bitcoin mining process involved in mining the cryptocurrency. The expert was also requested to verify the bitcoin mining equation present in the Australian miner’s earlier prospectus to assess the feasibility of the operation.

The company has faced frequent delays in its quest to be the world’s first publically floated Bitcoin startup. A prominent incident included a retraction by the company against any suggestions that Australian Prime Minister Malcolm Turnbull was a shareholder.

The second replacement prospectus can be viewed here . [Google Drive PDF]

The Latest Bitcoin Group Prospectus

The Melbourne-based miner has revealed that it is seeking to raise $20 million through 100,000,000 new shares at an offer price of $0.20 per share.

The miner also notes that 90% of the capital raised will go directly into expanding its mining operation as well as meeting the costs of its existing operations. The remaining 10%, according to the prospectus will be used towards all expenses outside operations including employment, marketing costs and more.

Mining Pools

The prospectus also contains a 7-page report required by the ASIC from an independent expert, Professor Peter Taylor at the University of Melbourne at its School of Mathematics and Statistics. The report provides an overview of the Bitcoin mining process and the business of the mining industry.

Since Bitcoin Mining Group is a mining-only Bitcoin-based startup, the ASIC required an independent expert to report on matters of “how the Bitcoin Industry operates, the variables underpinning the Bitcoin Mining Equation and its impact on BCG (Bitcoin Group) and information setting out future performance of BCG.” The terms were revealed in the company’s second supplementary prospectus, which coincided with the company delaying its IPO to schedule it on January 20, 2016.

To overcome these concerns, the BCG notes that it has joined a mining pool wherein the collective operation of a number of miners and an increased hash power also increases the chance of mining a block. The prospectus further revealed that all of BCG’s mining activities to date have only been conducted through participation in mining pools, “because at only 1% of the Network Hash Rate, standalone Mining would be too volatile.”

In his report, Professor Taylor confirms the probability of an increased yield of bitcoins mined while in a collective mining pool as opposed to going at “it alone.”

Demonstrating calculations revealed in the prospectus, Professor Taylor notes:

Consider, for example, a miner with 0.5% of worldwide computing power…we can see that such a miner will, on average mine 131.76 blocks in a 183-day period.

Also, if it [the mining entity] participated in a pool with 5% of worldwide computing power and received 10% of the pool’s earnings then, with probability 0.9993…number of bitcoins generated from mining [would be] between 120.1 and 145 blocks.

On the other hand, if the mining entity decided to go it [sic] alone, the average number of blocks is the same but the actual number is more variable. Indeed, there is a 0.9991 probability that the number of blocks mined will lie anywhere between 96 and 170.

The latest prospectus, filed on December 24, 2015 has a new timetable for the IPO. The offer closes on January 25, 2016; the expected issue and allotment of shares on January 27, 2016 and the expected dispatch of holding statements on January 28, 2016. The expected listing on the ASX has now been postponed to February 2, 2016.

As it so happens, the ASX is also keen on bitcoin’s underlying technology – the blockchain. Australia’s biggest stock exchange is due to take a decision to overhaul its current clearing and settlement system in mid-2016 and ASX CEO Elmer Funke Kupper recently claimed that the company is taking a “very close look” at blockchain technology.

Featured image from Shutterstock.