The attempt to publicly list on the Australian Stock Exchange (ASX) by bitcoin mining firm Bitcoin Group has for the second time failed to materialize.
After claiming to have raised almost $6 million dollars in January 2016, Bitcoin Group announced today that it is withdrawing its “Second Replacement Prospectus” to list on ASX and will return all IPO subscription application monies to investors.
According to the company, the main reason for the offer withdrawal is a requirement by the Australian Securities and Investment Commission (ASIC) that Bitcoin Group procure a working capital report from an independent accounting firm, a report not specifically required for a listing on the ASX. In preparing the report, the independent accountant Grant Thornton was required to factor in the reduction of newly minted bitcoins released resulting from the upcoming July 2016 Bitcoin block halving.
The mining company’s major concern is that the independent report does not consider an “expected increase in bitcoin price.” The Directors of Bitcoin Group stated:
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.
Moreover, Bitcoin Group management wanted investors to understand that the preparation of the report did not have regard to other upsides of block halving, a decrease in mining difficulty and increases in mining equipment efficiency.
Apparently ASIC even rejected Grant Thornton’s “base case” forecast of the Bitcoin price at $500 that would require the company to raise funds again by September 2017. ASIC also required the company to reopen its offer and raise additional funds to “an amount sufficient to deliver it adequate working capital to carry out its stated objectives and to have a sustainable business model.”
As a result, the directors of the company withdrew from the IPO process and will consider proceeding with a new offer after block halving has occurred and the bitcoin price response, which they expect to occur by September 2016.
For the bitcoin company, the road to an ASX IPO has been fraught with difficulties and setbacks. In 2015, Bitcoin Group was forced by the Australian Securities and Investment Commission (ASIC) to make six different extensions to its IPO application and revisions to its IPO prospectus. ASIC continued to require Bitcoin Group to revise its application and prospectus after issues rose over different issues that ranged from public revenue and profitability claims made by the bitcoin company over social media to information in its prospectus about the bitcoin mining process and the bitcoin mining equation.