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BY Fintan Ng - November 7, 2018

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Bitfury’s latest fundraise raises questions over IPO plans

Bitfury may opt out of an IPO after closing latest funding round
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Bitfury’s closing of a US$80mil private placement funding round raises the question of whether the startup is still planning an initial public offering (IPO).

The European bitcoin mining rig producer announced that Korelya Capital, a venture capital firm backed by Seoul-based Naver Corp, which also controls Japanese messaging firm Line Corp, led the funding round announced back in late July.

Bloomberg had reported in late October that the IPO was one of several options Bitfury was weighing, with early estimates for a valuation of US$3bil to US$5bil that could change depending on market and industry sentiments.

While Bitfury did not say how much of a stake was sold in the private placement, there could be reasons enough to hold off on an IPO given that bitcoin prices still remain nearly 53% lower than in the beginning of the year, which has had a negative impact on rig prices too.

The IPO, according to Bloomberg, would have been Europe’s first large listing in the industry.

Other investors in the latest round included Macquarie Capital, Dentsu, a stable of European private equity and asset management firms including Armat Group, Jabre Capital Partners, Lian Group, Argenthal Investment Partners, iTech Capital and Paris-based insurer MACSF.

New York-based crypto investment bank Galaxy Digital also took part in the placement exercise.

Bitfury cofounder/CEO Valery Vavilov, who together with cofounder Valery Nebesny hold a majority stake in the startup, says in a press release that the private placement reflects Bitfury’s achievements and ability to address adjacent market segments in high-performance computing, including in emerging technologies such as artificial intelligence.

“The institutionalisation of blockchain and cryptocurrencies, partnered with the opportunity of these emerging technologies, is a natural expansion opportunity that Bitfury will build on – in 2019 and beyond,” he says.

Speculation over Bitfury’s IPO plans comes after Asian competitors Bitmain, Canaan Creative and Ebang have all filed for listings in Hong Kong this year.

Their IPO filings have been overshadowed by the fall in rig prices following the decline in the crypto markets with Taiwan Semiconductor Manufacturing Co and Advanced Micro Devices, who make the chips that the rigs used, indicating that the outlook for their blockchain-related business has dimmed.

Besides producing rigs, Bitfury also operates a bitcoin mining pool, but the hash rate or computing power used to mine the cryptocurrency, is far smaller than Bitmain’s, which owns AntPool and BTC.com and is the sole investor in another, ViaBTC.

Bitfury raised US$30mil in a venture round in early 2017 from Credit China Fintech Holdings.

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