Australia’s Bitcoin Group withdraws IPO

Australian Securities Exchange Centre

Bitcoin Group – an Australian-based bitcoin miner – announced Wednesday it is withdrawing its IPO after the Australian Securities Exchange (ASX) said the company would have to make a new offer to investors because the exchange is not convinced Bitcoin Group has enough cash to get through its first year on the market, reported the Sydney Morning Herald.

Planning to return the $5.9 million it raised to investors, Bitcoin Group places blame on the ASX, stating the exchange did not allow forecasts on the highly volatile bitcoin price to be used in an assessment of the miner’s working capital, said the newspaper.

The Wall Street Journal reported that Bitcoin Group plans to consider a fresh offer after a block halving later this year when bitcoin’s value is expected to move sharply.

Bitcoin Group’s IPO would have been the first offering in Australia of a bitcoin miner, said the Wall Street Journal. The newspaper reported the company had already resent its IPO prospectus twice since it was first submitted to the Australian Securities and Investment Commission in June 2015, after the regulator first rejected a financial forecast then questioned the reasonableness of Bitcoin Group’s mining model. Following months of delays, the company’s IPO closed on January 25.

The Wall Street Journal reported that an ASX spokesman confirmed that Bitcoin Group had been notified it had yet to meet listing requirements, namely proven it had enough working capital to carry out its objectives.

In a letter to Bitcoin Group chief executive Sam Lee, the exchange said a report the firm supplied indicated a base-case scenario in which Bitcoin Group would need an additional capital injection beyond September 2017.

The Wall Street Journal reported that Bitcoin Group said the independent accountant the ASX required it to hire to produce the working capital report had to account for the reduction of newly minted bitcoins with the anticipated “block halving” this year, but without factoring in an expected increase in bitcoin’s price.

The company said that last time block halving took place, back in November 2012, the price rose by more than 1,000 percent in value in the following six month. There’s a limit on how many bitcoins can be generated, and once every four years the number of bitcoins that can be mined every 10 minutes is reduced by half.

“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,” said Bitcoin Group, as reported by the Wall Street Journal.

The company said in a statement to investors that it will continue to work hard to expand its bitcoin mining operations and network share.

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Featured (homepage) image – ASX Marketing (Copyleft – Free Art License)

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