![Where is Bitcoin Price headed?](https://i2.cdn.turner.com/money/dam/assets/180926134329-markets-now-s2-09-26-novogratz-bitcoin-1024x576.jpg)
Bitcoin’s massive debut on the stock market couldn’t have come at a worse time.
Three of the world’s top cryptocurrency technology makers are planning to sell shares, giving investors a new way to bet on digital currencies. They reportedly hope to raise billions of dollars.
Unlike dollars or euros issued by central banks, cryptocurrencies are based on computer code. Bitcoin, for example, is created and traded through a process of “mining” in which computer algorithms solve increasingly complex mathematical problems.
China-based Bitmain, Canaan and Yibang International make money by selling high-tech components and systems that power mining. Together, They dominate the industry.
But the three companies operate in a young and unpredictable industry and are planning initial public offerings in Hong Kong amid brutal market conditions. Bitcoin’s price surged to nearly $20,000 in December and has since plunged by about two-thirds. Other cryptocurrencies such as Ethereum also plummeted.
“If the market price of cryptocurrencies suddenly drops… the demand for our mining hardware and cryptocurrency mining services will also drop rapidly,” Bitmain warned potential investors this week.
![01 Bitmain ASIC files are restricted](https://i2.cdn.turner.com/money/dam/assets/180927091028-01-bitmain-asic-file-restricted-780x439.jpg)
Most importantly, these companies plan to list on the Hong Kong stock market, It entered a bear market this month, plunging more than 20% from its previous peak due to concerns about China’s economic slowdown and the trade war with the United States.
The mining technology company has not yet revealed exactly when it plans to go public or how much capital it is seeking to raise. Bitmain and Canaan declined interview requests, while Ebrun International did not respond to requests for comment.
“These companies may seek to cash out before the market plunges further,” said Benjamin Quinlan, founder of Hong Kong-based financial services consultancy Quinlan & Associates.
He noted that despite recent setbacks, cryptocurrencies are slowly gaining more acceptance from mainstream investors and that the top three mining companies are still seeing revenue growth. But the industry faces significant challenges.
The key lies in how governments regulate digital currencies. Last year, China banned most activities involving Bitcoin.the country is Still considered home to a large number of cryptocurrencies mining operations, but authorities have been trying to drive them out.
![20180927-bitcoin-mining-chart](https://i2.cdn.turner.com/money/dam/assets/180927161837-20180927-bitcoin-mining-chart-780x439.jpg)
Cryptocurrency miners require large amounts of electricity to run rooms full of computing equipment around the clock.Some public utilities in the United States Higher tariffs have been introduced specifically for miners.
“The increase in the cost of Bitcoin mining will reduce demand for mining equipment, thereby hindering the performance of these companies,” Quinlan said.
Mining cryptocurrencies is no longer as profitable as it once was.
Bitcoin mining activity has exploded over the past year, driving demand for the technology. But this means that the profits from mining will be more dispersed among more users. This could impact future demand for mining equipment.
Will the mining boom last?
Bitmain, Canaan and Ebrun International all posted profits in their latest fiscal year, according to documents outlining their intention to go public.
But Wang Leilei, a Shanghai-based consultant at research firm Kapronasia, said staying profitable will be a “huge challenge.”
These companies are aware of the risks they face and are working to adapt. For example, they said they are increasing investment in more advanced chip technology that can be used in areas such as artificial intelligence, cybersecurity and connected devices.
![He Bet on Bitcoin and Lost Almost Everything](https://i2.cdn.turner.com/money/dam/assets/180910151435-bitcoin-investment-loss-00020420-1024x576.jpg)
While the Chinese government generally takes a hard line on cryptocurrencies, it is eager to bolster the country’s technological prowess in areas such as computer chips. Chinese companies still rely heavily on foreign chip technology, especially American chip technology.
“regardless Whether (cryptocurrency companies) can successfully transform remains to be seen,” Wang said.
For now, their fate is tied to that of the wider industry.
Quinlan predicted that “cryptocurrencies may fall out of favor” without more mainstream adoption in the near future. He said that when the overall cryptocurrency market shrinks, mining equipment manufacturers will find it extremely difficult to survive.
But Bitcoin bulls remain hopeful that Bitcoin will recover as financial exchanges and large companies start to take Bitcoin more seriously.
“It feels like it’s going to rise as people become more accepting of it,” Mike Novogratz, CEO of cryptocurrency investment firm Galaxy Digital, told CNN this week.
CNN Business Channel (Hong Kong) First published September 27, 2018: 6:56am ET