Want to be the second Bitcoin company to go public? It's not that easy

【Abstract】The second Bitcoin company, Bitcoin Group, attempted to list on the Australian Stock Exchange. However, it was forced to issue a supplementary prospectus three times and delayed its public float for the fifth time, which was postponed to mid-January.

Velvet Gold Mine · 5 hours ago

Author: Velvet Gold Mine Image source: Dazhi

The second bitcoin company, Bitcoin Group, attempted to list on the Australian Securities Exchange. But it was forced to issue a supplementary prospectus three times and delayed its public float for a fifth time, to mid-January.

The latest changes follow a series of missteps and were rebuked by watchdog the Australian Securities and Investments Commission.

The second supplement to the replacement prospectus issued by Bitcoin Group mentioned a listing date of January 6. But this is too far from the launch date proposed by the Australian Securities and Investments Commission, which is September 4.

The listing rules state that if the prospectus is filed three months before the company goes public, it must return all the money it raised from investors. Bitcoin Group hopes to raise $20 million at 20 cents per share, called Bitcoin "miners". This requires buying digital currency by solving some complex equations and then recording the transaction on the blockchain (Bitcoin online wallet). The blockchain allows for formal and classified accounting. Between 2014 and 2015, Bitcoin Group mined nearly $2 million worth of encrypted electronic currency.

Bitcoin is notoriously volatile, so the prospectus outlined a range of predictable outcomes that would put the unit price between $250 and $550.

Second Bitcoin Startup to Go Public Soon

If Bitcoin Group successfully launches Bitcoin, it will create a market capitalization of nearly $33 million and will become the second Bitcoin startup to be listed on the Australian Stock Exchange, second only to digitalBTC (Australia's well-known Bitcoin company). In 2014, digitalBT joined the Australian Stock Exchange through a $9.1 million reverse listing.

DigitalBTC started out as a bitcoin merchant before changing its business model to become a remittance provider between the United States and Latin America, using bitcoin's distributed ledger - the blockchain. The Australian Securities Exchange has issued two orders to stop Bitcoin Group's fundraising. The first was within two weeks of receiving its original prospectus - which set a listing date of September 2; the second was before Bitcoin Group's prospectus was approved and lodged, after it was discovered that it was promoting its fundraising through the Chinese social media platform WeChat. The company's third prospectus states that 90% of the funds raised, about $18 million, will be used to develop its business. These businesses are mainly carried out on three websites, one in China, one in Iceland, and a newer one in Australia.

If the IPO is sold out, 5% of the financing, up to about $500,000, will go into a bonus fund. But this must be within 60 days of listing. The directors will repay the $230,000 loan. Individuals can get up to $150,000 from the bonus fund. But even if the company manages to raise $10 million, the bonus fund is the same.

Net profit as bonus

After the 2015-2016 fiscal year, if Bitcoin Group reaches its target of $10 million in net profit after tax, it will pay out 20% of its net profit as a bonus.

In June 2015, Bitcoin mining revenue was $1.73 million, with a total profit of $10,000.

Solving the Bitcoin crypto puzzle requires building facilities in focused jurisdictions with low electricity costs and allowing for large amounts of power to run complex computers.

The remaining 10 per cent will be used to repay a $230,000 start-up loan raised by the three directors, marketing fees and listing costs. When the proposal is completed, ASX shareholders will own more than half of the company, about 60.6 per cent. Three executive directors - Samuel Lee, Ryan Xu and Allan Guo - will own 8.6 per cent of the total. The majority of Bitcoin Group's revenue, about 98.5 per cent of its revenue, is through its Chinese operations. The prospectus lists this as a key risk in the business, along with volatile bitcoin prices and a relatively new industry that is finding its way.

JPM compiled from

SMH, Second Bitcoin IPO Delayed for Fifth Time, by Shaun Drummond.