Capital is one of the key factors to help the rapid development of science and technology. We hope to gain more capital support through listing and ultimately realize our vision.
Editor’s note: This article is from WeChat public account “CV Intelligence” (ID: CVAI2019) , author Han Jinglian, Editor: Zhang Lijuan. Authorized to reprint.
Who will be the first domestic mining machine?” This year-long discussion finally came to a close: on November 21st, accompanied by Jia Nan’s CEO Zhang Nanyu, ringing Zhong Ling, Jia Nan Zhizhi Officially listed on the NASDAQ.
The initial issue price of the listing is $9, the initial supply is 10 million, and the amount of funds raised is $90 million.
Zhang Nanxuan said at the scene before ringing the clock that “technology is the most effective way to improve the efficiency of social operations and improve the way people live. Jianan has been fighting for this vision since its birth, and capital is the key to help the rapid development of science and technology. One of the factors, we hope to get more capital support through listing, and ultimately achieve our vision.”
Jia Nan’s enthusiasm is more like a concentrated expression of the emotions of mining machine entrepreneurs.
Since 2016, Jianan Zhizhi, Yibang International, and Bitian have continued to hit the capital market, but they all ended in failure.
This time, Jia Nan Zhizhi successfully landed on Nasdaq. As Zhang Nanxuan said, I came to New York from Beijing. This is a very magical journey. I hope that Jianan’s listing will also become a witness and a magical event in New York. one.
Mining machine VS chip
It is customary to call Jianan Zhizhi a “mine machine manufacturer”, but in the prospectus, Jia Nan’s position is “providing a supercomputing solution through a proprietary high-performance computing ASIC chip. company of”.
Of course, from the data of the prospectus, I am afraid that the former is more appropriate.
According to the data of the prospectus provided by Jianan, the total income of Jianan Zhizhi was about 960 million yuan in the first three quarters of 2019, which was 60.5% lower than the total income of 2.43 billion yuan in the first three quarters of 2018; net profit About -2.4100 million yuan, down nearly -260% from the net profit of 150 million yuan in the first three quarters of 2018.
In 2017 and 2018, the company achieved net income of 1.308 billion yuan and 2.705 billion yuan respectively; net profit was 376 million yuan and 122 million yuan respectively.
Specifically in the income structure section, in 2017, 2018 and the first half of 2019, the sales of Bitcoin mining machines and other Bitcoin mining machine parts and accessories accounted for 99.6% of the total revenue of Jianan Zhizhi, respectively, 99.7%. And 99.4%, the company’s dependence on the sale of mining machines can be seen.
Frost & Sullivan’s data also shows that as of the first half of 2019, in the total computing power of the globally sold bitcoin mining machine, Jia Nan Zhi Zhi accounted for 21.9%. The market share calculated by mining machine sales was 23.3%, ranking second. The first place is Bit China.
Jia Nan’s choice of mining machine and chip appeared in the first year of its establishment.
In April 2013, Zhang Nanxuan, who graduated from the Beijing University of Aeronautics and Astronautics, and Li Jiaxuan, who was an IC engineer at Zhongxing Microelectronics, each invested 100,000 yuan to establish “Beijing Jianan Zhizhi Technology Co., Ltd.”.
At that time, Zhang Nanxuan and the Chinese-American programmer Guo Yifu developed the first generation of Avalon mining machine, which was able to dig up 357 bitcoins a day at the time of calculation, according to the price at that time, one day Can produce more than 200,000 yuan. Affected by the open source of the Avalon mining machine, hundreds of mining machine assemblers have appeared in the market.
But at the same time as the company was founded, Jia Nan Zhizhi announced that it would terminate the sale of the whole mining machine, focusing only on the development and production of chips. However, due to the frustration of chip development, the mining machine could not be delivered on time. Jianan Zhizhi decided to return to the mining machine assembly market and auction the second-generation Avalon mining machine.
So, why does Jianan Zhizhi insist on making chips?
As we all know, the mining machine and Bitcoin are strongly bound. Jianan Zhizhi was founded on the eve of the bitcoin boom. It is also an important participant and vested interest of this boom. It is not difficult to explain why the Chinese blockchain The three unicorns are all mining giants.
However, the revenue structure is too concentrated, and the single one usually brings uncertainty to the company’s development, especially the mining machine sales will fluctuate with the fluctuation of bitcoin prices.
Kana’s explanation of the decline in income in the prospectus also indicates that the company’s performance is affected by bitcoin price fluctuations.Large, bitcoin prices directly affect the company’s market demand. Although bitcoin prices have rebounded this year, Jia Nan said that business performance usually lags behind the rise in bitcoin prices.
How to develop a new profitable and sustainable business while the mining business is shrinking? The AI chip became the choice of Jia Nan.
In 2018, Jia Nan Zhizhi officially launched the first generation AI chip “Guizhi K210”, and the commercialization of the product was officially launched in March this year. According to the data, as of September 30 this year, the company shipped more than 53,000 chips and development kits to AI product developers within six months.
For the future development plan of the chip, Jia Nan Zhizhi has given a plan in the prospectus: Currently developing the second generation 28nm AI chip products, and plans to start mass production of the second generation chips in the first quarter of 2020. At the same time, it is planned to launch the third generation 12nm AI chip in the second half of 2020.
In the 2019 World Semiconductor Conference, Zhang Nanyi, the founder of Jianan Zhizhi, told the media that the company’s AI business revenue is expected to reach tens of millions of yuan in 2019. The company’s goal is to plan to use three years to realize the company’s mining machine. The ratio of revenue to AI business reached 1:1.
Of course, behind this is Jia Nan’s consistent helm Zhang Nanyi: Jia Nan’s implementation of the CEO responsibility system under the management of the board of directors, the CEO has always been Zhang Nanzhen.
The prospectus data shows that Li Jiaxuan has the most shares, accounting for 16.2%, and Zhang Nanxuan is 16%, but at the same time, Jia Nan Zhizhi also introduced the AB share system to protect the founder Zhang Nanxuan’s voting rights. The 16% shares held by Zhang Nanyu are Class B shares and have 15 times the voting rights of Class A shares.
In other words, Chairman and CEO Zhang Nanyu owns all Class B common stock without over-allocation. This means that Zhang Nanxuan firmly controls Jianan’s control in the absence of major changes in the current senior management and corporate shareholding structure.
Specifically for the purpose of the IPO fundraising, Jia Nan said that it will be used for research and development of ASICs related to AI algorithms and applications; research and development of ASICs related to blockchain algorithms and applications; Global expansion of AI and blockchain business; optimization of supply chain and repayment of liabilities arising from corporate restructuring.
The final “mining machine”
This is not the first time Jianan Zhizhi has hit the capital market.
As early as June 2016, Jia Nan Zhizhi hoped to obtain a backdoor A-share company, Lu Yitong, but because the merger and acquisition plan showed that the shares of the first two major shareholders were close after the transaction was completed, there was suspicion of evading borrowing. At the same time, because of the overvaluation of the valuation and the promise of high performance, Luyitong terminated the major asset restructuring and Jianan Zhizhi’s listing plan was terminated.
In August 2017, Jia Nan Yu Zhi applied for listing on the New Third Board again, but he voluntarily gave up the listing after half a year. Prior to Jianan Zhizhi, the world’s third largest bitcoin mining machine manufacturer, Yibang, also tried to list on the New Third Board in August 2015.
After May 2018, Jia Nan Yu Zhi transferred to the front of the Hong Kong stock market, intending to submit a listing application on the Hong Kong Stock Exchange at a market value of 400 million US dollars. Six months later, the official website of the Hong Kong Stock Exchange classified Jia Nan’s listing application as “invalid”, and the road to listing was again disappointing.
For the twists and turns of the listing process, on November 12, 2018, Jia Jian, the chairman of Jianan Yuzhi, said at the event hosted by BlockVC that the company’s unsuccessful IPO in any market was not rejected, but because of the mining machine manufacturer. The downstream industries (encrypted digital assets) may be too far-sighted in the eyes of traditional auditing organizations, and the auditing agencies are not sufficiently aware of them, which directly affects the progress and results of the mining machine IPO.
In the “2019 Hurun Global Unicorn List” published by Hurun Research Institute, there are 11 blockchain enterprises on the list for the first time, including three Chinese companies, namely Bitland, Jianan Zhizhi and Yibang. International, this is also the industry’s so-called “domestic mining machine three giants.”
Among them, Yibang is mainly engaged in data communication and chip design, and its digital currency mining machine brand name is “Wingbit”. Different from Jianan Zhizhi, Yibang started from communication equipment and is not a pure mining machine enterprise.
Bitland is basically established at the same time as Jianan Zhizhi. Not only does the ant mining machine but also the self-operated mine, but in the past few years, it has also shown the characteristics of the business layout of “heavy mining machine and mining”.
According to Frost & Sullivan data, the market share of Bitian, Jianan, and Yibang International was 74.5%, 6.2%, and 4.5%, respectively, based on 2017 revenue. In other words, three Chinese manufacturers have earned more than 85% of the ASIC-based cryptocurrency market.
When Jianan continued to impact the IPO, the other two miner manufacturers submitted their listing applications to the Hong Kong Stock Exchange in the same year. The results showed that they failed.
Why can mining machine manufacturers not open the door to Hong Kong stocks? At the World Economic Forum in Davos, Switzerland in January this year, Li Xiaojia, president of the Hong Kong Stock Exchange, replied: mining machine operators are not in line with the core principles of HKEx’s “marketing adaptability”.
“You used to make billions of dollars through the A business, but suddenly said that you want to do B business in the future, but there is no performance. Then I think that you brought the A business listed.