Hindenburg Research Shorts Chinese Bitcoin Mining Maker; Ebang Continues its Fundraising Spree

Short-seller Hindenburg Research is shorting Chinese Bitcoin mining machine producer Ebang International Holdings. This sent the shares of the company (EBON) down 20% to $5.53. EBON shares have lost 63% of their value since the mid-March high. Ebang made its debut on Nasdaq in June last year, and during this period, it has made three fundraising rounds, one in November and two in February this year alone, raking in $170 million in the last two. According to Hindenburg, Ebang “claims” to be a leading bitcoin miner maker, but their research “indicates no evidence backs this extraordinary claim.” It further goes on to the point that ever since releasing its final miner in May 2019, its sales have been dwindling to near-zero, “delivering only 6,000 total miners in 1H20.” The ongoing bull run has fueled a surge in fundraising in the crypto sector, which raised $2.6 billion in just three months, more than the amount raised in the entire last year. Hindenburg has also been short on another Chinese blockchain company and took short positions in electric vehicle companies, including Nikola Corp, Lordstown Motors, insurer Clover Health, and Kandi Technologies Group Inc in the past year. According to the firm, its research revealed that instead of using the capital proceeds to develop its business, Ebang has been moving the cash out of the company through “a series of opaque deals with insiders and questionable counterparties.” Interestingly, this week, Ebang also announced the closing of its previously announced best-efforts follow-on public offering for the sale of 14 million units at a purchase price of US$6.10 per unit, for aggregate gross proceeds of approximately US$85.4 million. The company intends to use its net proceeds to expand its crypto mining business and for the establishment and operation of the mining farms, crypto exchange, and general corporate purposes. As we reported, Ebang announced the launch of its cryptocurrency exchange just this week, which Dong Hu, Chairman, and CEO of the company, said, “will not only expand the revenue sources from our cryptocurrency business but also optimize the development of our blockchain industry chain.”