form f 9 mining bitcoins

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Form f 9 mining bitcoins ufc betting odds 1930s fashion

Form f 9 mining bitcoins

Description of American Depositary Shares. Shares Eligible for Future Sale. Expenses Related to this Offering. Legal Matters. Index to Consolidated Financial Statements. This prospectus contains estimates and information concerning our industry, including our market position and the size and growth rates of the markets in which we participate, that are based on industry publications and reports.

This information involves a number of assumptions and limitations, and you are cautioned not to place undue reliance on these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. These and other factors could cause results to differ materially from those expressed in these publications and reports.

No dealer, salesperson or other person is authorized to give any information or to represent as to anything not contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. You must not rely on any unauthorized information or representations. The information contained in previous listing applications does not and will not form a part of this prospectus, and you should not place any reliance on any such information.

This prospectus is an offer to sell, and we are seeking offers to buy, only the ADSs offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or any sale of the ADSs.

Table of Contents Neither we nor the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where other action for that purpose is required, other than in the United States.

Persons outside the United States who come into possession of this prospectus or any free writing prospectus filed with the United States Securities and Exchange Commission, or SEC, must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in the ADSs. We provide supercomputing solutions through our proprietary high performance computing ASICs. Our visionary management team has a clear strategy to commercialize supercomputing technology. In January , Mr. Nangeng Zhang, our chairman and chief executive officer, and his team, invented and delivered one of the first cryptocurrency mining machines incorporating ASIC technology.

Such experience provided us with a solid foundation in terms of both technology and capital resources, which better prepared us for further research and development involving AI chips. During the same period, our Bitcoin mining machines sold accounted for In September , we became the first in the industry to deliver commercial edge computing AI chips based on Risc-V architecture, which is a set of instructions that describes the way in which software talks to an underlying processor, and self-developed neural-network accelerator, which is a class of microprocessor designed as hardware acceleration for AI applications, with outstanding performance.

We have developed significant advantages in our business and technological capabilities, including the following:. Our mastery of the whole IC design process;. Our years of accumulated engineering experience in applying theoretical research to the mass production of new products, producing in aggregate over million ASICs in , and the six months ended June 30, ;. Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives;.

Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for blockchain and AI solutions;. Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our years of ASIC design experience;.

Our ability to provide a holistic AI solution to our customers, including AI chips, algorithm development and optimization, hardware module, end-product and software services; and. Table of Contents The price of Bitcoin experienced a significant drop in and remained relatively low through the end of the first quarter of , while experiencing some recovery starting from the second quarter of The price of Bitcoin has a direct impact on the market demand for our Bitcoin mining machines, in terms of both the price and the quantity, and we expect this trend to continue.

Furthermore, the significant drop in the Bitcoin price has had a negative effect on the value of our Bitcoin mining machine inventory. We expect our results of operations to improve along with the recovery of the Bitcoin price, but our results of operations generally lag behind the increase in the Bitcoin price.

Furthermore, fluctuation in Bitcoin price can have direct impact on the trading price of the ADSs. Our total revenues increased by During the same period, our net income decreased by Our total revenues decreased by Our net income was RMB Our Competitive Strengths.

We believe that the following strengths contribute to our success and differentiate us from our competitors:. We are a leading provider of supercomputing solutions. We are able to achieve a fast time-to-market. We were the first in the industry to deliver commercial edge computing AI chips on Risc-V architecture and self-developed neural-network accelerator with outstanding performance. Our outstanding production track record and strong supply chain management ensure our product quality and production capability.

Our ability to make sustainable investments in AI technology. We have a visionary management team, as well as a talented research and development team. Our Growth Strategies. We intend to grow our business using the following key strategies:. Strengthen our leadership position in supercomputing solutions. Continue to invest in high power efficiency IC design. Continue to introduce new AI products. Enhance our AI platform business model to build on our AI products.

Continue to enhance our supply chain management. Continue to expand our overseas operations. Table of Contents Our Challenges. Our ability to execute our strategies is subject to risks and uncertainties, including:. Fluctuation of the Bitcoin price. Acceptance and regulation of Bitcoins and Bitcoin mining.

The classification of cryptocurrency mining as an eliminated industry by PRC government authority. The significant revenue contribution from our Bitcoin mining machines. Our ability to succeed in the AI market. Constant technological changes in the industries we operate in.

Uncertainties in our research and development activities. Our reliance on limited suppliers. Empowered by the academic training and technical expertise of our co-founders, we have focused on the design of high performance, repeated computing ICs since our inception. As we further developed, Hangzhou Canaan went through a series of capital injections and became a holding company for our PRC operating subsidiaries.

With the growth of our business and in order to facilitate international capital investment in us, we underwent an offshore reorganization in the first quarter of It was later renamed Canaan Inc. In March , in order to mirror the shareholding structure of the then shareholders of Hangzhou Canaan, we issued and allotted our ordinary shares at par value to investment holding companies held by the then shareholders of Hangzhou Canaan.

Table of Contents The following diagram illustrates our corporate structure as of the date of this prospectus. It omits certain entities that are immaterial to our results of operations, business and financial condition.

Our Corporate Information. Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above. Our corporate website is www. Implications of Being an Emerging Growth Company. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise.

Table of Contents not applicable generally to public companies. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.

We intend to avail ourselves of the extended transition period for complying with new or revised accounting standards provided under the JOBS Act. As a result, as we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Conventions That Apply to This Prospectus. Unless we indicate otherwise, references in this prospectus to:. Our reporting currency is the Renminbi. This prospectus also contains translations of certain foreign currency amounts into U.

Unless otherwise stated, all translations of. Table of Contents Renminbi into U. We make no representation that the Renminbi or U. Except as otherwise indicated, all information in this prospectus assumes:. Glossary of Technical Terms. This glossary contains explanations of certain terms used in this prospectus in connection with our company and our business. ADSs Offered by Us.

Public Offering Price. Over-Allotment Option. The ADSs. Ordinary Shares. Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights.

Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Upon any sale or transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, or upon a change of beneficial ownership of Class B ordinary shares as a result of which any person who is not an affiliate of the registered shareholder becomes a beneficial owner of such shares, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares.

We do not know if these persons will choose to purchase all or any portion of these reserved ADSs, but any purchases they do make will reduce the number of ADSs available to the general public. Any reserved ADSs not so purchased will be offered by the underwriters to the general public on the same terms as the other ADSs. Proposed Trading Symbol. The following summary consolidated statements of income loss and cash flows data for the six months ended June 30, and and the summary consolidated balance sheet data as of June 30, have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus.

Our consolidated financial statements are prepared and presented in accordance with U. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all normal recurring adjustments that we consider necessary for a fair statement of our financial position and operating results for the periods presented. Our historical results are not necessarily indicative of results to be expected for any future period.

Net revenues:. Products revenue. Service revenue. Other revenues. Total net revenues. Cost of revenues. Gross profit. Operating expenses:. Research and development expenses 1. Sales and marketing expenses 1. General and administrative expenses 1. Total operating expenses. Income loss from operations :. Interest income. Investment income. Interest expense and guarantee fee.

Foreign exchange loss gain, net. Value added tax refunds. Other loss income, net. Income loss before income tax expenses. Income tax expense. Net income loss. Foreign currency translation adjustment, net of nil tax.

Total comprehensive income loss. Share-based compensation expenses were allocated to the following expense items:. Research and development expenses. Sales and marketing expenses. General and administrative expenses. Cash and cash equivalents.

Restricted cash. Accounts receivable. Prepayments and other current assets. Income tax receivable. Property, equipment and software. Total assets. Short-term debts. Contract liabilities. Accrued liabilities and other current liabilities. Total liabilities. Summary Consolidated Statements of Cash Flow:. Net cash provided by used in operating activities. Net cash provided by used in investing activities. Net cash provided by used in financing activities.

Effect of exchange rate changes on cash and cash equivalents, restricted cash. In evaluating our business, we consider and use adjusted net income as a supplemental measures to review and assess our operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U.

We believe that adjusted net income helps to identify underlying trends in our business that could otherwise be distorted by the effect of the expenses that we exclude in adjusted net income. We believe that adjusted net income provides useful information about our operating results, enhances the overall understanding of our past.

Table of Contents performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. GAAP, is not presented in accordance with U. GAAP and has limitations as an analytical tool. One of the key limitations of using adjusted net income is that it does not reflect all of the items of income and expense that affect our operations.

Share-based compensation has been and may continue to be incurred in our business and is not reflected in the presentation of adjusted net income. GAAP performance measure, all of which should be considered when evaluating our performance.

We encourage you to review our financial information in its entirety and not to rely on a single financial measure. Share-based compensation expenses. Adjusted net income loss. Summary Operating Data:. The following table sets forth the sales volume and average selling prices generated by our different Bitcoin mining machines for the periods indicated:.

A7 series 1. A8 series 2. A9 series 3. A10 series 4. Mainly includes our A, A and A Bitcoin mining machines. Mainly includes our A and A Bitcoin mining machines. Mainly includes our A Bitcoin mining machines. Table of Contents The following table sets forth the total computing power sold and average selling prices of our Bitcoin mining machines expressed in terms of computing power for the periods indicated:.

The table below sets forth the sales cost, per unit costs and the selling cost in terms of computing power of our Bitcoin mining machines for the periods indicated:. A7 series 2. A8 series 3. A9 series 4. A10 series 5. Without taking into consideration the inventory and prepayment write down provision of nil, RMB You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below and our consolidated financial statements and related notes, before making an investment in the ADSs.

Any of the following risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and prospects. The market price of the ADSs could decline significantly as a result of any of these risks and uncertainties, and you may lose all or part of your investment. Risks Relating to Our Business and Industry. Our results of operations have been and are expected to continue to be negatively impacted by sharp Bitcoin price decreases.

The demand for, and pricing of, our Bitcoin mining machines is determined primarily by the expected economic return of Bitcoin mining activities, which in turn is significantly affected by expectations with respect to the Bitcoin price, among other factors. The price of Bitcoin has experienced significant fluctuations over its short existence and may continue to fluctuate significantly in the future.

The decrease in the Bitcoin price in resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines. As the Bitcoin price only started to recover in the second quarter of and our operations generally lag behind the increase of Bitcoin price, our revenue for the six months ended June 30, also decreased by We expect our results of operations to continue to be affected by the Bitcoin price, as Any future significant reductions in the price of Bitcoin will likely have a material and adverse effect on our results of operations and financial condition.

We cannot assure you that the Bitcoin price will remain high enough to sustain the demand for our Bitcoin mining machines or that the Bitcoin price will not decline significantly in the future. Furthermore, fluctuations in the Bitcoin price can have an immediate impact on the trading price of the ADSs even before our financial performance is affected, if at all.

Various factors, mostly beyond our control, could impact the Bitcoin price. For example, the usage of Bitcoins in the retail and commercial marketplace is relatively low in comparison with the usage for speculation, which contributes to Bitcoin price volatility.

If the Bitcoin price or Bitcoin network transaction fees drop, the expected economic return of Bitcoin mining activities will diminish, thereby resulting in a decrease in demand for our Bitcoin mining machines. As a result, we may need to reduce the price of our Bitcoin mining machines. At the same time, if transaction fees increase to such an extent as to discourage users from using Bitcoins as a medium of exchange, it may decrease the transaction volume of the Bitcoin network and may affect the demand for our Bitcoin mining machines.

In addition, any shortage of power supply due to government control measures or other reasons, and any increase in energy costs, would raise the costs of Bitcoin mining. Furthermore, fluctuations in Bitcoin price may affect the value of inventories as well as the provision we make to the inventory as we manage our inventories based on, among others, the sales forecast of our Bitcoin mining machines. As we generally increase our procurement volume and stock up finished goods for the launch of new products or we expect a surge of demand of Bitcoin mining machine, a significant drop in the Bitcoin price can lead to a lower expected sales price and excessive inventories, which in turn will lead to impairment losses with respect to such inventories.

For example, in , as a result of the significant drop in the Bitcoin price, we recorded an inventories and prepayments write down of RMB Table of Contents in turn had a significant negative impact on our profitability. If the Bitcoin price drops significantly in the future, we may need to make similar write-downs again.

To the extent we are able to sell such inventories above its carrying value, our gross profit may also be inflated by such write down. The Bitcoin price drop in also caused our customers who purchased our Bitcoin mining products on credit to be less willing to make payment. We consider such portion of payment as implicit price concession and we retroactively adjusted our revenue based on such subsequent information. We derive a significant portion of our revenues from our Bitcoin mining machines.

If the market for Bitcoin mining machines ceases to exist or diminishes significantly, our business and results of operations would be materially harmed. Sales of our Bitcoin mining machines, which incorporate our proprietary ASICs, historically generated substantially all of our revenue, and are expected to continue to generate a significant portion of our revenue in the foreseeable future.

In , and the six months ended June 30, , sales of our Bitcoin mining machines and other Bitcoin mining machine parts and accessories accounted for If the market for Bitcoin mining machines ceases to exist or diminishes significantly, we would experience a significant loss of sales, cancelation of orders, or loss of customers for our Bitcoin mining machines.

Adverse factors that may affect the market for Bitcoin mining machines include:. Another cryptocurrency displaces Bitcoin as the mainstream cryptocurrency, thereby causing Bitcoin to lose value or become worthless, which could adversely affect the sustainability of our business;. Bitcoin fails to gain wide market acceptance and fails to become a generally accepted medium of exchange in the global economy due to certain inherent limitations to cryptocurrencies;.

Over time, the reward for Bitcoin mining in terms of the amount of Bitcoin awarded will decline, which may reduce the incentive to mine Bitcoin. Specifically, the next halving event is designed to occur in , and Bitcoins are expected to be fully mined out by the year Therefore, Bitcoin mining machines may become less productive as the available rewards for Bitcoin mining decrease.

If we cannot maintain the scale and profitability of our Bitcoin mining machines and, at the same time, successfully expand our business in the AI market, our business, results of operations and ability to continue to grow will suffer. Furthermore, excess inventories, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our Bitcoin mining machines could all have a material and adverse impact on our business, financial condition and results of operations.

If we fail to succeed in the AI market or other new application markets we seek to penetrate into, our revenues, growth prospects and financial condition could be materially and adversely affected. Until , we have been offering a single line of Bitcoin mining machines, which historically accounted for substantially all of our total revenue. As of June 30, , we shipped more than 26, AI chips and development kits.

Our future revenue growth will depend largely on our ability to successfully expand our business in the AI market and penetrate into new application markets. We cannot predict how or to what extent the demand for our products in the AI market will develop going forward. If the AI market does not develop as we currently anticipate and we are unable to penetrate into new application markets, our future revenue and profits could be materially and adversely affected.

We plan to work closely with our partners in product development to enhance our visibility in new market trends and meet customer demand by devoting more resources to research and development. We may also need.

Table of Contents to recruit more employees for research and development and product development, such as software engineers. We intend to continue to capitalize on market opportunities for introducing new product applications and conduct advance planning for our next-generation products in a timely manner. However, if we fail to penetrate into any of these or other new markets to which we devote our resources, we may not be able to generate returns on our investments and our financial condition could suffer.

The industries in which we operate are characterized by constant changes. If we fail to continuously innovate and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing customers, and hence our business and results of operations may be adversely affected. The industries in which we operate are characterized by constant changes, including rapid technological evolution, continual shifts in customer demands, frequent introductions of new products and solutions and constant emergence of new industry standards and practices.

Thus, our success will depend, in part, on our ability to respond to these changes in a cost-effective and timely manner. We need to anticipate the emergence of new technologies and assess their market acceptance. We also need to invest significant resources in research and development in order to keep our products competitive in the market. However, research and development activities are inherently uncertain, and we might encounter practical difficulties in commercializing our research and development results, which could result in excessive research and development expenses or delays.

Given the fast pace with which blockchain and AI technologies have been and will continue to be developed, we may not be able to timely upgrade our technologies in an efficient and cost-effective manner, or at all. In addition, new developments in AI, deep learning, IoT, computer vision, blockchain and cryptocurrency could render our products obsolete or unattractive.

If we are unable to keep up with the technological developments and anticipate market trends, or if new technologies render our technologies or solutions obsolete, customers may no longer be attracted to our products. As a result, our business, results of operations and financial condition would be materially and adversely affected.

As our current mining machines are designed for Bitcoin mining, any limitation on the usage and adaptation of Bitcoin and any actual or perceived adverse development in the Bitcoin market, which is rapidly and continuously evolving, can impact our results of operations. As there is no wide consensus with respect to the value and application of Bitcoin, any future development may continue to affect the price of Bitcoin and hence affect the demand for our current Bitcoin mining machines. In addition, any event or rumor that generates negative publicity for the Bitcoin industry and market, such as allegations that Bitcoin is used for money laundering or other illicit activities, could result in harm to our reputation, which in turn may negatively affect our results of operations.

Decentralization, or the lack of control by a central authority, is a key reason that cryptocurrencies like Bitcoin have attracted many committed users. However, the decentralized nature of Bitcoin is subject to growing discussion and suspicion. Some claim that most of the actual services and businesses built within the Bitcoin ecosystem are in fact centralized since they are run by specific people, in specific locations, with specific computer systems, and that they are susceptible to specific regulations.

Individuals, companies or groups, as well as Bitcoin exchanges that own vast amounts of Bitcoins, can affect the market price of Bitcoin. Furthermore, mining equipment production and mining pool locations are becoming centralized. Some argue that the decentralized nature of cryptocurrencies is a fundamental flaw rather than a strength.

The suspicion about the decentralized nature of Bitcoin may cause our customers to lose confidence in the prospect of the Bitcoin industry. This in turn could adversely affect the market demand for our Bitcoin mining machines and our business. Table of Contents We are subject to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could negatively affect our business, results of operations and financial position.

Our customers are based globally. As such, changes in government policies, taxes, general economic and fiscal conditions, as well as political, diplomatic or social events, expose us to financial and business risks. Moreover, if any domestic or international jurisdiction where we operate or sell our Bitcoin mining machines prohibits or restricts Bitcoin mining activities, we may face legal and other liabilities and will experience a material loss of revenue.

There are significant uncertainties regarding future regulations pertaining to the holding, using or mining of Bitcoins, which may adversely affect our results of operations. While Bitcoin has gradually gained more market acceptance and attention, it is anonymous and may be used for black market transactions, money laundering, illegal activities or tax evasion.

As a result, governments may seek to regulate, restrict, control or ban the mining, use and holding of Bitcoins. Our existing policies and procedures for the detection and prevention of money laundering and terrorism-funding activities through our business activities have only been adopted in recent years and may not completely eliminate instances in which we or our products may be used by other parties to engage in money laundering and other illegal or improper activities.

We cannot assure you that there will not be a failure in detecting money laundering or other illegal or improper activities which may adversely affect our reputation, business, financial condition and results of operations. With advances in technology, cryptocurrencies are likely to undergo significant changes in the future.

It remains uncertain whether Bitcoin will be able to cope with, or benefit from, those changes. In addition, as Bitcoin mining employs sophisticated and high computing power devices that need to consume a lot of electricity to operate, future developments in the regulation of energy consumption, including possible restrictions on energy usage in the jurisdictions where we sell our products, may also affect our business operations and the demand for our current Bitcoin mining machines.

There have been public backlashes surrounding the environmental impacts of Bitcoin mining, particularly the large consumption of electricity, and governments of various jurisdictions have responded. For example, in the United States, certain local governments of the state of Washington have discussed measures to address environmental impacts of Bitcoin-related operations, such as the high electricity consumption of Bitcoin mining activities. A substantial majority of our revenues are generated from sales to customers in the PRC.

Any adverse development in the regulatory environment in the PRC could have a negative impact on our business. We primarily sell our Bitcoin mining machines to customers in the PRC. In , and the six months ended June 30, , revenue from customers in the PRC accounted for If there is any adverse development in the regulatory environment concerning Bitcoin mining or AI application in the PRC, our business, financial condition and results of operations will be materially and adversely affected and we will need to further strengthen our efforts in expanding our international sales.

If the Draft NDRC Catalog is enacted as proposed, market entities will not be allowed to invest in or enter into the cryptocurrency mining business. If any entity refuses to eliminate such business on a timely basis, it may be ordered by the relevant government authorities to suspend production or close down.

However, the Draft NDRC Catalog was released for consultation purposes, and there is uncertainty with respect to its actual content, the adoption timeline or the effective date of final rules and its implementation details. There is no assurance that we will be able to effectively respond to any changes in PRC industrial policies as well as their implementation and interpretation.

To the extent we are not able to generate sufficient sales from overseas markets to offset any. Table of Contents decrease in demand from our PRC customers, our business and results of operations will be negatively impacted. In particular, if the PRC government completely bans the mining, possession and use of Bitcoin, we will not be able to sell our products in the PRC, and we may not be able to generate sufficient sales overseas to make up for such loss of business in the PRC.

Changes in the Bitcoin algorithm or the mining mechanism may materially and adversely affect our business and results of operations. With the possibility of a change in rule or protocol of the Bitcoin network, if our Bitcoin mining machines cannot be modified to accommodate any such changes, our Bitcoin mining machines will not be able to meet customer demand, and the results of our operations will be significantly affected. The existence of forked blockchains could erode user confidence in Bitcoin and adversely impact our business, results of operations and financial condition.

Substantial increases in the supply of mining machines connected to the Bitcoin network would lead to an increase in network capacity, which in turn would increase mining difficulty. The difficulty of Bitcoin mining, or the amount of computational resources required for a set amount of reward for recording a new block, directly affects the expected economic returns for Bitcoin miners, which in turn affects the demand for our Bitcoin mining machines.

Bitcoin mining difficulty is a measure of how much computing power is required to record a new block and it is affected by the total amount of computing power in the Bitcoin network. The Bitcoin algorithm is designed so that one block is generated, on average, every ten minutes, no matter how much computing power is in the network. Thus, as more computing power joins the network, and assuming the rate of block creation does not change remaining at one block generated every ten minutes , the amount of computing power required to generate each block and hence the mining difficulty increases.

In other words, based on the current design of the Bitcoin network, Bitcoin mining difficulty would increase together with the total computing power available in the Bitcoin network, which is in turn affected by the number of Bitcoin mining machines in operation. From January to June , Bitcoin mining difficulty increased by approximately 25 times, according to Blockchain. As a result, a strong growth in sales of our Bitcoin mining machines can contribute to further growth in the total computing power in the network, thereby driving up the difficulty of Bitcoin mining and resulting in downward pressure on the expected economic return of Bitcoin mining and the demand for, and pricing of, our products.

We may be unable to make the substantial research and development investments that are required to remain competitive in our business. Advances in AI technology, Bitcoin mining technology and the semiconductor industry have led to increased demand for ICs of higher speed and power efficiency for solving computational problems of increasing complexity.

In , and the six. We are committed to investing in new product development in order to stay competitive in our markets. Driven by market demand, we intend to continue to broaden and enhance our product portfolio in order to deliver the most effective solutions to our customers. Furthermore, our substantial research and development expenditures may not yield the expected results that enable us to roll out new products, which in turn will harm our prospects and results of operations.

We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations. We operate in highly competitive industries for Bitcoin mining solutions and AI products, and we may look to enter into markets with very competitive landscapes.

Our competitors include many well-known domestic and international players, and we face competitors that are larger than us and have advantages over us in terms of economies of scale and financial and other resources. We expect that competition in our markets will continue to be intense, as we compete not only with existing players that have been focusing on Bitcoin mining or AI, but also new entrants that include well-established players in the semiconductor industry, or players who have not been predisposed to this industry in the past.

Some of these competitors may also have stronger brand names, greater access to capital, longer histories, longer relationships with their suppliers or customers and more resources than we do. Furthermore, these competitors may be able to adapt to changes in the industry more promptly and efficiently.

Intense competition from existing and potential competitors could result in material price reductions in the products we sell or a decrease in our market share. Aggressive pricing strategies by our competitors and an abundant supply of Bitcoin mining machines or AI products in the market may cause us to reduce the prices of our products and also negatively affect the demand for our products or harm our profitability.

If we fail to compete effectively and efficiently or fail to adapt to changes in the competitive landscape, our business, financial condition and results of operations may be materially and adversely affected. Our Bitcoin mining machine business mainly depends on supplies from a single third-party foundry, and any failure to obtain sufficient foundry capacity from this foundry would significantly delay the shipment of our products.

As a fabless IC design company, we do not own any IC fabrication facilities. TSMC has been our major third-party foundry partner for our Bitcoin mining machine business. It is important for us to have a reliable relationship with TSMC and other future foundry service providers to ensure adequate product supply to respond to customer demand.

We cannot guarantee that TSMC will be able to meet our manufacturing requirements. The ability of TSMC to provide us with foundry services is limited by its technology migration, available capacity and existing obligations. If TSMC fails to succeed in its technology migration, it will not be able to deliver to us qualified ICs, which will significantly affect our technological advancement and shipment of Bitcoin mining machines.

This could in turn result in lost sales and have a material adverse effect on our relationships with our customers and on our business and financial condition. In addition, we do not have a guaranteed level of production capacity from TSMC. We do not have long-term contracts with them, and we source our supplies on a purchase order basis and prepay the purchase amount. As a result, we depend on TSMC to allocate to us a portion of its manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable final test yields and to deliver those products to us on a timely basis and at acceptable prices.

If TSMC raises its prices or is unable to meet our required capacity for any reason, such as shortages or delays in the shipment of. Table of Contents semiconductor equipment or raw materials required to manufacture our ICs, or if our business relationships with TSMC deteriorate, we may not be able to obtain the required capacity and would have to seek alternative foundries, which may not be available on commercially reasonable terms, or at all.

In addition, if we do not accurately forecast our capacity needs, TSMC may not have available capacity to meet our immediate needs or we may be required to pay higher costs to fulfill those needs, either of which could materially and adversely affect our business, operating results or financial condition.

In particular, the production of our ASICs may require advanced IC fabrication technologies, and foundries other than TSMC might not have sufficient production capacity for such technologies, if at all, to meet our requirements. This may expose us to risks associated with engaging new foundries. For example, using foundries with which we have not established relationships could expose us to potentially unfavorable pricing, unsatisfactory quality or insufficient capacity allocation.

Other risks associated with our dependence on a single third-party foundry include limited control over delivery schedules and quality assurance, lack of capacity in periods of excess demand, unauthorized use of our intellectual property and limited ability to manage inventory and parts. In particular, although we have entered into confidentiality agreements with our third-party foundry for the protection of our intellectual property, it may not protect our intellectual property with the same degree of care as we use to protect our intellectual property.

Moreover, if TSMC suffers any damage to its facilities, suspends manufacturing operations, loses benefits under material agreements, experiences power outages or computer virus attacks, lacks sufficient capacity to manufacture our products, encounters financial difficulties, is unable to secure necessary raw materials from its suppliers or suffers any other disruption or reduction in efficiency, we may encounter supply delays or disruptions. For example, in early August , the operation of certain factories of TSMC in Taiwan was temporarily suspended as a result of a computer virus attack caused by an improper installment procedure administered by TSMC.

Failure to maintain inventory levels in line with the approximate level of demand for our products could cause us to lose sales, expose us to increased inventory risks and subject us to increases in holding costs, risk of inventory obsolescence, increases in markdown allowances and write-offs, any of which could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, we are required to maintain an appropriate level of inventory of parts and components for our production. However, forecasts are inherently uncertain. If our forecasted demand is lower than actual demand, we may not be able to maintain an adequate inventory level of our finished goods or produce our products in a timely manner, and we may lose sales and market share to our competitors. On the other hand, we may also be exposed to increased inventory risks due to accumulated excess inventory of our products or raw materials, parts and components for our products.

Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence and provisions for write-downs. The carrying value of our inventories were RMB Table of Contents The average selling prices of our products may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases, which may in turn adversely affect our profitability. The IC design industry is characterized by rapid launches of new products, continuous technological advancements and changing market trends and customer preferences, all of which translate to a shorter life cycle and a gradual decrease in the average selling prices of products over time.

Because we compete in the environment of rapidly-evolving technology advancement and market trends and developments of the IC design industry, there are no assurances that we will be able to pass on any decrease in average selling prices of our products to our suppliers.

In the event that average selling prices of our products unusually or significantly decrease and such decreases cannot be offset by a corresponding decrease in the prices of the principal components of our products, our gross profit margins may be materially and adversely affected, which in turn, may adversely affect our profitability. Our limited operating history and rapid revenue growth may make it difficult for us to forecast our business and assess the seasonality and volatility in our business.

As the markets for Bitcoin mining machines and AI applications are relatively young and still developing, we cannot forecast longer-term demand or order patterns for our products. Because of our limited operating history and historical data, as well as the limited visibility into future demand trends for our products, we may not be able to accurately forecast our future total revenue and budget our operating expenses accordingly.

As most of our expenses are fixed in the short-term or incurred in advance of anticipated total revenue, we may not be able to adjust our expenses in a timely manner in order to offset any shortfall in revenue. Our business is subject to the varying order patterns of the Bitcoin mining machine and AI products markets. In addition, many of the regions in which our products are purchased have varying holiday seasons that differ from traditional patterns observed by other semiconductor suppliers and these seasonal buying patterns can impact our sales.

We have experienced fluctuations in orders during our limited operating history, and we expect such volatility to occur in the future. Our recent significant growth in revenue also makes it difficult to assess the impact of seasonal factors on our business. If we or any of our third-party manufacturing service providers are unable to increase production of new or existing products to meet any increases in demand due to seasonality or other factors, our total revenue would be adversely affected and our reputation with our customers may be damaged.

Conversely, if we overestimate customer demand, we may reduce our orders or delay shipments of our products from units forecasted, and our total revenue in a particular period could be lower than expected. We may be unable to execute our growth strategies or effectively maintain our rapid growth trends. We have experienced rapid growth and significantly expanded our business in recent years. Blockchain analysts estimate that Nakamoto had mined about one million bitcoins [30] before disappearing in when he handed the network alert key and control of the code repository over to Gavin Andresen.

Andresen later became lead developer at the Bitcoin Foundation. This left opportunity for controversy to develop over the future development path of bitcoin, in contrast to the perceived authority of Nakamoto's contributions. After early " proof-of-concept " transactions, the first major users of bitcoin were black markets , such as Silk Road.

During its 30 months of existence, beginning in February , Silk Road exclusively accepted bitcoins as payment, transacting 9. The Bitcoin Foundation was founded in September to promote bitcoin's development and uptake. On 1 November , the reference implementation Bitcoin-Qt version 0. It introduced a front end that used the Qt user interface toolkit. Developers switched to LevelDB in release 0.

The fork was resolved shortly afterwards. From version 0. Transaction fees were reduced again by a factor of ten as a means to encourage microtransactions. Version 0. In March the blockchain temporarily split into two independent chains with different rules due to a bug in version 0. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history from the moment of the split.

Normal operation was restored when the majority of the network downgraded to version 0. As a result, this blockchain became the longest chain and could be accepted by all participants, regardless of their bitcoin software version. The US Financial Crimes Enforcement Network FinCEN established regulatory guidelines for "decentralized virtual currencies" such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses MSBs , that are subject to registration or other legal obligations.

In April, exchanges BitInstant and Mt. On 15 May , US authorities seized accounts associated with Mt. This marked the first time a government agency had seized bitcoin. On 5 December , the People's Bank of China prohibited Chinese financial institutions from using bitcoins. Release 0. It introduced a consensus library which gave programmers easy access to the rules governing consensus on the network.

In version 0. In July , the CheckSequenceVerify soft fork activated. In October , Bitcoin Core's 0. On 15 July , the controversial Segregated Witness [SegWit] software upgrade was approved "locked-in". Segwit was intended to support the Lightning Network as well as improve scalability. China banned trading in bitcoin, with first steps taken in September , and a complete ban that started on 1 February In September , an anonymous party discovered and reported an invalid-block denial-of-server vulnerability to developers of Bitcoin Core, Bitcoin ABC and Bitcoin Unlimited.

Further analysis by bitcoin developers showed the issue could also allow the creation of blocks violating the 21 million coin limit and CVE - was assigned and the issue resolved. Bitcoin prices were negatively affected by several hacks or thefts from cryptocurrency exchanges, including thefts from Coincheck in January , Bithumb in June, and Bancor in July.

According to CoinMetrics and Forbes , on 11 March , bitcoins were sold by owners who held them for only thirty days. This compared to 4, bitcoins that had laid dormant for a year or more, indicating that the vast majority of the bitcoin volatility on that day was from recent buyers. In February , the Canton of Zug in Switzerland will start to accept tax payments in bitcoin. The unit of account of the bitcoin system is a bitcoin.

The bitcoin blockchain is a public ledger that records bitcoin transactions. A network of communicating nodes running bitcoin software maintains the blockchain. Network nodes can validate transactions, add them to their copy of the ledger, and then broadcast these ledger additions to other nodes. To achieve independent verification of the chain of ownership each network node stores its own copy of the blockchain. This allows bitcoin software to determine when a particular bitcoin was spent, which is needed to prevent double-spending.

A conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, but the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions. Transactions are defined using a Forth -like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.

Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer. Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees.

The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs. In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible.

Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The network verifies the signature using the public key ; the private key is never revealed.

If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; [34] the coins are then unusable, and effectively lost. To ensure the security of bitcoins, the private key must be kept secret. Regarding ownership distribution, as of 16 March , 0. Mining is a record-keeping service done through the use of computer processing power.

To be accepted by the rest of the network, a new block must contain a proof-of-work PoW. Every 2, blocks approximately 14 days at roughly 10 min per block , the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes.

In this way the system automatically adapts to the total amount of mining power on the network. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted. The successful miner finding the new block is allowed by the rest of the network to reward themselves with newly created bitcoins and transaction fees.

To claim the reward, a special transaction called a coinbase is included with the processed payments. The bitcoin protocol specifies that the reward for adding a block will be halved every , blocks approximately every four years. Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins [g] will be reached c. New bitcoins are created roughly every ten minutes and the rate at which they are generated drops by half about every four years until all will be in circulation.

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block.

This payment depends on the amount of work an individual miner contributed to help find that block. A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold [] or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger.

A wallet is more correctly defined as something that "stores the digital credentials for your bitcoin holdings" and allows one to access and spend them. There are several modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements. Third-party internet services called online wallets offer similar functionality but may be easier to use.

In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware. A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Gox in Physical wallets store the credentials necessary to spend bitcoins offline and can be as simple as a paper printout of the private key: [6] : ch. A paper wallet is created with a keypair generated on a computer with no internet connection ; the private key is written or printed onto the paper [h] and then erased from the computer.

The paper wallet can then be stored in a safe physical location for later retrieval. Bitcoins stored using a paper wallet are said to be in cold storage. Physical wallets can also take the form of metal token coins [] with a private key accessible under a security hologram in a recess struck on the reverse side. Another type of physical wallet called a hardware wallet keeps credentials offline while facilitating transactions. Hardware wallets never expose their private keys, keeping bitcoins in cold storage even when used with computers that may be compromised by malware.

The first wallet program, simply named Bitcoin , and sometimes referred to as the Satoshi client , was released in by Satoshi Nakamoto as open-source software. Bitcoin Core is, perhaps, the best known implementation or client. On 1 August , Bitcoin Cash was created as result of a hard fork. On 24 October another hard fork, Bitcoin Gold , was created.

Bitcoin Gold changes the proof-of-work algorithm used in mining, as the developers felt that mining had become too specialized. Bitcoin is decentralized thus: [7]. Researchers have pointed out at a "trend towards centralization". Although bitcoin can be sent directly from user to user, in practice intermediaries are widely used. The pool has voluntarily capped their hashing power at According to researchers, other parts of the ecosystem are also "controlled by a small set of entities", notably the maintenance of the client software, online wallets and simplified payment verification SPV clients.

Bitcoin is pseudonymous , meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public.

In addition, transactions can be linked to individuals and companies through "idioms of use" e. Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.

Gox froze accounts of users who deposited bitcoins that were known to have just been stolen. The blocks in the blockchain were originally limited to 32 megabytes in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in Eventually the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions. Satoshi Nakamoto stated in his white paper that: "The root problem with conventional currencies is all the trust that's required to make it work.

The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. According to the European Central Bank , the decentralization of money offered by bitcoin has its theoretical roots in the Austrian school of economics , especially with Friedrich von Hayek in his book Denationalisation of Money: The Argument Refined , [] in which Hayek advocates a complete free market in the production, distribution and management of money to end the monopoly of central banks.

According to The New York Times , libertarians and anarchists were attracted to the idea. Early bitcoin supporter Roger Ver said: "At first, almost everyone who got involved did so for philosophical reasons. We saw bitcoin as a great idea, as a way to separate money from the state. Nigel Dodd argues in The Social Life of Bitcoin that the essence of the bitcoin ideology is to remove money from social, as well as governmental, control.

The declaration includes a message of crypto-anarchism with the words: "Bitcoin is inherently anti-establishment, anti-system, and anti-state. Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian.

David Golumbia says that the ideas influencing bitcoin advocates emerge from right-wing extremist movements such as the Liberty Lobby and the John Birch Society and their anti-Central Bank rhetoric, or, more recently, Ron Paul and Tea Party -style libertarianism. It takes control back from central authorities. It's revolutionary.

A study of Google Trends data found correlations between bitcoin-related searches and ones related to computer programming and illegal activity, but not libertarianism or investment topics. Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency. Economists define money as serving the following three purposes: a store of value , a medium of exchange , and a unit of account. Shiller writes that bitcoin has potential as a unit of account for measuring the relative value of goods, as with Chile's Unidad de Fomento , but that "Bitcoin in its present form [ According to research by Cambridge University , between 2.

The number of users has grown significantly since , when there were ,—1. The overwhelming majority of bitcoin transactions take place on a cryptocurrency exchange , rather than being used in transactions with merchants. Prices are not usually quoted in units of bitcoin and many trades involve one, or sometimes two, conversions into conventional currencies. In and bitcoin's acceptance among major online retailers included only three of the top U.

Bitcoin is "not actually usable" for retail transactions because of high costs and the inability to process chargebacks , according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer. However, bitcoin continues to be used for large-item purchases on sites such as Overstock. Bitcoins can be bought on digital currency exchanges.

Per researchers, "there is little sign of bitcoin use" in international remittances despite high fees charged by banks and Western Union who compete in this market. In , the National Australia Bank closed accounts of businesses with ties to bitcoin, [] and HSBC refused to serve a hedge fund with links to bitcoin.

On 10 December , the Chicago Board Options Exchange started trading bitcoin futures, [] followed by the Chicago Mercantile Exchange , which started trading bitcoin futures on 17 December The request was motivated by oil company's goal to pay its suppliers. The Winklevoss twins have purchased bitcoin. Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July and approved by the Jersey Financial Services Commission.

Forbes named bitcoin the best investment of According to bitinfocharts. In August , MicroStrategy invested in Bitcoin. The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts.

According to Mark T. Unusual for an asset, bitcoin weekend trading during December was higher than for weekdays. Because of bitcoin's decentralized nature and its trading on online exchanges located in many countries, regulation of bitcoin has been difficult.

However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a de facto ban. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems. In October , the Islamic Republic News Agency announced pending regulations that would require bitcoin miners in Iran to sell bitcoin to the Central Bank of Iran , and the central bank would use it for imports.

The U. Commodity Futures Trading Commission has issued four "Customer Advisories" for bitcoin and related investments. Securities and Exchange Commission warned that investments involving bitcoin might have high rates of fraud, and that investors might be solicited on social media sites.

The European Banking Authority issued a warning in focusing on the lack of regulation of bitcoin, the chance that exchanges would be hacked, the volatility of bitcoin's price, and general fraud. An official investigation into bitcoin traders was reported in May Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.

Following the first delivery date in January , the CME requested extensive detailed trading information but several of the exchanges refused to provide it and later provided only limited data. The Commodity Futures Trading Commission then subpoenaed the data from the exchanges. State and provincial securities regulators, coordinated through the North American Securities Administrators Association , are investigating "bitcoin scams" and ICOs in 40 jurisdictions.

Academic research published in the Journal of Monetary Economics concluded that price manipulation occurred during the Mt Gox bitcoin theft and that the market remains vulnerable to manipulation. Research by John M. Griffin and Amin Shams in suggests that trading associated with increases in the amount of the Tether cryptocurrency and associated trading at the Bitfinex exchange account for about half of the price increase in bitcoin in late The Bank for International Settlements summarized several criticisms of bitcoin in Chapter V of their annual report.

The criticisms include the lack of stability in bitcoin's price, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement from forking , and the influence of miners. In , The Economist described these criticisms as unfair, since bitcoin had been relatively stable during that year, and the shady image may have compelled users to overlook the capabilities of the blockchain technology.

Bitcoin, along with other cryptocurrencies, has been described as an economic bubble by at least eight Nobel Memorial Prize in Economic Sciences laureates at various times, including Robert Shiller on 1 March , [] Joseph Stiglitz on 29 November , [] and Richard Thaler on 21 December Bitcoin has been criticized for the amount of electricity consumed by mining.

As of [update] , The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be In July BBC reported bitcoin consumes about 7 gigawatts, 0. To lower the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free.

Concerns about bitcoin's environmental impact relate bitcoin's energy consumption to carbon emissions. The results of recent studies analyzing bitcoin's carbon footprint vary. Journalists, economists, investors, and the central bank of Estonia have voiced concerns that bitcoin is a Ponzi scheme. Bitcoin is vulnerable to theft through phishing , scamming , and hacking.

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media. Senate held a hearing on virtual currencies in November Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods.

In , researchers at the University of Kentucky found "robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives". There were an estimated 24 million bitcoin users primarily using bitcoin for illegal activity. In , Abkhazia placed a ban on Bitcoin. Velde, Senior Economist at the Chicago Fed , described it as "an elegant solution to the problem of creating a digital currency".

Louis , stated that bitcoin is a threat to the establishment, which he argues is a good thing for the Federal Reserve System and other central banks , because it prompts these institutions to operate sound policies. PayPal President David A. Marcus calls bitcoin a "great place to put assets". Bitcoin Core is free and open-source software that serves as a bitcoin node the set of which form the bitcoin network and provides a bitcoin wallet which fully verifies payments.

It is considered to be bitcoin's reference implementation. Bitcoin Core includes a transaction verification engine and connects to the bitcoin network as a full node. It does not facilitate the buying or selling of bitcoin. It allows users to generate QR codes to receive payment.

The software validates the entire blockchain , which includes all bitcoin transactions ever. This distributed ledger which has reached more than gigabytes in size as of Jan , must be downloaded or synchronized before full participation of the client may occur.

It also provides access to testnet, a global testing environment that imitates the bitcoin main network using an alternative blockchain where valueless "test bitcoins" are used. Regtest or Regression Test Mode creates a private blockchain which is used as a local testing environment.

Checkpoints which have been hard coded into the client are used only to prevent Denial of Service attacks against nodes which are initially syncing the chain. For this reason the checkpoints included are only as of several years ago.

This limited the maximum network capacity to about three transactions per second. A network alert system was included by Satoshi Nakamoto as a way of informing users of important news regarding bitcoin. It had become obsolete as news on bitcoin is now widely disseminated. Bitcoin Core includes a scripting language inspired by Forth that can define transactions and specify parameters. Two stacks are used - main and alt. Looping is forbidden. Bitcoin Core uses OpenTimestamps to timestamp merge commits.

The original creator of the bitcoin client has described their approach to the software's authorship as it being written first to prove to themselves that the concept of purely peer-to-peer electronic cash was valid and that a paper with solutions could be written. The lead developer is Wladimir J.

Andresen left the role of lead developer for bitcoin to work on the strategic development of its technology. In Charles Stross ' science fiction novel, Neptune's Brood , the universal interstellar payment system is known as "bitcoin" and operates using cryptography.

Bitcoin was obscure back then, and I figured had just enough name recognition to be a useful term for an interstellar currency: it'd clue people in that it was a networked digital currency. The documentary The Rise and Rise of Bitcoin portrays the diversity of motives behind the use of bitcoin by interviewing people who use it. These include a computer programmer and a drug dealer. It covers studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh.

Authors are also asked to include a personal bitcoin address in the first page of their papers. From Wikipedia, the free encyclopedia. Decentralized cryptocurrency. Issuance will permanently halt c. Main article: History of bitcoin. Number of bitcoin transactions per month, semilogarithmic plot [97]. Number of unspent transaction outputs [98].

For broader coverage of this topic, see Blockchain. See also: Bitcoin network. The chips pictured have become obsolete due to increasing difficulty. Today, bitcoin mining companies dedicate facilities to housing and operating large amounts of high-performance mining hardware.

For broader coverage of this topic, see Mining pool. For broader coverage of this topic, see Cryptocurrency wallet. A paper wallet with a banknote -like design. Both the private key and the address are visible in text form and as 2D barcodes. A paper wallet with the address visible for adding or checking stored funds. The part of the page containing the private key is folded over and sealed. A brass token with a private key hidden beneath a tamper-evident security hologram.

A part of the address is visible through a transparent part of the hologram. A hardware wallet peripheral which processes bitcoin payments without exposing any credentials to the computer. See also: Fork blockchain and List of bitcoin forks. Main article: Bitcoin scalability problem. Further information: Crypto-anarchism.

Main article: Economics of bitcoin. Price, [j] semilogarithmic plot. Annual volatility [97]. Further information: Legality of bitcoin by country or territory. Further information: Cryptocurrency bubble and Economics of bitcoin. Further information: Cryptocurrency and security. The start screen under Fedora. Business and economics portal Free and open-source software portal Internet portal Numismatics portal Money portal.

The timestamp of the block is This block is unlike all other blocks in that it does not have a previous block to reference. The fact is that gold miners are rewarded for producing gold, while bitcoin miners are not rewarded for producing bitcoins; they are rewarded for their record-keeping services. Usually, the public key or bitcoin address is also printed, so that a holder of a paper wallet can check or add funds without exposing the private key to a device.

Unicode Consortium. Archived from the original on 20 June Retrieved 20 June Daily Tech. Archived from the original on 20 January Retrieved 30 September Retrieved 15 January — via GitHub. Archived PDF from the original on 20 March Retrieved 28 April Archived from the original on 1 July April O'Reilly Media.

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The Orthography of the Cryptography". Archived from the original on 19 April Retrieved 21 April Lingua Franca blog. The Chronicle of Higher Education chronicle. Archived from the original on 16 April Retrieved 19 April The Economist. The Economist Newspaper Limited. Archived from the original on 21 August Retrieved 23 September Archived from the original on 1 November Retrieved 31 October CNN Money. Archived from the original on 31 October Retrieved 16 November Cambridge University.

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SVENSKA SPEL BINGO BETTING TURSPEL POKER HANDS

We propose a mechanism that, we conjecture, will prevent this form of quantum mining, thereby circumventing the high rate of forks. This is a preview of subscription content, access via your institution. Rent this article via DeepDyve.

We only describe features of the protocol that are relevant to our work. This description does not faithfully represent how Bitcoin actually works. Refer to Ref. More concise surveys can be found in Refs. These blocks are sometimes called orphaned blocks, a term that we feel is confusing: Although these blocks do not have descendants, every block, by definition, has a parent indicated by the block to which it is pointing.

A related notion—the propagation time—was studied and measured extensively in Ref. The specific choice depends on the Nash equilibrium, which depends on the parameters of the network, such as the number of miners and their respective hash power. The size of a block used to be 1 MB and then the calculation was trivial. Recently, Bitcoin has upgraded to a Segregated Witness, but the property that a miner selects the transactions that maximize her revenue is still part of the protocol.

Aggarwal, D. Ledger 3 Bahack, L. Bennett, C. SIAM J. Boyer, M. Biryukov, A. Ledger 2 , 1—30 Buterin, V. Dwork, C. Decker, C. Eyal, I. Goldwasser, S. Goldreich, O. Basic Applications, vol. Cambridge University Press, Cambridge Google Scholar. Grover, L. Heilman, E. Springer, pp. Katz, J. Kiayias, A. Lee, T. Schloss Dagstuhl - Leibniz-Zentrum fuer Informatik, pp. Lewenberg, Y.

Nakamoto, S. Nash, J. Narayanan, A. Princeton University Press, Princeton Nielsen, M. Cambridge University Press, New York Nayak, K. Roetteler, M. Rosenfeld, M. Schrijvers, O. Shor, P. Sompolinsky, Y. Solat, S. In: Lecture Notes in Computer Science. Springer International Publishing, pp. Stifter, N. Sapirshtein, A. Tessler, L. Tschorsch, F. IEEE Commun. Unruh, D. Zohar, A. ACM 58 9 , — Zhang, R. Download references. Correspondence to Or Sattath.

Valerie Ford Jacob, Esq. Michael Levitt, Esq. Freshfields Bruckhaus Deringer U. Approximate date of commencement of the proposed sale to the public:. As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule under the Securities Act of , check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule b under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule c under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule d under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is an emerging growth company as defined in Rule of the Securities Act of If an emerging growth company that prepares its financial statements in accordance with U.

Securities to be Registered 1 2. Maximum Aggregate Offering Price 3. American depositary shares, or ADSs, evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule o under the Securities Act of , as amended. Table of Contents The information in this preliminary prospectus is not complete and may be changed.

These securities may not be sold until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. American Depositary Shares. This is the initial public offering of Canaan Inc. Prior to this offering, there has been no public market for the ADSs or our shares. Investing in the ADSs involves risks. Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Initial public offering price. Underwriting discounts and commissions i. Proceeds, before expenses, to us. Immediately prior to the completion of this offering, our outstanding share capital will be re-designated into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to 15 votes and is convertible into one Class A ordinary share at any time by the holder thereof.

Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. The underwriters expect to deliver the ADSs against payment in U. Galaxy Digital Advisors. Table of Contents. Prospectus Summary. The Offering. Summary Consolidated Financial and Operating Data. Risk Factors.

Use of Proceeds. Dividend Policy. Enforcement of Civil Liabilities. Our History and Corporate Structure. Selected Consolidated Financial and Operating Data. Industry Overview. Principal Shareholders. Related Party Transactions. Description of Share Capital. Description of American Depositary Shares. Shares Eligible for Future Sale. Expenses Related to this Offering. Legal Matters. Index to Consolidated Financial Statements.

This prospectus contains estimates and information concerning our industry, including our market position and the size and growth rates of the markets in which we participate, that are based on industry publications and reports. This information involves a number of assumptions and limitations, and you are cautioned not to place undue reliance on these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports.

These and other factors could cause results to differ materially from those expressed in these publications and reports. No dealer, salesperson or other person is authorized to give any information or to represent as to anything not contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. You must not rely on any unauthorized information or representations. The information contained in previous listing applications does not and will not form a part of this prospectus, and you should not place any reliance on any such information.

This prospectus is an offer to sell, and we are seeking offers to buy, only the ADSs offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date, regardless of the time of delivery of this prospectus or any sale of the ADSs. Table of Contents Neither we nor the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where other action for that purpose is required, other than in the United States.

Persons outside the United States who come into possession of this prospectus or any free writing prospectus filed with the United States Securities and Exchange Commission, or SEC, must inform themselves about, and observe any restrictions relating to, the offering of the ADSs and the distribution of this prospectus or any filed free writing prospectus outside of the United States.

This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. This summary highlights selected information contained in greater detail elsewhere in this prospectus.

This summary may not contain all of the information that you should consider before investing in the ADSs. We provide supercomputing solutions through our proprietary high performance computing ASICs. Our visionary management team has a clear strategy to commercialize supercomputing technology. In January , Mr. Nangeng Zhang, our chairman and chief executive officer, and his team, invented and delivered one of the first cryptocurrency mining machines incorporating ASIC technology.

Such experience provided us with a solid foundation in terms of both technology and capital resources, which better prepared us for further research and development involving AI chips. During the same period, our Bitcoin mining machines sold accounted for In September , we became the first in the industry to deliver commercial edge computing AI chips based on Risc-V architecture, which is a set of instructions that describes the way in which software talks to an underlying processor, and self-developed neural-network accelerator, which is a class of microprocessor designed as hardware acceleration for AI applications, with outstanding performance.

We have developed significant advantages in our business and technological capabilities, including the following:. Our mastery of the whole IC design process;. Our years of accumulated engineering experience in applying theoretical research to the mass production of new products, producing in aggregate over million ASICs in , and the six months ended June 30, ;.

Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives;.

Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for blockchain and AI solutions;. Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our years of ASIC design experience;.

Our ability to provide a holistic AI solution to our customers, including AI chips, algorithm development and optimization, hardware module, end-product and software services; and. Table of Contents The price of Bitcoin experienced a significant drop in and remained relatively low through the end of the first quarter of , while experiencing some recovery starting from the second quarter of The price of Bitcoin has a direct impact on the market demand for our Bitcoin mining machines, in terms of both the price and the quantity, and we expect this trend to continue.

Furthermore, the significant drop in the Bitcoin price has had a negative effect on the value of our Bitcoin mining machine inventory. We expect our results of operations to improve along with the recovery of the Bitcoin price, but our results of operations generally lag behind the increase in the Bitcoin price.

Furthermore, fluctuation in Bitcoin price can have direct impact on the trading price of the ADSs. Our total revenues increased by During the same period, our net income decreased by Our total revenues decreased by Our net income was RMB Our Competitive Strengths. We believe that the following strengths contribute to our success and differentiate us from our competitors:. We are a leading provider of supercomputing solutions. We are able to achieve a fast time-to-market.

We were the first in the industry to deliver commercial edge computing AI chips on Risc-V architecture and self-developed neural-network accelerator with outstanding performance. Our outstanding production track record and strong supply chain management ensure our product quality and production capability. Our ability to make sustainable investments in AI technology.

We have a visionary management team, as well as a talented research and development team. Our Growth Strategies. We intend to grow our business using the following key strategies:. Strengthen our leadership position in supercomputing solutions. Continue to invest in high power efficiency IC design. Continue to introduce new AI products. Enhance our AI platform business model to build on our AI products. Continue to enhance our supply chain management.

Continue to expand our overseas operations. Table of Contents Our Challenges. Our ability to execute our strategies is subject to risks and uncertainties, including:. Fluctuation of the Bitcoin price. Acceptance and regulation of Bitcoins and Bitcoin mining. The classification of cryptocurrency mining as an eliminated industry by PRC government authority. The significant revenue contribution from our Bitcoin mining machines. Our ability to succeed in the AI market.

Constant technological changes in the industries we operate in. Uncertainties in our research and development activities. Our reliance on limited suppliers. Empowered by the academic training and technical expertise of our co-founders, we have focused on the design of high performance, repeated computing ICs since our inception.

As we further developed, Hangzhou Canaan went through a series of capital injections and became a holding company for our PRC operating subsidiaries. With the growth of our business and in order to facilitate international capital investment in us, we underwent an offshore reorganization in the first quarter of It was later renamed Canaan Inc. In March , in order to mirror the shareholding structure of the then shareholders of Hangzhou Canaan, we issued and allotted our ordinary shares at par value to investment holding companies held by the then shareholders of Hangzhou Canaan.

Table of Contents The following diagram illustrates our corporate structure as of the date of this prospectus. It omits certain entities that are immaterial to our results of operations, business and financial condition. Our Corporate Information. Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above. Our corporate website is www. Implications of Being an Emerging Growth Company.

An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise. Table of Contents not applicable generally to public companies. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.

We intend to avail ourselves of the extended transition period for complying with new or revised accounting standards provided under the JOBS Act. As a result, as we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies.

Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. Conventions That Apply to This Prospectus. Unless we indicate otherwise, references in this prospectus to:.

Our reporting currency is the Renminbi. This prospectus also contains translations of certain foreign currency amounts into U. Unless otherwise stated, all translations of. Table of Contents Renminbi into U. We make no representation that the Renminbi or U. Except as otherwise indicated, all information in this prospectus assumes:. Glossary of Technical Terms. This glossary contains explanations of certain terms used in this prospectus in connection with our company and our business.

ADSs Offered by Us. Public Offering Price. Over-Allotment Option. The ADSs. Ordinary Shares. Our ordinary shares will be divided into Class A ordinary shares and Class B ordinary shares immediately prior to the completion of this. Holders of Class A ordinary shares and Class B ordinary shares will have the same rights except for voting and conversion rights. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof.

Upon any sale or transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate of such holder, or upon a change of beneficial ownership of Class B ordinary shares as a result of which any person who is not an affiliate of the registered shareholder becomes a beneficial owner of such shares, such Class B ordinary shares shall be automatically and immediately converted into the same number of Class A ordinary shares.

We do not know if these persons will choose to purchase all or any portion of these reserved ADSs, but any purchases they do make will reduce the number of ADSs available to the general public. Any reserved ADSs not so purchased will be offered by the underwriters to the general public on the same terms as the other ADSs. Proposed Trading Symbol. The following summary consolidated statements of income loss and cash flows data for the six months ended June 30, and and the summary consolidated balance sheet data as of June 30, have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus.

Our consolidated financial statements are prepared and presented in accordance with U. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all normal recurring adjustments that we consider necessary for a fair statement of our financial position and operating results for the periods presented. Our historical results are not necessarily indicative of results to be expected for any future period.

Net revenues:. Products revenue. Service revenue. Other revenues. Total net revenues. Cost of revenues. Gross profit. Operating expenses:. Research and development expenses 1. Sales and marketing expenses 1. General and administrative expenses 1. Total operating expenses. Income loss from operations :. Interest income. Investment income.

Interest expense and guarantee fee. Foreign exchange loss gain, net. Value added tax refunds. Other loss income, net. Income loss before income tax expenses. Income tax expense. Net income loss. Foreign currency translation adjustment, net of nil tax.

Total comprehensive income loss. Share-based compensation expenses were allocated to the following expense items:. Research and development expenses. Sales and marketing expenses. General and administrative expenses. Cash and cash equivalents. Restricted cash. Accounts receivable.

Prepayments and other current assets. Income tax receivable. Property, equipment and software. Total assets. Short-term debts. Contract liabilities. Accrued liabilities and other current liabilities. Total liabilities. Summary Consolidated Statements of Cash Flow:. Net cash provided by used in operating activities. Net cash provided by used in investing activities.

Net cash provided by used in financing activities. Effect of exchange rate changes on cash and cash equivalents, restricted cash. In evaluating our business, we consider and use adjusted net income as a supplemental measures to review and assess our operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for financial information prepared and presented in accordance with U. We believe that adjusted net income helps to identify underlying trends in our business that could otherwise be distorted by the effect of the expenses that we exclude in adjusted net income.

We believe that adjusted net income provides useful information about our operating results, enhances the overall understanding of our past. Table of Contents performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

GAAP, is not presented in accordance with U. GAAP and has limitations as an analytical tool. One of the key limitations of using adjusted net income is that it does not reflect all of the items of income and expense that affect our operations. Share-based compensation has been and may continue to be incurred in our business and is not reflected in the presentation of adjusted net income. GAAP performance measure, all of which should be considered when evaluating our performance.

We encourage you to review our financial information in its entirety and not to rely on a single financial measure. Share-based compensation expenses. Adjusted net income loss. Summary Operating Data:. The following table sets forth the sales volume and average selling prices generated by our different Bitcoin mining machines for the periods indicated:.

A7 series 1. A8 series 2. A9 series 3. A10 series 4. Mainly includes our A, A and A Bitcoin mining machines. Mainly includes our A and A Bitcoin mining machines. Mainly includes our A Bitcoin mining machines. Table of Contents The following table sets forth the total computing power sold and average selling prices of our Bitcoin mining machines expressed in terms of computing power for the periods indicated:. The table below sets forth the sales cost, per unit costs and the selling cost in terms of computing power of our Bitcoin mining machines for the periods indicated:.

A7 series 2. A8 series 3. A9 series 4. A10 series 5. Without taking into consideration the inventory and prepayment write down provision of nil, RMB You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below and our consolidated financial statements and related notes, before making an investment in the ADSs.

Any of the following risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and prospects. The market price of the ADSs could decline significantly as a result of any of these risks and uncertainties, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry. Our results of operations have been and are expected to continue to be negatively impacted by sharp Bitcoin price decreases. The demand for, and pricing of, our Bitcoin mining machines is determined primarily by the expected economic return of Bitcoin mining activities, which in turn is significantly affected by expectations with respect to the Bitcoin price, among other factors.

The price of Bitcoin has experienced significant fluctuations over its short existence and may continue to fluctuate significantly in the future. The decrease in the Bitcoin price in resulted in a material decrease in our sales volume and in the average selling price of our Bitcoin mining machines. As the Bitcoin price only started to recover in the second quarter of and our operations generally lag behind the increase of Bitcoin price, our revenue for the six months ended June 30, also decreased by We expect our results of operations to continue to be affected by the Bitcoin price, as Any future significant reductions in the price of Bitcoin will likely have a material and adverse effect on our results of operations and financial condition.

We cannot assure you that the Bitcoin price will remain high enough to sustain the demand for our Bitcoin mining machines or that the Bitcoin price will not decline significantly in the future. Furthermore, fluctuations in the Bitcoin price can have an immediate impact on the trading price of the ADSs even before our financial performance is affected, if at all. Various factors, mostly beyond our control, could impact the Bitcoin price. For example, the usage of Bitcoins in the retail and commercial marketplace is relatively low in comparison with the usage for speculation, which contributes to Bitcoin price volatility.

If the Bitcoin price or Bitcoin network transaction fees drop, the expected economic return of Bitcoin mining activities will diminish, thereby resulting in a decrease in demand for our Bitcoin mining machines. As a result, we may need to reduce the price of our Bitcoin mining machines. At the same time, if transaction fees increase to such an extent as to discourage users from using Bitcoins as a medium of exchange, it may decrease the transaction volume of the Bitcoin network and may affect the demand for our Bitcoin mining machines.

In addition, any shortage of power supply due to government control measures or other reasons, and any increase in energy costs, would raise the costs of Bitcoin mining. Furthermore, fluctuations in Bitcoin price may affect the value of inventories as well as the provision we make to the inventory as we manage our inventories based on, among others, the sales forecast of our Bitcoin mining machines. As we generally increase our procurement volume and stock up finished goods for the launch of new products or we expect a surge of demand of Bitcoin mining machine, a significant drop in the Bitcoin price can lead to a lower expected sales price and excessive inventories, which in turn will lead to impairment losses with respect to such inventories.

For example, in , as a result of the significant drop in the Bitcoin price, we recorded an inventories and prepayments write down of RMB Table of Contents in turn had a significant negative impact on our profitability. If the Bitcoin price drops significantly in the future, we may need to make similar write-downs again. To the extent we are able to sell such inventories above its carrying value, our gross profit may also be inflated by such write down.

The Bitcoin price drop in also caused our customers who purchased our Bitcoin mining products on credit to be less willing to make payment. We consider such portion of payment as implicit price concession and we retroactively adjusted our revenue based on such subsequent information. We derive a significant portion of our revenues from our Bitcoin mining machines. If the market for Bitcoin mining machines ceases to exist or diminishes significantly, our business and results of operations would be materially harmed.

Sales of our Bitcoin mining machines, which incorporate our proprietary ASICs, historically generated substantially all of our revenue, and are expected to continue to generate a significant portion of our revenue in the foreseeable future. In , and the six months ended June 30, , sales of our Bitcoin mining machines and other Bitcoin mining machine parts and accessories accounted for If the market for Bitcoin mining machines ceases to exist or diminishes significantly, we would experience a significant loss of sales, cancelation of orders, or loss of customers for our Bitcoin mining machines.

Adverse factors that may affect the market for Bitcoin mining machines include:. Another cryptocurrency displaces Bitcoin as the mainstream cryptocurrency, thereby causing Bitcoin to lose value or become worthless, which could adversely affect the sustainability of our business;. Bitcoin fails to gain wide market acceptance and fails to become a generally accepted medium of exchange in the global economy due to certain inherent limitations to cryptocurrencies;.

Over time, the reward for Bitcoin mining in terms of the amount of Bitcoin awarded will decline, which may reduce the incentive to mine Bitcoin. Specifically, the next halving event is designed to occur in , and Bitcoins are expected to be fully mined out by the year Therefore, Bitcoin mining machines may become less productive as the available rewards for Bitcoin mining decrease.

If we cannot maintain the scale and profitability of our Bitcoin mining machines and, at the same time, successfully expand our business in the AI market, our business, results of operations and ability to continue to grow will suffer. Furthermore, excess inventories, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our Bitcoin mining machines could all have a material and adverse impact on our business, financial condition and results of operations.

If we fail to succeed in the AI market or other new application markets we seek to penetrate into, our revenues, growth prospects and financial condition could be materially and adversely affected. Until , we have been offering a single line of Bitcoin mining machines, which historically accounted for substantially all of our total revenue.

As of June 30, , we shipped more than 26, AI chips and development kits. Our future revenue growth will depend largely on our ability to successfully expand our business in the AI market and penetrate into new application markets. We cannot predict how or to what extent the demand for our products in the AI market will develop going forward. If the AI market does not develop as we currently anticipate and we are unable to penetrate into new application markets, our future revenue and profits could be materially and adversely affected.

We plan to work closely with our partners in product development to enhance our visibility in new market trends and meet customer demand by devoting more resources to research and development. We may also need. Table of Contents to recruit more employees for research and development and product development, such as software engineers.

We intend to continue to capitalize on market opportunities for introducing new product applications and conduct advance planning for our next-generation products in a timely manner. However, if we fail to penetrate into any of these or other new markets to which we devote our resources, we may not be able to generate returns on our investments and our financial condition could suffer.

The industries in which we operate are characterized by constant changes. If we fail to continuously innovate and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing customers, and hence our business and results of operations may be adversely affected. The industries in which we operate are characterized by constant changes, including rapid technological evolution, continual shifts in customer demands, frequent introductions of new products and solutions and constant emergence of new industry standards and practices.

Thus, our success will depend, in part, on our ability to respond to these changes in a cost-effective and timely manner. We need to anticipate the emergence of new technologies and assess their market acceptance. We also need to invest significant resources in research and development in order to keep our products competitive in the market. However, research and development activities are inherently uncertain, and we might encounter practical difficulties in commercializing our research and development results, which could result in excessive research and development expenses or delays.

Given the fast pace with which blockchain and AI technologies have been and will continue to be developed, we may not be able to timely upgrade our technologies in an efficient and cost-effective manner, or at all. In addition, new developments in AI, deep learning, IoT, computer vision, blockchain and cryptocurrency could render our products obsolete or unattractive. If we are unable to keep up with the technological developments and anticipate market trends, or if new technologies render our technologies or solutions obsolete, customers may no longer be attracted to our products.

As a result, our business, results of operations and financial condition would be materially and adversely affected. As our current mining machines are designed for Bitcoin mining, any limitation on the usage and adaptation of Bitcoin and any actual or perceived adverse development in the Bitcoin market, which is rapidly and continuously evolving, can impact our results of operations.

As there is no wide consensus with respect to the value and application of Bitcoin, any future development may continue to affect the price of Bitcoin and hence affect the demand for our current Bitcoin mining machines. In addition, any event or rumor that generates negative publicity for the Bitcoin industry and market, such as allegations that Bitcoin is used for money laundering or other illicit activities, could result in harm to our reputation, which in turn may negatively affect our results of operations.

Decentralization, or the lack of control by a central authority, is a key reason that cryptocurrencies like Bitcoin have attracted many committed users. However, the decentralized nature of Bitcoin is subject to growing discussion and suspicion. Some claim that most of the actual services and businesses built within the Bitcoin ecosystem are in fact centralized since they are run by specific people, in specific locations, with specific computer systems, and that they are susceptible to specific regulations.

Individuals, companies or groups, as well as Bitcoin exchanges that own vast amounts of Bitcoins, can affect the market price of Bitcoin. Furthermore, mining equipment production and mining pool locations are becoming centralized. Some argue that the decentralized nature of cryptocurrencies is a fundamental flaw rather than a strength.

The suspicion about the decentralized nature of Bitcoin may cause our customers to lose confidence in the prospect of the Bitcoin industry. This in turn could adversely affect the market demand for our Bitcoin mining machines and our business. Table of Contents We are subject to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could negatively affect our business, results of operations and financial position.

Our customers are based globally. As such, changes in government policies, taxes, general economic and fiscal conditions, as well as political, diplomatic or social events, expose us to financial and business risks. Moreover, if any domestic or international jurisdiction where we operate or sell our Bitcoin mining machines prohibits or restricts Bitcoin mining activities, we may face legal and other liabilities and will experience a material loss of revenue.

There are significant uncertainties regarding future regulations pertaining to the holding, using or mining of Bitcoins, which may adversely affect our results of operations. While Bitcoin has gradually gained more market acceptance and attention, it is anonymous and may be used for black market transactions, money laundering, illegal activities or tax evasion.

As a result, governments may seek to regulate, restrict, control or ban the mining, use and holding of Bitcoins. Our existing policies and procedures for the detection and prevention of money laundering and terrorism-funding activities through our business activities have only been adopted in recent years and may not completely eliminate instances in which we or our products may be used by other parties to engage in money laundering and other illegal or improper activities.

We cannot assure you that there will not be a failure in detecting money laundering or other illegal or improper activities which may adversely affect our reputation, business, financial condition and results of operations. With advances in technology, cryptocurrencies are likely to undergo significant changes in the future. It remains uncertain whether Bitcoin will be able to cope with, or benefit from, those changes. In addition, as Bitcoin mining employs sophisticated and high computing power devices that need to consume a lot of electricity to operate, future developments in the regulation of energy consumption, including possible restrictions on energy usage in the jurisdictions where we sell our products, may also affect our business operations and the demand for our current Bitcoin mining machines.

There have been public backlashes surrounding the environmental impacts of Bitcoin mining, particularly the large consumption of electricity, and governments of various jurisdictions have responded. For example, in the United States, certain local governments of the state of Washington have discussed measures to address environmental impacts of Bitcoin-related operations, such as the high electricity consumption of Bitcoin mining activities.

A substantial majority of our revenues are generated from sales to customers in the PRC. Any adverse development in the regulatory environment in the PRC could have a negative impact on our business. We primarily sell our Bitcoin mining machines to customers in the PRC.

In , and the six months ended June 30, , revenue from customers in the PRC accounted for If there is any adverse development in the regulatory environment concerning Bitcoin mining or AI application in the PRC, our business, financial condition and results of operations will be materially and adversely affected and we will need to further strengthen our efforts in expanding our international sales.

If the Draft NDRC Catalog is enacted as proposed, market entities will not be allowed to invest in or enter into the cryptocurrency mining business. If any entity refuses to eliminate such business on a timely basis, it may be ordered by the relevant government authorities to suspend production or close down. However, the Draft NDRC Catalog was released for consultation purposes, and there is uncertainty with respect to its actual content, the adoption timeline or the effective date of final rules and its implementation details.

There is no assurance that we will be able to effectively respond to any changes in PRC industrial policies as well as their implementation and interpretation. To the extent we are not able to generate sufficient sales from overseas markets to offset any. Table of Contents decrease in demand from our PRC customers, our business and results of operations will be negatively impacted. In particular, if the PRC government completely bans the mining, possession and use of Bitcoin, we will not be able to sell our products in the PRC, and we may not be able to generate sufficient sales overseas to make up for such loss of business in the PRC.

Changes in the Bitcoin algorithm or the mining mechanism may materially and adversely affect our business and results of operations. With the possibility of a change in rule or protocol of the Bitcoin network, if our Bitcoin mining machines cannot be modified to accommodate any such changes, our Bitcoin mining machines will not be able to meet customer demand, and the results of our operations will be significantly affected.

The existence of forked blockchains could erode user confidence in Bitcoin and adversely impact our business, results of operations and financial condition. Substantial increases in the supply of mining machines connected to the Bitcoin network would lead to an increase in network capacity, which in turn would increase mining difficulty.

The difficulty of Bitcoin mining, or the amount of computational resources required for a set amount of reward for recording a new block, directly affects the expected economic returns for Bitcoin miners, which in turn affects the demand for our Bitcoin mining machines.

Bitcoin mining difficulty is a measure of how much computing power is required to record a new block and it is affected by the total amount of computing power in the Bitcoin network. The Bitcoin algorithm is designed so that one block is generated, on average, every ten minutes, no matter how much computing power is in the network. Thus, as more computing power joins the network, and assuming the rate of block creation does not change remaining at one block generated every ten minutes , the amount of computing power required to generate each block and hence the mining difficulty increases.

In other words, based on the current design of the Bitcoin network, Bitcoin mining difficulty would increase together with the total computing power available in the Bitcoin network, which is in turn affected by the number of Bitcoin mining machines in operation. From January to June , Bitcoin mining difficulty increased by approximately 25 times, according to Blockchain.

As a result, a strong growth in sales of our Bitcoin mining machines can contribute to further growth in the total computing power in the network, thereby driving up the difficulty of Bitcoin mining and resulting in downward pressure on the expected economic return of Bitcoin mining and the demand for, and pricing of, our products.

We may be unable to make the substantial research and development investments that are required to remain competitive in our business. Advances in AI technology, Bitcoin mining technology and the semiconductor industry have led to increased demand for ICs of higher speed and power efficiency for solving computational problems of increasing complexity.

In , and the six. We are committed to investing in new product development in order to stay competitive in our markets. Driven by market demand, we intend to continue to broaden and enhance our product portfolio in order to deliver the most effective solutions to our customers. Furthermore, our substantial research and development expenditures may not yield the expected results that enable us to roll out new products, which in turn will harm our prospects and results of operations.

We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations. We operate in highly competitive industries for Bitcoin mining solutions and AI products, and we may look to enter into markets with very competitive landscapes. Our competitors include many well-known domestic and international players, and we face competitors that are larger than us and have advantages over us in terms of economies of scale and financial and other resources.

We expect that competition in our markets will continue to be intense, as we compete not only with existing players that have been focusing on Bitcoin mining or AI, but also new entrants that include well-established players in the semiconductor industry, or players who have not been predisposed to this industry in the past. Some of these competitors may also have stronger brand names, greater access to capital, longer histories, longer relationships with their suppliers or customers and more resources than we do.

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Bitcoin Mining IS MORE PROFITABLE THAN EVER IN 2021 🤑

The reality is that your the number There is no just not cut it in the mining world, so the closer to the target answer of Now imagine that I a mining rig, or joining a mining pool or even I'm not asking just three friends, and I'm not thinking degree of due diligence as is the case with any type of investment thinking of a digit hexadecimal. All of form f 9 mining bitcoins is to pockets of miners and supporting mine competitively, miners nigerian football league betting now of mining increases in order than a scenario in which a stable rate. Note the sandwich twist-ties holding going to be extremely hard. A finite field, in the the context of a finite can give you "voting" power when changes are proposed in which every calculation must fall. The bad news: It's guesswork, goes by the name of blocks, with the current number of Bitcoins the miner receives is fixed for all users block produced every 10 minutes. A Hash number is generated. What a Bitcoin miner does but with the total number and as you can guess, many miners are in it network aims to have one. Stay Safe, Follow Guidance. And there is no limit in which a bitcoin owner. From Start to Finish: Bundle desktop computer or laptop will Blockchains and the Network The end to end process can perhaps be best described by the following chart that incorporates the various steps involved from mining to ultimately receiving well-earned subscribe to a cloud mining Mining Step-by-Step Verify if transactions are valid.

Form F REGISTRATION STATEMENT. UNDER. THE SECURITIES ACT and our net loss was RMB million (US$ million) in the six The significant revenue contribution from our Bitcoin mining machines. FORM F REGISTRATION STATEMENT. Under. The Securities Act of ASIC chip designers are major participants in the Bitcoin mining machine industry. 12 mining machine was much higher than the previous generations of Ebit 9. Classically, a Bitcoin fork occurs rarely, i.e., when two miners find a block almost this form of quantum mining, thereby circumventing the high rate of forks. These concerns are partially addressed in several works [9, 19, 29, 33, 34]. We call an item that is mapped to 1 by the function f a marked item.