How does a company go from having over $300 million in revenue for the first half of the year to having revenue of essentially $0 in the second half?

That’s one question U.S. investors should be considering now that China-based bitcoin mining hardware manufacturer Ebang has filed its $100 million initial public offering (IPO) in the U.S.

It’s not the first time the company has filed an IPO, according to CoinDesk Research’s in-depth look at the manufacturer. That first attempt, on Hong Kong’s exchange, failed. And Ebang isn’t even the first Chinese bitcoin mining hardware company to file a U.S. IPO. That honor goes to Canaan, which filed a $400 million IPO on Nasdaq but only raised $90 million.

Ebang could certainly use a financial boost. Gyrations in bitcoin’s price affect mining profitability. A sustained price drop often crowds out small and inefficient miners from the market, and that has a direct effect on the companies making the mining hardware. 

Read more: Price Drop Casts Pall Over Bitcoin Miners’ Equipment Upgrades

Utilizing its IPO prospectus in combination with its redacted Hong Kong IPO application, we were able to delve into Ebang’s financials and identify key risks and concerns.

There are many. Ebang, once accused of sales fraud and inflating revenue figures, has walked back on a significant portion of its revenue, the amount of which is still unknown. It was once thought to be one of the leaders in the industry but now seems way behind market leaders Bitmain and MicroBT.

Some takeaways:

  • On the surface, Ebang’s U.S. IPO prospectus describes a company facing hardships caused by industry volatility. However, upon further inspection, Ebang’s problems appear to run deeper.
  • In its prospectus, Ebang notes its revenue write-offs were “significant” in 2018. Nonetheless, the company fails to disclose the extent of the write-offs, which were only partly discoverable after using back-end calculations in combination with its redacted Hong Kong IPO application. This omission of detail coupled with past allegations of sales fraud and a list of disputes from its largest customers gives significant reason for concern.
  • Ebang’s public accounting firm has identified material weaknesses in the company’s financial reporting. In response, Ebang made additions to its management team including a new CFO, albeit one with a controversial past, and a new financial controller who just completed her undergrad a few years ago.
  • Ebang’s current product offering of ASIC miners is quickly becoming outdated leading to the company having to sell its equipment at prices far below its cost to produce. Given the lack of detail within the prospectus, it’s uncertain when the company will be able to produce new models that are competitive to those produced by Bitmain and MicroBT.

Download the full report here.

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