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Dear Investor

The Directors of Bitcoin Group Ltd would firstly like to thank all our IPO investors for their support in our attempt to become the world’s first bitcoin IPO.

Bitcoin Group is an audited public company with a track record of profitably, having mined over $8 million dollars worth of bitcoins (14,000 bitcoins) since 2014.

Considering the long and eventful journey the IPO has taken, we would like to offer our investors a summary of the past 6 months, that led to the disappointing outcome of announcing today, that Bitcoin Group is withdrawing the Second Replacement Prospectus dated 24 December 2015, to list on the Australian Stock Exchange (ASX) and return IPO subscription application monies to investors.

We will be continuing our bitcoin mining activities.

The key reason for the withdrawal of the offer is due to the requirement of the ASX, that Bitcoin Group procure a working capital report from an independent accounting firm, a report not specifically required for a listing on the ASX. In preparing the working capital report, Grant Thornton, the independent accountant was required to factor in the reduction of newly minted bitcoins released on the occurrence of block halving in July 2016, without regard to the expected increase in bitcoin price.

The last time block halving occurred (28 November 2012), the bitcoin price increased in value by 1032% in the proceeding 6 months (from US$12.16 to US$125.58). Unfortunately, ASIC prohibited any forecasting on the bitcoin price which resulted in a report which did not allow for any increase in bitcoin price upon the number of bitcoins available to be mined halving in July 2016.

Importantly, the Directors want investors to note that:

  • The working capital report did show that without any increase in the bitcoin price being tailored in, Bitcoin Group has sufficient working capital to meet its objectives over the forward 12 month period; and
  • The working capital report identified that the preparation of the report did not have regard to the key upside of block halving, being any expected:
    • increase in the bitcoin price.
    • decrease in difficulty.
    • increase in mining equipment efficiency.

The Directors consider that it is appropriate to now withdraw from the IPO process and consider proceeding with a new offer after Blockchain halving has occurred and the price of bitcoin responds to the halving, which we expect to occur by September 2016.

The Directors had hoped to share our company’s opportunity of future success in the rapidly growing bitcoin ecosystem with the Australian investment community.

The Directors intend to proceed with a new offer after block halving to allow time for the bitcoin price to reflect the reduced number of bitcoins being released.

For information on how we will process application refunds, please proceed to the end of this communication.


For investors who would like a more in depth breakdown of our IPO journey and the challenges we faced, please read on…

Bitcoin Group’s vision is to bring legitimacy, transparency and accountability to the Bitcoin Blockchain by attempting to become the industry’s first bitcoin IPO on a major stock exchange, the ASX.

Given the newness of the bitcoin mining industry, ASIC rejected the financial forecast which was signed off by Moore Stephens in our original prospectus lodged in June 2015.

ASIC then agreed to let the Replacement Prospectus be published on the 4th September 2015 and allowed to pass its exposure period, with the company then conducting its roadshow and raise capital for the IPO.

In the midst of the offer period, ASIC questioned the relationships between price, difficulty and mining equipment output, and in turn the reasonableness of our bitcoin mining business model. Bitcoin Group was due to close the offer on Friday 20th November 2015, however 2 days prior to this date, on Wednesday 18th November, ASIC requested that Bitcoin Group engage an ‘Independent Bitcoin Mining Expert’ to complete a report on the bitcoin mining process.

Bitcoin Group was disappointed by the timing of this request, considering ASIC had allowed the Replacement Prospectus, lodged on 4th September, to pass its exposure period, enabling the receipt of IPO subscription monies for two and a half months. We are of the opinion that ASIC should not have let the Replacement Prospectus be offered to investors if they did not have comfort or full understanding of our bitcoin mining process.

Bitcoin Group engaged Melbourne University Maths Professor Peter Taylor to complete an independent report on bitcoin mining process. This was submitted to ASIC in a Second Replacement Prospectus. ASIC accepted the validity of this report and Bitcoin Group lodged the Second Replacement Prospectus on 4th December 2015.

After months of delays and successfully satisfying requests for additional information from ASIC, Bitcoin Group successfully closed the IPO Offer on 25th January.

Bitcoin Group announced on the 2nd of February that $5,927,168.40 was the final amount raised in the IPO.

The Directors were satisfied the amount of funds raised in the IPO was sufficient to execute on the capital deployment strategy set out in the Second Replacement Prospectus.

In parallel with ASIC’s request for an Independent Expert Report on the bitcoin mining process, ASX wrote to Bitcoin Group on 18th November stating “The Replacement Prospectus does not contain a statement in compliance with Listing Rule 1.3.3(a). Accordingly, the Company is required to give to ASX such a statement from an independent expert (the “Expert”).”

The company subsequently inserted into the Second Replacement Prospectus the statement “Bitcoin Group believes that it has sufficient working capital to carry out its stated objectives.” to comply with Listing Rule 1.3.3(a)

On 10th January, ASX advised Bitcoin Group that although the statement above satisfies listing rules 1.3.3(a) Bitcoin Group still needs an expert report on working capital, as ASX has the right to request one under listing rules 1.17

Bitcoin Group engaged Grant Thornton to undertake an Independent Expert Report on Working Capital for submission to the ASX. We can now advise the Grant Thornton’s Independent Expert Report has affirmed the financial viability of our capital deployment strategy regarding the company’s ability to operate as a going concern.

ASX rejected this report in the view that the company will not have sufficient working capital beyond September 2017, with the opinion of Grant Thornton provided, based upon:

  • blockchain halving occurring in July 2016; and
  • the price of bitcoin remaining at $500 during all forecast periods,

Without any allowance for market dynamics to take place such as:

  • the price of bitcoins to increase (due to a 50% drop in supply)
  • the mining difficulty to decrease (due to a 50% drop in market opportunity)
  • the expected efficiency mining hardware (due to improved technology)

Please see the details of the Grant Thornton independent expert report in the latest copy of a Supplementary Prospectus dated 4th March 2016.

Furthermore, after closing the Offer on 25th January, ASIC on 2nd March requested additional information based on what it regarded as a ‘change in market conditions’ concerning the Bitcoin Mining network difficulty rate being outside the normal range of average increases, as detailed in the Second Replacement Prospectus. ASIC subsequently requested “disclosure relating to the new market conditions arising from the significant increase in Difficulty and Network Hash Rate” under section 710 of the Corporations Act.

ASIC refer specifically to difficulty increase of 20.06% for the period ending 7th February and an increase of 13.44% for the period ending 19th February.

There has since been a decrease in network difficulty of -3.10% for the period ending 4th March, however this has happened after ASIC’s request and therefore has not been factored into their assessment of a ‘change to market conditions’.

Bitcoin Group believes that ASIC’s assessment of a ‘change to market conditions’ does not have a material effect regarding the sustainability of our mining profitability, as they have failed to factor in that since 4th September, Bitcoin Group saw an increase in market opportunity by 87.25%. The difficulty adjusted for this increase in opportunity, the real rate increase in the difficulty is 3.08% per period, which is aligned with the 2.5% and 4.3% historical average on page 29 of the Second Replacement Prospectus.

In light of the new market circumstances, ASIC has granted relief on 4th March extending the offer period to 4th June, however with ASIC’s continuing view that any “forecast” of bitcoin price in any documents published in relation to the IPO would breach section 728 of the Corporations Act, the Company is unable to address the artificialities in the Working Capital Independent Expert Report to better reflect the sustainability of the Company to the level that will satisfy ASX.

Bitcoin Group believes it cannot satisfy the requests required by ASIC and ASX at this time so close to the scheduled block halving in July 2016.

On behalf of the Directors and the rest of the Bitcoin Group team, we are deeply grateful to all our investors for their unwavering support, patience and understanding with our attempt to become the worlds first bitcoin company to IPO on the ASX.

We will continue to work hard to expand our bitcoin mining operations and network share, helping to secure the Bitcoin Blockchain, the world’s first, largest and most secure decentralised trust network.

The Bitcoin Group team strongly believes in the future of the Bitcoin ecosystem and we look forward to bringing new opportunities to the market in due course.



Application withdrawals and refund process:

We’ll be working closely with Computershare to ensure all IPO investor application subscription monies are refunded in an efficient and timely manner.

Please email us at including your full name, address, bank details and amount applied for, allowing us to instruct Computershare to process the refund via EFT.

If EFT direct credit is not available to you, a cheque will be forwarded to your registered address on your IPO application form.

We would appreciate our investors understanding while we work through the refund process.

If you have any questions about Bitcoin Group or the IPO, feel free to call our office on 1300 88 38 48 or email


Best regards,

Sam Lee (Chief Executive Officer)
Allan Guo (Chief Financial Officer)
Ryan Xu (Chief Strategy Officer)
Martin Davidson (Business Development Manager)
Jacob Cheng (Operations Manager)
Jin Chen (Technical Manager)
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