The year 2021 was a record year for IPOs. Never in history have more companies been listed on a stock exchange. And never before has the volume of these listings been higher.

2022, however, will be very different. According to Renaissance Capital, only 34 IPOs took place in the first five months of 2021. That's 70 percent less than in the first five months of the past year. Also, 59 percent of new listings were special purpose acquisition vehicles (SPACs) last year. This year, that number has decreased significantly.

Although the financing environment has worsened, Bitcoin miner PrimeBlock has announced going public via a $1.25 billion SPAC deal. The merger is expected to close by the second half of this year.

What Are SPACs?

The idea of SPACs is to facilitate capital raising by making it easier for firms to go public. SPACs are also known as "blank check companies." Those companies go public without any operations and often without a specific acquisition target. The goal for these companies is to acquire an existing company – usually a private company – after their IPO, transforming it into a public company. SPAC investors typically do not know which company they will ultimately invest in at the time of the IPO.

SPACs are usually underwritten by institutional investors before offering shares to the public. They have two years to complete an acquisition, or they must return funds to the investors.

The advantage of those vehicles is that they create an opportunity for companies to go public without going through the cumbersome conventional IPO process. For investors, SPACs come with the risk that the SPAC promoters might not successfully acquire or merge with a target company.

A Difficult Financing Environment

PrimeBlock is a Bitcoin mining and infrastructure startup that operates data centers and crypto mining operations across North America. The company announced in April to merge with a SPAC to go public. The deal will value the company at $1.25 billion, including debt.

The company has secured $300 million in equity financing for the deal. It will merge with 10X Capital Venture Acquisition Corp II. After the deal, the combined company will get listed on the NASDAQ Stock Exchange.

The announcement came at a time when the IPO market had slowed significantly and crypto markets had lost half of their market capitalization. Crypto markets have crashed since the announcement in April. Bitcoin is now trading more than 60% below its all-time high last November.

Bitcoin losing that much in value is a serious problem for Bitcoin mining companies. They must now sell their Bitcoin at a lower price, or they might eventually have to shut down their mining operations. On top of that, rising energy prices further compress margins because Bitcoin mining is heavily energy-intensive.

Considering that PrimeBlock's announcement was before the recent Bitcoin crash, it might not be entirely clear what the future of the company’s IPO plans will look like.

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