Chinese mining chip designer Nano Labs has applied for an initial public offering (IPO) in the United States to raise $50 million on Nasdaq amid sluggish market conditions.

According to information obtained by the Renaissance Capital IPO monitoring tool, the Huangzhou-based crypto mining chip maker has filed with the regulator, the U.S. Securities and Exchange Commission (SEC), for its upcoming public offering on Nasdaq, the world's second-larges stock exchange.

The application for American depository shares is occurring amid a slew of regulatory difficulties in China and the United States, causing a shortage of Chinese issuers' overseas fundraising. Only two IPOs took place in 2022 in New York, raising $49.5 million, compared to 28 IPOs, which raised $5.8 billion last year.

Nano Labs, however, is pressing ahead with its Nasdaq offering even though it has yet to produce a viable product. The firm plans to transform into a metaverse business, providing computing power for gaming and entertainment.

A metaverse is a new online environment being developed on the blockchain. Users may create avatars and own digital property in these virtual realms, sometimes referred to as "next-generation internet" or Web3 applications.

The two main shareholders of Nano Labs are co-founders Kong and Sun Qifeng, with 32.8% and 22.3% stakes, respectively. Kong was previously the co-chairman and a director at rival Canaan, which became the first cryptocurrency-mining rig maker to list in the U.S. in November 2019. In August 2020, he departed Canaan amid a corporate power struggle, according to reports from China then.

Nano Labs’ products are used to mine cryptocurrencies such as Bitcoin 

BTC

$17,214

, Ether 

ETH

$1,325

 and Filecoin 

FIL

$3.72

. In 2020, the company's earnings were derived solely from China-based clients. To expand sales overseas, it established a subsidiary in Singapore last year.

Related: Celsius Network's crypto mining subsidiary SEC filing suggests plans for IPO

After Beijing cracked down on crypto activities in May 2021, China, which was previously the world's biggest cryptocurrency mining location, witnessed some activities being pushed underground. In July last year, the hash rate, a metric of the network's computing power for validating transactions and creating new digital assets, briefly went to zero.

Even if the IPO is a success, Nano Labs faces the danger of being delisted. If a U.S. audit regulator fails to examine Chinese accounts for three years, mainland Chinese firms may be delisted from American markets by 2023. Nano Labs claimed it would face this problem as a result of auditing work done by its accounting firm's offices in China.