CoinDesk
Canaan's third-quarter mining-equipment revenue plunged 96% to $4.8 million from $118.6 million a year earlier, as weaker demand and lower selling prices hit the Avalon maker. The company has launched a $20 million share buyback and says it is selectively selling cryptocurrency to fund repurchases.
Why it matters
The buyback sits within a broader $100 million authorization approved by Canaan's board on Nov. 6. Its shares fell about 75% this year through Wednesday's close. In an October update, Canaan disclosed sales of 3,952 ETH and 54.5 BTC for about $13.9 million; it used $5.4 million to repurchase 13.6 million American depositary shares in late August.
Much of its remaining treasury was committed at Sept. 30. Of 1,875.5 BTC held, 1,258 were pledged against loans and 100 were in a fixed-term product. Another 517.5 BTC were recorded directly as cryptocurrency assets, worth $43.7 million at quarter-end.
Market impact
Canaan's own mining operation generated $9.5 million in third-quarter revenue, nearly twice its hardware sales. The company posted an $8 million profit despite a $42.9 million operating loss, helped by gains from revaluing cryptocurrency and financial derivatives.
Of its $72.8 million in cash and restricted cash, $50 million backed a letter of credit for infrastructure commitments. Management says it plans to pursue buybacks more actively as funds become available, while retaining a long-term digital-asset treasury.
Frequently asked questions
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Why did Canaan's mining-equipment revenue fall?
Canaan attributed the decline to weaker demand and lower selling prices. Third-quarter mining-equipment revenue fell to $4.8 million from $118.6 million a year earlier.
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How is Canaan funding its share repurchases?
Canaan says it is selectively monetizing cryptocurrency holdings to fund buybacks. It previously disclosed sales of 3,952 ETH and 54.5 BTC for about $13.9 million.
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How much of Canaan's Bitcoin was pledged against loans?
At Sept. 30, Canaan had pledged 1,258 BTC against loans out of total holdings of 1,875.5 BTC. Another 100 BTC were in a fixed-term product.
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How did Canaan post a profit despite an operating loss?
Gains from revaluing cryptocurrency and financial derivatives helped Canaan report an $8 million quarterly profit despite a $42.9 million operating loss.
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How much of Canaan's cash backed infrastructure commitments?
At quarter-end, $50 million of Canaan's $72.8 million in cash and restricted cash backed a letter of credit supporting infrastructure commitments.
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