Key Takeaways:
Canaan Inc. posted a $97.6 million second-quarter net loss as revenue plunged 68 percent to $31.9 million on collapsing demand for Bitcoin mining hardware.
The NASDAQ-listed maker of cryptocurrency-mining computers swung from an $11.1 million loss a year earlier, with the deterioration driven by a $25.3 million inventory write-down that acknowledged rigs sitting in warehouses are worth far less than their production cost. Product revenue tumbled to $13.6 million from $71.9 million a year earlier as computing power sold and average selling prices fell, while mining revenue slipped to $17.7 million from $28.1 million on a lower average Bitcoin price.
The company recorded a $29.3 million gross loss and a $69.5 million operating loss for the quarter ended June 30. Non-cash charges compounded the damage, including a $9.2 million impairment of property and equipment, a $9.3 million cryptocurrency fair-value loss and an $8.9 million loss from changes in the fair value of financial derivatives. Adjusted EBITDA came in at negative $74.9 million versus positive $25.3 million a year earlier.
Canaan expects third-quarter revenue of $11 million to $15 million, a range that would mark another 50 percent-plus sequential decline and signals at least one more quarter of contraction. The company mined 243 Bitcoin during the quarter and ended June with a record treasury of 1,915.5 Bitcoin and 3,951.7 Ether, while self-mining power reached 10.05 exahash per second, up 23.3 percent year over year at an all-in power cost of about $0.043 per kilowatt-hour.
Beneath the losses, management is leaning on its digital-asset holdings as a capital-allocation tool. Cash on hand improved to $66 million from $43 million in the prior quarter, and Canaan repurchased 16.4 million American depositary shares for $7.4 million under its buyback program. In late August it sold 3,952 Ether and 54 Bitcoin for roughly $13.9 million, with some proceeds funding the buybacks.
The results show the strain across the Bitcoin mining sector, where Bitcoin fell from about $82,000 to $58,000 during the quarter, squeezing profitability for miners and chilling demand for new rigs from peers such as Bitmain and MicroBT. For Canaan shareholders, the $66 million cash position provides runway and the growing Bitcoin treasury offers upside if prices recover, but quarterly losses approaching $100 million leave little margin for error. Investors will watch the third-quarter report for whether the revenue decline stabilizes as Bitcoin prices find a floor.
This article is for informational purposes only and does not constitute investment advice.
