Two executives of bitcoin mining rig maker Canaan, Nangeng Zhang and James Jin Cheng, plan to jointly purchase at least $2 million worth of company shares, believing the company is undervalued despite a revenue decline. Canaan saw a 67.5% decrease in total revenue in 2023 compared to 2022, dropping from $651.5 million to $211.5 million. Zhang and Cheng stated that they see the company progressing well in manufacturing its A14 series mining rigs, fulfilling previous contract sales orders, and making advancements in the development of next-generation A15 series units and ongoing R&D of the A16 series. This decision follows the recent fourth halving event on the Bitcoin network, with Zhang emphasizing potential opportunities in the Bitcoin ecosystem.
Established in 2013, Canaan is a technology company specializing in ASIC high-performance computing chip design, chip research and development, computing equipment production, and software services. Under the leadership of Nangeng Zhang, the company achieved a significant milestone by shipping the world’s first batch of mining machines incorporating ASIC technology in Bitcoin’s history. In 2019, Canaan completed its initial public offering on the Nasdaq Global Market. Despite the ongoing bull market in the cryptocurrency space, demand for Bitcoin application-specific integrated circuit (ASIC) miners and servers has remained subdued. Canaan disclosed a revenue decline of $49 million in the fourth quarter of 2023, representing a 16% decrease compared to the same period the previous year.
Additionally, Canaan reported a widening net loss of $139 million in the fourth quarter of 2023, compared to $91.6 million in the fourth quarter of 2022. Despite an uptick in computing power sold and a recovery in Bitcoin’s price, the revenue decline was attributed to selling ASICs at lower prices relative to the market throughout the year. The company’s annual report for 2023 revealed a net loss of $414.2 million, compared to a net income of $69.9 million in 2022. Total revenues, including product and mining revenue, significantly declined by 67.5% to $211.5 million in 2023 from $651.5 million in 2022. The decrease in revenue was due to lower average selling prices of Canaan’s Bitcoin mining machines on a per-Thash basis, resulting from soft demand and a price drop in computing power throughout 2023.
Despite the revenue decline, mining revenue amounted to $34 million in 2023, slightly higher than the $32.5 million recorded in 2022, according to the company’s report. Canaan attributed the revenue decline to a decrease in the average selling price of Bitcoin mining machines and soft demand in the market. The decision by executives Zhang and Cheng to purchase company shares highlights their belief that Canaan is deeply undervalued and presents a rare investment opportunity. With ongoing advancements in product development and the potential for emerging opportunities in the Bitcoin ecosystem following the fourth halving event, Canaan remains optimistic about its future prospects in the high-performance computing solutions market.
