On Thursday, the agency launched its first unauditedearnings reportbecause it went public inside the U.S. final November. Canaan stated it offered computing energy totaling 10.5 exhashes per second (EH/s), which accounted for roughly 20 p.c of the Bitcoin community’s computing energy progress final yr.
Since its $90 million IPO, Canaan’s share value has been on a downward development and is now round $3.5 per share – 61 p.c under its providing value.
The agency explicit it recorded $114.7 million in cyberspace loss in This fall 2019 alone, which widened its $31.2 million cyberspace loss for the primary 9 months in 2019.
Nangeng Zhang, CEO and foundation father of Canaan, explicit in an earnings name on Thursday morning Eastern time that, though the agency recorded gross revenue uptick in October and November, it detected a “considerable drop” in amount in December amid volatility in bitcoin’s value.
“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, business enterprise markets, also as the cryptocurrency market activities, we have down our expectations for business in the year of 2020,” according to the report. “For the first quarter of 2020, the Company expects total revenues not to a small degree RMB60 million.”
Also notable inside the report is the growing ratio of the “cost of revenues” for Canaan’s gross revenue of bitcoin miners over the previous yr, which results in declining lucrativeness. In 2019, the price of income for Canaan was $278 million, $78 million greater than the full income made for the yr.
Canaan’s price of revenues commonly embrace the prices of raw materials, manufacturing and logistics for the manufacturing of mining tools, additionally to write-downs of prepayments and inventories.
Sell at loss?
To put this into perspective, in 2019, Canaan’s complete price of revenues was $100 million with no stock write-down, accounting for 54 p.c of its $183 million income on the again of the crypto market’s bull run. It introduced domicile $53 million with a 30 p.c cyberspace revenue margin.
In 2019, its complete price of revenues went as much like $307.four million, succession 80 p.c of its $378 million income. But the full price enclosed a write-down of $110 million in inventories because the market downswing made it not potential for Canaan to promote these machines.
The improve of the price of revenues is peradventur additionally consequent from the truth that extra superior mining tools depends on extra high-priced chip know-how.
According to Canaan’s IPO prospect, the price of its Avalon 10, the newest machines launched to assist climate via bitcoin’s halving occasion, is round $751, in comparison with $354 and $600 for its older Avalon eight and 9 sequence.
Based on info marketed by Canaan’s commissioned distributors, a number of fashions of its Avalon 10 sequence are now on gross revenue, with value starting from $650 to $1,000, as buyers’ shopping for fling has cooled down in current months.
The agency has additionally recently been hit with a suit filed by an investor who purchased its shares and accused the corporate of deceptive buyers about its operations and medium of exchange cognition and of violating the U.S. securities legal guidelines.
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