Bitcoin miner Canaan seeks new capital as revenue slumps

Canaan, one of the leading Bitcoin mining companies, is in search of fresh capital as its revenue and bottom line take a hit. The company's Q3 2023 earnings report, released on Nov. 28, reveals plans to raise $148 million through an at-the-market offering. This comes after Canaan recently reached an agreement with an undisclosed institutional investor to issue up to 125,000 preferred stock at $1,000 each, resulting in total proceeds of $125 million.

Revenue down 55% in Q3 2022

Compared to the same period last year, Canaan's revenue has dropped by 55% to $33.3 million in the third quarter of 2022. This decline is attributed to a decrease in the number of Bitcoin (BTC) mined and a fall in the number of ASIC mining rigs sold. The company also experienced a net loss of $110.7 million, a significant decrease from the net income of $6.3 million reported in the same period last year.

Nangeng Zhang, chairman and CEO of Canaan, expressed that the company faced tough challenges in sales due to increased pricing competition and a decline in purchasing power on the demand front. Canaan expects its Q4 revenue to remain relatively unchanged from Q3, citing challenging market conditions across the industry.

Market conditions improve for Bitcoin miners

In 2022, several Bitcoin miners filed for bankruptcy due to soaring electricity costs and lower BTC prices, which disrupted the sales of Bitcoin ASIC mining rigs. However, market conditions have improved this year, thanks to easing inflation and a recovery in Bitcoin prices. On Nov. 13, Bitcoin miners earned a record-breaking $44 million in block rewards and transaction fees, signaling an upturn in the industry.