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Chinese Bitcoin Miner Manufacturer Canaan Reported $148M Loss in 2019

Chinese bitcoin mining hardware manufacturer Canaan Creative has reported a net loss of $148.6 million for 2019, according to its latest financial results filed with the Securities and Exchange Commission (SEC).

With its machines securing roughly 20% of the bitcoin network, Canaan is a market leader in the crypto mining industry which has been apparently susceptible to the volatile crypto price swings and fast-paced technological advancement.

The latest unaudited financial statements from the bitcoin miner mega-seller revealed that its total net revenue for 2019 stood at $204.3 million – approximately half of the $384 million it earned in 2018.

The company explained that the decrease was mainly “due to the decline in ASP per Thash sold, which in turn was the result of the bitcoin price drop that began in 2018”.

While the increases of computing power it sold have helped offset some of the revenue decreases.

As per the file, Canaan sold 10.5 million TH/s throughout 2019, an increase of 47.1% year over year from 7.2 million TH/s in 2018.

Since the company went public on Nasdaq in November 2019 after the bitcoin rally in the mid-year, its performance in the last quarter of the year was relatively more impressive, with an increase of 66.8% and 57.9% in revenue (at $66.5 million), compared to the $39.8 million in Q4 2018 and $42.1 million in 2019’s first half.

The prosperity in Q4 2019 as market demand for crypto miners soared did bring good results with the revenue in Q4 ($66.5 million) accounting for nearly one third of the year’s total ($204.3 million).

While the inventories and prepayments in Q4 has on the other side lead to the company’s increasing ratio of “cost of revenues” and thus declining profitability.

In 2019, the cost of revenue for Canaan was $278 million, almost $78 million more than the total revenue made for the year.

As for the business outlook for 2020, the company said they have lowered their expectations in the year of 2020 as a result of the impact of the COVID-19 outbreak, with an expected revenue above RMB60 million ($8.5 million) for the Q1 of 2020. This represents only about one eighth of the $66.5 million the company generated last quarter in Q4 2019.

Being the first of the China’s big three bitcoin miner manufacturers (Bitmain, Canaan and Ebang) to go public in a traditional capital market, Canaan made a high profile debut on Nasdaq last November.

However, its stock price fell after the listing and has been hovering its all-time lows around $3 from the IPO price at $9. The company has recently been facing a class-action lawsuit for allegedly misleading investors in its initial public offering filing.

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