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Insight into the Prospectus of Canaan, A Chinese Bitcoin Mining Giant

Canaan Creative, the Avalon bitcoin miner maker and one of the world’s largest mining equipment manufacturers, has just formally filed to be a publicly-traded company in the United States.

Prospectus shows that Canaan Creative has been the second largest designer and manufacturer of bitcoin mining machine all over the world. With 21.9% of the global bitcoin computing power, Canaan earns more than 99% of the revenue from bitcoin mining machine and related sales.

If everything goes smoothly, Canaan will become the first bitcoin miner maker to go listed in China, stock ticker “CAN” will also become the first blockchain stock in the true sense.

Customers mainly from China

Chinese users are the main source for Canaan. In 2017, 2018 and 2019, the revenue from Chinese customers accounted for 91.5%, 76.1% and 87.9% of the total revenue, respectively.

“Most of our revenue comes from Chinese customers, any adverse regulatory environment in China could leave a negative impact on our business.”

Canaan will balance the business of miners and AI chips

In September 2018, Canaan became the first crypto miner maker to provide business edge computing AI chip based on Risc-V architecture, it boasts the ability to provide customers with overall AI solutions.

In the prospectus, Canaan claims itself as a “leading provider of supercomputing solutions”. Over the past two years, AI products contributed 742900 Chinese yuan (about 108200 US dollars), a small part of the company’s revenue. In the future, Canaan plans to balance the mining machine and AI chip business to achieve a more balanced combination. As for AI SaaS platform to be created, Canaan thinks it as a source of stable income flow in the future.

The accumulated shareholding of executives is up to 50.8%

By October 28, the total number of ordinary shares issued by Canaan was 222222222, including 52027157 restricted shares. The legal share cost of Canaan will be $50000, including 999682488667 A common shares and 356624444 B common shares, with a par value of $0.00000005 each. Among them, each A common share has 1 vote, and  B common share has 15 votes.

Bitcoin’s price jump this year has caused the demand for bitcoin mining equipment to outstrip the supply available from several major miner makers, which subsequently led to surging sales for leading manufacturers such as Bitmain, Canaan, and MicroBT. For instance, MicroBT, the maker of WhatsMiner, expects $400 million in revenue just for the third quarter of 2019.

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Canaan also implemented the strategy of “crypto mining for AI” which is similar to that of Bitmain. This strategy has been controversial among Bitmain’s executives, and it is also regarded as the source of the internal struggle between the two founders. But in contrast, Canaan doesn’t face the same challenge as Bitmain, as Zhang Nangeng, the founder of Canaan still holds the largest shares.

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