Canaan, a Chinese Bitcoin mining machine manufacturer, has released its Q4 and full-year financial reports for 2022, revealing a 60% drop in revenue in Q4 compared to Q3. The company recorded $56.8 million in Q4 revenue, while 2022’s full-year revenue was slightly lower than 2021, at $635 million.
Despite the fall, Canaan believes that the worst moment of the cycle has passed, and an upward recovery is expected. The company predicts that Q1 2023 revenue will be approximately $65 million.
Canaan’s computing power sales in Q4 2022 reached 1.9 million Thash/s, indicating a significant decline of 45.8% compared to Q3 2022 and a massive drop of 75.8% compared to the same period in 2021.
However, their mining revenue surged to RMB72.2 million (US$10.5 million), showing an increase of 16.3% from the previous quarter and a remarkable increase of 368.2% from the same period in 2021.
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Despite the challenging period, Canaan’s Chairman and CEO, Mr. Nangeng Zhang, acknowledged that their Q4 results exceeded their previous guidance range due to their improved mining business operations and continuous efforts to address clients’ needs.
The company has been diligently improving and developing its mining business to mitigate demand risks during the market downturn. In early 2023, Canaan installed a 3.8 EH/s hash rate for mining, positioning itself for the market’s resurgence.
Canaan’s CFO stated Q4 2022 revenue surpassed expectations. This was achieved under the severe conditions of low bitcoin prices and weak sales demand.
Canaan incurred an additional inventory write-down of RMB205.3 million due to greater depreciation from their growing Bitcoin mining fleet. This was despite the soft market demand and low selling price.
The company suffered losses during the quarter, but Mr. Cheng noted that they made substantial prepayments to secure wafer production capacity in preparation for the approaching cyclical upswing in the bitcoin price.
However, Canaan is optimistic about the future and is confident in their investment in key strategies to deploy their computing power in advance, capitalizing on future market opportunities.
The company has debuted its new mining machine series incorporating the latest cutting-edge process node. This has driven its computing power and efficiency to a new level.
They have also expanded globally and established overseas supply chains and headquarters in Singapore. Moreover, gaining experience operating their mining business in various overseas locations.
Canaan struggled in 2022 Q4 and the full year due to low Bitcoin prices and weak sales demand. But, they remain optimistic about the future and are positioning themselves for the market’s resurgence, capitalizing on future market opportunities.