Bitcoin Miner Maker Canaan Lost $148M in 2019

Chinese bitcoin miner producer Canaan Creative has disclosed it made a internet lack of $148.6 million for 2019 on a income of $204.Three million, reflecting a declining profitability over the previous three years.

On Thursday, the agency launched its first unaudited earnings report because it went public in 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 development final yr.

Since its $90 million IPO, Canaan’s share value has been on a downward pattern and is presently round $3.5 per share – 61 p.c under its providing value.

The agency stated it recorded $114.7 million in internet loss in This fall 2019 alone, which widened its $31.2 million internet loss for the primary 9 months in 2019.

Nangeng Zhang, CEO and founding father of Canaan, stated in an earnings name on Thursday morning Eastern time that, though the agency recorded gross sales uptick in October and November, it noticed a “appreciable drop” in quantity in December amid volatility in bitcoin’s value.

“As a results of the impression of the COVID-19 outbreak, a widespread well being disaster that adversely affected common industrial actions, the economies, monetary markets, in addition to the cryptocurrency market actions, we now have lowered our expectations for enterprise in the yr of 2020,” in line with the report. “For the primary quarter of 2020, the Company expects complete revenues not lower than RMB60 million.”

Also notable in the report is the growing ratio of the “price of revenues” for Canaan’s gross sales of bitcoin miners over the previous yr, which ends up in declining profitability. 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 typically embody the prices of uncooked materials, manufacturing and logistics for the manufacturing of mining tools, in addition to write-downs of prepayments and inventories.

To put this into perspective, in 2017, 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 bull run on the time. It introduced dwelling $53 million with a 30 p.c internet revenue margin.

In 2018, its complete price of revenues went as much as $307.four million, taking on 80 p.c of its $378 million income. But the full price included a write-down of $110 million in inventories as a result of the market downturn made it onerous for Canaan to promote these machines. 

The improve in the price of revenues is maybe additionally on account of the truth that extra superior mining tools depends on extra pricey chip know-how. 

According to Canaan’s IPO prospectus, the price of its Avalon 10, the newest vary of miner launched to assist climate bitcoin’s halving occasion, is round $751, in comparison with $354 and $600 for its older Avalon eight and 9 sequence. Prices had been round $1,200 in December for the Avalon 10.

Based on data marketed by Canaan’s approved distributors, a number of Avalon 10 fashions are presently on sale, as a shopping for spree from traders has cooled down in current months.

The agency has additionally not too long ago been hit with a lawsuit filed by an investor who purchased its shares after which accused the corporate of creating deceptive statements about its operations and monetary knowledge, and of violating the U.S. securities legal guidelines.