Canaan – a China-based Bitcoin (BTC) ASIC manufacturer and operator – lost nearly half its revenue from mining machine sales last quarter, according to its Q3 earnings.
Released on Tuesday, the firm’s financial results showed just $33 million in revenue for the three months ended September 30, 2023. That’s down from $73.9 million in Q2, and $145.5 million during the same period last year.
The vast majority of that revenue came from sales of the firm’s Avalon Bitcoin miners, which fell 48% quarter over quarter. Though the company tried cutting the price of its machines, it did little to stimulate new demand.
“Overall, we faced increased pricing competition and a noticeable softening in purchasing power on the demand front, which have posed severe challenges to our sales,” wrote the company.
In response to the downturn, Canaan said its “exploring miner collaborations” and making “relentless efforts” to find new business opportunities despite tight market conditions.
Sinking Revenue for Crypto Firms
Since the start of last year, crypto firms of all stripes have faced withering revenue and user activity amid dual headwinds of rising interest rates and a sinking digital asset market. Major crypto lending firms, exchanges, and mining companies went bankrupt, while firms that survived were often forced to enact mass layoffs.
Revenue and share value for many public mining companies like CleanSpark (CLSK) and Marathon Digital (MARA) have made a comeback since last year thanks to BTC’s strong performance. Nevertheless, Canaan’s local mining business plummeted in Q3 to just $3.3 million – a whopping 79.5% drop from $15.9 million during the prior quarter, and $9.2 million during the same period last year.
According to Canaan CFO James Jin Cheng, the dramatic decline was amplified by the “suspension of operations in Kazakhstan due to new local policies,” and the default of a U.S. counterparty.
Chairman and CEO Nangeng Zhang said the company is still actively expanding its mining infrastructure through pilot projects in both North and South America. He added:
“As a provider of crucial bitcoin infrastructure, we believe in the long-term prospects of the bitcoin system and are poised to leverage our experience to navigate these turbulent times, capturing value from the future upswings in the bitcoin price.”
Canaan’s third-quarter net loss was $80.1 million, driven largely by a $53.9 million inventory write-down.
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