Bitcoin miner Canaan is seeking new capital amid a slump in its revenue and bottom line.
According to its Q3 2023 earnings report released on Nov. 28, the company seeks to sell $148 million in equity through an at-the-market offering. The day before, Canaan announced that it had reached an agreement with an undisclosed institutional investor to issue up to 125,000 preferred stock at $1,000 apiece for total proceeds of $125 million.
Compared to the third quarter of 2022, the company’s revenue fell 55% to $33.3 million due to a decrease in the number of Bitcoin (BTC) mined and a fall in the number of ASIC mining rigs sold. The firm also swung to a net loss of $110.7 million compared to a net income of $6.3 million in the same period a year ago.
“Overall, we faced increased pricing competition and a noticeable softening in purchasing power on the demand front, which has posed severe challenges to our sales,” said Nangeng Zhang, chairman and chief executive officer of Canaan. The firm expects its Q4 revenue to be roughly unchanged from Q3 due to “challenging market conditions across the industry.”
Due to soaring electricity costs and lower BTC prices, several Bitcoin miners filed for bankruptcy in 2022, disrupting the sales of Bitcoin ASIC mining rigs. However, market conditions have improved this year due to easing inflation and a recovery in Bitcoin prices. On Nov. 13, Bitcoin miners earned $44 million in block rewards and transaction fees, the highest ever in history.
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