Canaan ($CAN), the Chinese supercomputing firm and ASIC mining pioneer, has reported a $33 million net loss for 2020. Bullish Bitcoin prices were not enough to overcome the effects of a global chip shortage, stalling the production of Canaan’s popular Bitcoin mining machines and causing inventory backorders to pile up. These effects were exacerbated by COVID-19 supply chain disruptions, but are beginning to see a significant turnaround.
Their 2020 net loss, as reported in the Bitcoin miner manufacturer’s unaudited financial report for Q4 2020, was notably lower than their 2019 loss of $148 million. As Bitcoin prices hold steady, Canaan shows optimism in this trend of loss reduction.
The company has been consistently reducing their net loss, with Q2 2020 experiencing a 90% year-over-year reduction due to the sale of mining rigs, which experienced significant growth on their gross margins.
Despite reported losses, the company shows optimism for the upcoming year and forecasts a Q1 2021 revenue target of $61 million, with significant growth driven by the large volume of Bitcoin mining hardware pre-orders as Bitcoin prices foresee another climb.
While their mining rigs were selling for $10 per TH/s in 2020, 2021 sales have already been ranging from $50 to $80 per TH/s, and they’re only expected to continue going up.
This activity is indicative of the current demand within the crypto mining industry that only continues to rise, reflecting ongoing global shortages of mining rigs. With Bitcoin further advancing its reach, gaining acceptance and entering the mainstream payment market with services such as Cash App accepting the digital currency on its platform, it’s safe to say that prominent names within crypto mining will continue to see significant growth as the year progresses.
Looking forward, Nancheng Zhang, CEO of Canaan, stated:
“Although the outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter of 2020, our market leadership has enabled us to attain $174 million contracted orders with $66 million of cash advance from customers as of December 31, 2020, thus laying a solid foundation for substantial revenue growth for 2021.”
With many leading mining hardware manufacturers being plagued by supply shortages amidst Bitcoin price spikes, seeing a reach to an all-time high, mining rigs have become scarcer than ever. Proactive resellers like Wattum Management have preempted this shortage, stocking up on inventory of cryptocurrency mining hardware and purchasing over 2,400 Canaan miners in a $13 million deal. The rise in price per TH/s continues with the foreseen steadiness of Bitcoin value, creating an ample opportunity to invest in such hardware and equipment.