Canaan Net Income Nosedives 88% As Bitcoin Mining Suffers On Heels Of FTX Crumble

Zinger Key Points
  • Amid decline in Bitcoin price, Canaan's net income drops by 88%.
  • Company's CFO predicts further pain for the industry.

Canaan CAN, a manufacturer of Bitcoin BTC/USD mining equipment, reported lackluster third-quarter financial results on the heels of a difficult few months for the crypto industry.

According to the Beijing-based company:

  • Net income plummeted 88% to 61.1 million yuan ($8.6 million) from the same period a year earlier.
  • Revenue fell 26% to 978.2 million yuan
  • Total computing power sold fell 48.5% to 3.5 million terahashes per second (the rate of hashes per second determines how long it takes to complete a block).

Canaan isn't the only bitcoin mining firm having a tough time. Compute North, a provider of data centers, declared bankruptcy in September.

Liquidity problems have also affected Argo Blockchain ARBK and Core Scientific CORZ.

Also read: CEO Says ETH Worth $300M Transferred 'Erroneously,' Binance's CZ Tweets 'Clear Sign Of Problems'

“The negative market dynamics have significantly hindered bitcoin miners' revenues and cash flows. As miners are forced to cut their demand for computing power, we had to adjust down our selling price in response,” Canaan CEO Nangeng Zhang said.

While efforts were being made in the research and development of supercomputing technology, Canaan faces "a very tough industry period as the Bitcoin price is sinking to lows the market has not seen in two years," Zhang explained.

"Our priority is to conserve our cash, minimize our expenses, and endure this market downturn," he added.

The scenario was likely worsened by the collapse of crypto company FTX, which was once valued at $32 billion but is now valued at next to nothing after declaring bankruptcy last week.

Market circumstances are anticipated to continue deteriorating due to "Bitcoin's downward trajectory, rising energy prices, and miners under increased cash pressure," according to James Jin Cheng, CFO of Canaan.

Shares of Canaan were last trading at $2.69, according to data from Benzinga.

Next: 'They Just Couldn't Have So Much Cash': Binance CEO On His FTX 'Hunches' And Importance Of Stablecoins In Bear Market

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