Bitcoin mining equipment manufacturer Canaan launched a $20 million share buyback despite a 96% decline in hardware revenue.
Canaan will carry out the program, launched Tuesday, under the authorization to buy back up to $100 million in shares approved by its board on November 6. CEO Nangeng Zhang said the company selectively converted crypto assets into cash to fund buybacks while preserving its long-term digital asset treasury. Management plans to conduct buybacks more actively as funds become available.
The decision comes as the company’s mining equipment business contracts. Canaan’s hardware revenue fell 96% year over year to $4.8 million in the third quarter. The company attributed the decline to weaker demand and lower selling prices.
Canaan’s mining revenue surpasses hardware sales
Canaan’s own mining operations generated $9.5 million in revenue in the same quarter, nearly twice the revenue from hardware sales. The company’s shares had also lost about 75% of their value year to date by Wednesday’s close.
In a statement in October, Canaan said it had previously sold 3,952 Ethereum (ETH) and 54.5 Bitcoin (BTC) for about $13.9 million. The company used $5.4 million of that amount to buy back 13.6 million American depositary shares at the end of August. These shares represent Canaan stock traded on Nasdaq.
A portion of its Bitcoin holdings is restricted
As of September 30, the company held 1,875.5 BTC. Of that amount, 1,258 BTC had been pledged as collateral for loans, and 100 BTC had been placed in a term product. The remaining 517.5 BTC, recorded as direct crypto assets, was worth $43.7 million at the end of the quarter.
Canaan had a total of $72.8 million in cash and restricted cash. Of that amount, $50 million was tied to a letter of credit supporting infrastructure commitments; unrestricted cash stood at about $22.8 million.
Not investment advice.