Despite the closure of the domestic Bitcoin mining industry, Canaan Technology's revenue in the second quarter still increased by 2.6 times month-on-month

On September 15, Bitcoin mining machine manufacturer Canaan Inc. (NASDAQ: CAN) released its unaudited second-quarter financial results. The financial report shows that in the second quarter of 2021, Canaan Inc.'s operating income was 1.081 billion yuan, a 2.6-fold increase from the previous quarter and a year-on-year increase of 507%; net profit was 245 million yuan, compared with a loss of 16.8 million yuan in the same period last year.
Canaan Inc. attributes its rapid revenue growth to the increase in total computing power sold.
Since 2020, Canaan Inc. has started to frequently receive overseas orders. Even though mainland China continues to clear out the Bitcoin mining industry, it has not affected overseas institutions' purchase of Bitcoin mining machines. At the same time, Canaan Inc. has accelerated the layout of overseas mines.
On June 24, Canaan Technology launched its self-operated mining business in Kazakhstan, and the first batch of Avalon mining machines were put into operation. Previously, in order to comply with regulatory requirements, Canaan Technology established an operating entity for its self-operated mining business in Singapore.
On August 12, Canaan Inc. and Mawson, a U.S.-listed company, reached another cooperation agreement and signed 17,352 units of Avalon's latest generation of ASIC mining machines, adding more than 1.5EH of computing power to Mawson's existing business.
On August 31, Jiemian News learned that Canaan Technology signed an order for 200,000 Bitcoin mining machines with North American mining company Genesis Digital Assets, including 20,000 mining machines and an additional purchase option of up to 180,000 mining machines.
A large number of U.S.-listed mining companies purchased mining machines from Canaan Technology, which led to a sharp increase in its prepayments. As of June 30, 2021, prepayments were RMB 1.041 billion (US$161 million), an increase from RMB 430 million as of December 31, 2020. Canaan Technology said the reason was the increase in down payments for customer mining machine sales orders in the next few quarters.
While revenue soared, its total operating expenses and costs also continued to grow. Canaan Technology's total operating expenses in the second quarter of 2021 were RMB 262 million (US$41 million), compared with RMB 62 million in the same period of 2020 and RMB 208 million in the first quarter of 2021.
Canaan's costs in the second quarter of 2021 increased to RMB 655 million (US$101 million) from RMB 135 million in the same period of 2020 and RMB 209 million in the first quarter of 2021.
As its business continues to grow, Canaan Inc. confidently predicts that its business will continue to rise on a quarter-on-quarter basis in the third quarter.
Prior to this, after the release of its 2020 financial report, Canaan Inc. was embroiled in fraud lawsuits filed by investors due to the stock price plunge. Canaan Inc.'s own organizational structure has also undergone major adjustments, including the resignation of senior executives such as Kong Jianping, who was originally in charge of marketing, and a major reshuffle of board members. Canaan Inc. currently has Chairman Zhang Nangeng as its absolute core.
On August 2, Canaan Inc. announced that Cheng Jin, vice president of Zhaopin.com, joined Canaan Inc. as its new chief financial officer (CFO), and the former acting chief financial officer He Tong will continue to serve the company as financial director.
From the perspective of business structure, Bitcoin mining machine sales and research and development are Canaan Technology's core businesses, but it has not given up its investment and layout in the semiconductor and AI fields.
On August 11, Canaan Inc. announced a strategic investment in Pixelworks' wholly-owned Chinese subsidiary, Pixelworks Shanghai Co., Ltd., with the goal of acquiring technical resources in the field of video processing at the AI ​​business level and strengthening its R&D and scene implementation capabilities in image processing.
As a listed company, Canaan's net earnings per share turned positive year-on-year. In the second quarter of 2021, Canaan's basic net earnings and diluted net earnings per American depositary share (ADS) were RMB 1.46 (US$0.23) and RMB 1.40 (US$0.22), respectively. In comparison, the basic net loss and diluted net loss per ADS in the same period of 2020 were both RMB 0.71, and the basic net earnings and diluted net earnings per ADS in the first quarter of 2021 were both RMB 0.05.
However, Canaan Inc.'s stock price performed flat. At the close of September 15, Canaan Inc.'s stock was quoted at US$8.21, down more than 10%. Despite its rapid performance growth, its stock price continued to fluctuate and fall from its historical high in the first half of the year.