Canaan Shares Soar on Bitcoin Mining Equipment Demand Surge

Shares of Canaan, a manufacturer of Bitcoin mining hardware, witnessed a substantial surge on Tuesday following the announcement of doubled third-quarter revenues compared to the previous year. This growth was primarily driven by heightened demand for mining equipment as numerous miners reported increased revenue streams. Canaan disclosed on Tuesday that its total Q3 revenue surged by 104% year-over-year to reach $150.5 million. This increase was attributed to a "substantial volume of new orders," with mining equipment revenue constituting the majority at $118.6 million. During the company's earnings call, James Jin Cheng, Chief Financial Officer of Canaan, noted that a significant portion of sales originated from U.S.-based clients who "started actively placing sizable and repeating orders." He further added, "Sales to North American customers accounted for 31% of our total revenue in the third quarter. We are pleased to observe the strong recovery of demand within the North American market." Other mining companies have also reported robust earnings. HIVE Digital reported a 285% increase in earnings on Monday, while BitFuFu doubled its third-quarter revenue due to demand for cloud mining and equipment, as miners sought to capitalize on the rising price of Bitcoin. ### Canaan Shares Jump on Earnings Report Canaan's shares (CAN) concluded trading on Tuesday nearly 21% higher, closing at $1.03, following the company's earnings release. Gains extended by almost 2% after-hours, reaching $1.05. Despite the recent surge, Canaan's stock is down approximately 50% this year as numerous Bitcoin miners have shifted their focus towards powering artificial intelligence (AI) operations. This pivot is driven by the increasing cost and difficulty associated with Bitcoin mining, coupled with a decline in Bitcoin's price. The company reported mining revenue of $30 million for Q3, a 241% increase year-over-year. However, a net loss of $27 million was recorded, compared to a $75 million loss in the same period last year. ### CEO Advocates Bitcoin Mining as a Primary Revenue Source Nangeng Zhang, CEO of Canaan, informed investors during the earnings call that certain miners facing balance sheet pressures and share price performance challenges are transitioning towards AI, which in turn reduces mining operations over the medium term. Nevertheless, he maintains that Bitcoin mining remains a viable option during this transitional period, as the deployment of AI infrastructure requires time. "Our customers, including ourselves, are actively exploring how to construct AI-ready mining facilities for the future," he stated. "At this juncture, allocating resources towards deploying additional Bitcoin miners remains the optimal approach for energy utilization and revenue generation, rather than delaying for one, two, or even three more years."