Canaan Inc. (NASDAQ:CAN), a cryptocurrency mining hardware manufacturer, reported its quarterly numbers on Monday. During the three-month period that ended on 30 September 2022, the computing solutions provider achieved a revenue of $137.5 million, representing a decrease compared to the last quarter and the same period a year earlier.
The company's revenues slumped more than 40% quarter-over-quarter (QoQ) and 26% year-over-year (YoY). The net income depreciation was even more acute and the numbers dropped 90% QoQ to $8.6 million.
The downturn is directly correlated to declining profitability in the mining industry, which translated into the sale of fewer bitcoin and other cryptocurrency mining devices. Total computing power sold by Canaan during the last quarter reached 3.5 million tera hashes per second (TH/s), decreasing by 37.1% compared to 5.5 million TH/s sold a quarter before.
"The bitcoin mining market deteriorated during the third quarter, as the bitcoin price fluctuated and further dipped to around sixteen thousand dollars recently. 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," Nangeng Zhang, the Chairman and Chief Executive Officer of Canaan, commented.
"Looking forward, we face a very tough industry period as the bitcoin price is sinking to lows the market has not seen in two years. Our priority is to conserve our cash, minimize our expenses, and endure this market downturn."
Canaan uses the period of prolonged 'cryptocurrency winter' to develop new tools to increase miners' productivity and profitability. The company presented a new mining machine series during the last quarter, dubbed AvalonMade13. As a part of the development strategy, the manufacturer expanded its Singapore base of professionals and mining business by allocating its machines to the US.
Crypto Miners in Growing Pain
For Canaan, crypto mining revenues are just a tiny part of total earnings. However, the quarterly results of public-listed companies making their buck mainly on digital assets mining operations show worsening problems and financial pain.
Hut 8 Mining Corp. (HUT), one of the leading cryptocurrency miners, reported its quarterly numbers last week and showed a steep decline in revenue of 63% from CAD 50.3 million to CAD 18.6 million.
The company's shares have lost about 80% since the beginning of the year, along with other publicly traded miners, like HIVE Blockchain Technologies Ltd. (HIVE) or Riot Blockchain Inc. (RIOT). Canaan is slipping by 'only' 48% year-to-date (YTD), while bitcoin itself is losing 64% and is currently trading below $17,000.
