In 2019, Canaan, the Chinese company that makes computer chips and other hardware for Bitcoin mining rigs, priced its shares at $9 on the Nasdaq stock exchange as part of a $90 million initial public offering (IPO). Now, with the price below $2 and near an all-time low, the Chinese crypto mining company will spend up to $10 million to buy shares back. Canaan’s second financial report reported year-over-year decreases in total computing power sold and total net revenues of 18.2% and 26.3%, respectively.
The number of repurchased shares will depend on different factors.
According to a Canaan press release, “the number of [American Depositary Shares] repurchased and the timing of repurchases will depend on several factors, including, but not limited to, price, trading volume, and general market conditions, along with Canaan’s working capital requirements and general business conditions. The unaudited second-quarter financial results of the Chinese company shed some light on the hardware maker’s thinking, reported Saumil Kohli. It reported year-over-year decreases in total computing power sold and total net revenues of 18.2% and 26.3%.
The CEO blames the ongoing pandemic for lower sales.
The CEO of Canaan Nangeng Zhang blamed the decline on the COVID-19 pandemic and Bitcoin price volatility associated with the Bitcoin halving in May when block rewards for mining were cut in half. The COVID-19 outbreak, which originated in China, was already trending downward in the country by February before the pandemic in the US, and much of the world’s rest had yet spiked, which explains why Canaan’s April-through-June earnings were alright. Quarter-over-quarter net revenue of the Chinese company was up 160.9% to $25.2 million. The company’s CFO said that they would continue to invest in those areas that can strengthen the product offerings, streamline their operations, and solidify our market leadership.