Canaan may sell more bitcoin for stock buybacks as mining-rig revenue falls 96%

Canaan may sell more bitcoin for stock buybacks as mining-rig revenue falls 96%

The Avalon maker has launched a $20 million repurchase program, while most of its bitcoin holdings were pledged or placed in a fixed-term product at September’s end.

Canaan may sell more bitcoin for stock buybacks as mining-rig revenue falls 96%. (Credit: Getty Images, Nikolay Tsuguliev)

Canaan launched a $20 million share buyback program and is selling some cryptocurrency holdings to fund repurchases as its stock has fallen about 75 percent this year.

Third-quarter mining-equipment revenue fell 96 percent to $4.8 million, while gains from revaluing cryptocurrency and derivatives helped produce an $8 million profit despite a $42.9 million operating loss.

Much of Canaan’s treasury is committed elsewhere, with 1,258 bitcoins pledged against loans and $50 million of its $72.8 million in cash and restricted cash backing infrastructure commitments.

Bitcoin mining-machine maker Canaan (CAN) is drawing on its cryptocurrency holdings to buy back its own shares as revenue from selling mining equipment collapses.

The company launched a $20 million buyback program on Tuesday under a broader $100 million authorization approved by its board on Nov. 6. Management says it intends to pursue repurchases more actively as funds become available.

Canaan’s shares have lost about 75% this year through Wednesday’s close, data shows.

CEO Nangeng Zhang said Canaan was maintaining a long-term digital-asset treasury while “selectively monetizing cryptocurrency holdings to fund share repurchases.”

Earlier disclosures show how that works.

In an October update, Canaan said it had sold 3,952 ETH and 54.5 BTC for about $13.9 million. It used $5.4 million to buy back 13.6 million American depositary shares, the securities representing its shares on Nasdaq, in late August.

The new program comes with much of its remaining treasury tied up.

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Canaan held 1,875.5 BTC as of Sept. 30, including 1,258 pledged against loans and 100 placed in a fixed-term product. The remaining 517.5 BTC was recorded directly as cryptocurrency assets, worth $43.7 million at quarter-end.

Of its $72.8 million in cash and restricted cash, $50 million backed a letter of credit supporting infrastructure commitments. That left about $22.8 million outside the restricted balance.

Management says its stock undervalues the business and its growth prospects. The buyback authorization lasts 12 months, and the company can adjust purchases according to its operating and funding needs.

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Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.

Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.

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