Bitcoin Miner Maker Canaan Lost $148M in 2019

Chinese bitcoin miner manufacturer Canaan Creative disclosed a net loss of $148.6 million for 2019 on revenue of $204.3 million, reflecting declining profitability over the past three years.

On Thursday, the firm released its first unaudited earnings report since going public in the U.S. in November. Canaan said it sold computing power totaling 10.5 exhashes per second (EH/s), which accounted for roughly 20 percent of the Bitcoin network’s computing power growth last year.

Since its $90 million IPO, Canaan’s share price has been on a downward trend and is currently around $3.5 per share – 61 percent below its offering price.

The firm said it recorded $114.7 million in net loss in Q4 2019 alone, which widened its $31.2 million net loss for the first nine months in 2019.

Nangeng Zhang, CEO and founder of Canaan, said in an earnings call on Thursday morning Eastern time that, although the firm recorded sales uptick in October and November, it saw a “considerable drop” in volume in December amid volatility in bitcoin’s price.

“As a result of the impact of the COVID-19 outbreak, a widespread health crisis that adversely affected general commercial activities, the economies, financial markets, as well as the cryptocurrency market activities, we have lowered our expectations for business in the year of 2020,” according to the report. “For the first quarter of 2020, the Company expects total revenues not less than RMB60 million [$8.5 million].”

Also notable in the report is the increasing ratio of the “cost of revenues” for Canaan’s sales of bitcoin miners over the past year, which leads to declining profitability. In 2019, the cost of revenue for Canaan was $278 million, $78 million more than the total revenue made for the year, largely due to inventories and prepayments write down of $104.7 million in Q4.

Canaan’s cost of revenues generally include the costs of raw material, production and logistics for the manufacturing of mining equipment, as well as…

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