Bitcoin Mining Hardware Firm Canaan Sees 'Prolonged Headwinds' After Challenging Quarter

Supercomputing services provider Canaan (CAN) said tougher market conditions will hurt its performance in the coming months after a difficult second quarter.

Revenue at the Beijing-based company rose 53% from the year-earlier period to 1,653 million yuan ($247 million), the firm said Thursday. Earnings per share (EPS) were 3.53 cents, or 53 cents per American depositary share (ADS), surpassing Seeking Alpha's estimates of 39 cents per ADS.

CEO Nangeng Zhang described the quarter as a "challenging period" due the bitcoin price tumbling below $20,000 in June and COVID-19 lockdowns in various cities in China. The lower bitcoin price "will bring prolonged headwinds to our performance in the coming quarters," Zhang added.

Computing power sold fell to 5.5 million terahashes per second from 5.9 million TH/s. Canaan responded to the tougher conditions by dropping prices on spot sales, which it said will lead to a dramatic decrease in gross margin during the second half.

"Looking forward to the coming quarters, we see a tougher market environment from the lower bitcoin price level, overall increased energy price, and various pandemic and geopolitical uncertainties globally, which may all jeopardize the demand and price for our products," CFO James Jin Cheng said.

Canaan's Nasdaq-listed shares rose 4.6% to $4.09 in premarket trading at the time of writing.

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