Canaan in Record Over 200% YoY 2021 Sales Increase

China-based chip producer, Canaan, has shown in its 2021 unaudited full-year financial results that it sold a total computing power of 22.3 million Thash/s which equates to a year-over-year increase of 238.5%. The huge leap from 2020’s 6.6 million Thash/s total sale – impacted by the global pandemic crisis – generated total net revenue of RMB4,986.7 million (US$782.5 million) increasing from RMB447.7 million the previous year.

Following 2020’s dismal performance, Canaan gets a backlash from the market. By 2021, the company started shifting its target customer base to large mining firms, listed companies, and fund-backed institutions like Genesis Digital Assets, Hive Blockchain and Mawson Infrastructure to maximise revenue. It also joined in on crypto mining after setting up a base in Kazakhstan as it diversified while still selling mining rigs. Canaan said its business’ first diversification attempt into the crypto mining business is to mitigate potential operational risks such as price pressure, Bitcoin price fluctuation and regulatory changes in different countries.

Stemming the impact of these risks on the operations of mining hardware providers became crucial as the production and sales of mining machines and the prices of connected cryptocurrencies have now become closely related. Hence, undue fluctuations in the price of mined cryptocurrencies e.g. Bitcoin can have on the revenue streams.
Canaan notes that mitigating the operational risks are meant to improve the company’s “nimbleness and ability to navigate the rapidly evolving market conditions.” In Q3 2021, it reported a revenue increase of up to 708.2% (RMB1,317.6 million) from RMB163.0 million in the same period of 2020, and up 21.8% compared to RMB1,081.8 million in Q2 of 2021. It says in a company release that it continued to leverage its established market presence to optimize its international customer base, secured a large number of pre-orders from across markets and streamlined its supply chain to optimize its cash flow.

The latest financials show that Canaan made a 2021 gross profit of RMB2,850.7 million (US$447.3 million) increasing from RMB37.8 million in 2020 and a net income of RMB2,000.3 million (US$313.9 million) as against a net loss of RMB215.1 million in 2020. The non-GAAP adjusted net income stood at RMB2,301.6 million (US$361.2 million) unlike the adjusted net loss of RMB212.1 million in 2020.

Nangeng Zhang, CEO of Canaan, pointed out that the strong Q4 performance including the Bitcoin mining business enhanced by additional computing power was key to their overall 2021 results. He adds that they continuously developed their AI business, expanded partner base in a broader ecosystem and look to 2022 to grow through investment in research, global approach and prudent deployment in their mining operations.

According to James Jin Cheng, CanCypherpower Adminaan’s Chief Financial Officer, the company has garnered contract advances of RMB1,340.7 million as of the end of 2021 to guarantee stable revenue streams in 2022 while offering cash flows to expand supply capabilities. “Going forward, we will mitigate the negative effects from fluctuations in the Bitcoin price, geopolitical volatility, and regulatory uncertainties by staying vigilant and agile in our operations,” Jin Cheng said in the 2021 unaudited full-year financial results. 

Market news shows that the reported blowout Q4 numbers had an impact on the company’s stock price action.