Canaan Q3 financial report: Pre-sale amount is nearly 300 million, or entering the digital currency industry, stock price rose 200% in two months

Wu Blockchain learned that Canaan released its latest third-quarter financial report on the 30th. Although the data is not as good as the second quarter, it reveals a large amount of pre-sales and the possibility of entering the digital currency field in the future. Canaan's market value/share price has increased by 200% in the past two months, becoming the cryptocurrency mining company with the highest market value in the US stock market.

Canaan's total revenue in the third quarter was RMB 163 million (approximately US$24 million), down 8.5% from the second quarter. As for the reason for the quarter-on-quarter decline in revenue, Canaan said that the company's sales in the second quarter were mainly based on inventory, and by the beginning of the third quarter, the inventory had been basically sold out, so revenue declined, and pre-sales were not included in the revenue of the quarter.

R&D expenses in the third quarter were RMB 32.1 million, up 23% from the second quarter. The gross loss was RMB 17 million, and the gross profit in the second quarter of 2020 was RMB 43.3 million. Canaan explained that the main reason was that the company's mass production and wafer production gradually started in the third quarter, but these wafers put into production in the third quarter will basically be made into complete machines and delivered after 90-120 days.

The data is not good, but the stock price is soaring. Wall Street is looking at expectations. Canaan's new mining machine A1246 series products were released in the third quarter, and came to 38J/T that can compete head-on with Shenma M30S. As Ebang and Xindong gradually faded out of the Bitcoin mining machine industry, Bitcoin mining machines have become a two-horse race between Shenma and Bitmain. Canaan has returned to the first echelon with its new mining machines.

Zhang Nangeng, chairman of Canaan, said that as of the end of November, the total delivery amount of pre-sale orders for mining machines in the fourth quarter of this year and the first quarter of next year was more than 45 million US dollars (about 300 million yuan). Currently, Canaan is selling futures for mining machines in the second quarter of next year.

Canaan's performance has increased, not only because of the release of new mining machines and its return to the first echelon, but more importantly because of the sudden surge in the price of Bitcoin since October. Due to the crazy buying of mainstream institutions, Jiang Zhuoer, Sun Yuchen and others predicted that the price of Bitcoin may reach 100,000 US dollars in 2021.

Regarding the future, Zhang Nangeng said that in the past six months, the company has conducted sufficient research and demonstration on domestic and foreign markets and policy environments, and has accumulated sufficient industry resources and experience for the development of new businesses. The company has made final preparations for conducting mining business and holding digital currencies in a legal and compliant manner , and will carry out mining-related businesses within the next 6 months. It will use mining machines as the cornerstone and develop upward to become a company with a complete blockchain ecosystem.

Canaan did not provide a more detailed explanation as to whether the company will engage in the business of holding digital currency after holding digital currency and in the blockchain ecosystem, such as the mining financial services that Bitmain, Biyin and others are currently vigorously developing.

Currently, the other two crypto mining companies listed on the US stock market include Ebang and Bit Digital. Ebang is the most aggressive in the field of digital currency, and has successively announced the establishment of companies in Singapore, Canada, New Zealand, Australia and other places to expand cryptocurrency exchanges and related financial businesses. Bit Digital is a company acquired by Yuhong and filled with mining business. As of September 30, 2020, there are 22,869 mining machines in operation, which have obtained 949.51 bitcoins and confirmed unaudited revenue of approximately US$10.08 million.

Although Ebang previously relied on the good news of cryptocurrency to stimulate the stock price to soar, Canaan has recently surpassed it. As of 8 pm Beijing time on the 30th, the market value of Canaan, Ebang, and Bit Digital was 900 million, 647 million, and 276 million US dollars respectively. In September, Canaan's market value was only 300 million US dollars. Within 2 months, the stock price/market value soared by 200%, which was related to the rise in Bitcoin prices and its good sales.

As of September 30, FMR Fidelity has newly held 2,714,809 shares of Canaan, making it one of the largest institutional investors in Canaan. If it holds on to the present, it will have gained more than 200%. Fidelity cleared out its holdings once in June and then bought them again.

The core issues that Canaan needs to pay attention to in the future include: the stability of the performance of high-computing power mining machines and subsequent delivery; the amount of chip production capacity acquired in 2021; whether the blockchain business other than mining machines can tell a story; and whether the AI ​​business can be spun off and listed domestically.

Zhang Nangeng said that in the field of AI chips, the monthly shipments are currently stable at around 30K, and next year the monthly shipments are expected to be stable at more than 50K, and the annual revenue will strive to reach the 10 million level. The new generation of artificial intelligence chip K510 has also been put into production and is expected to be released in the first quarter of next year.