Bitcoin mining hardware producer Canaan (CAN) is considering further cryptocurrency sales to finance its stock repurchase plans as its mining equipment revenue continues to deteriorate.
The company announced a fresh $20 million share buyback program on Tuesday, supported by a broader $100 million authorization approved by its board on November 6. Executives indicated that repurchases could increase as additional funding becomes available.
Canaan’s shares have struggled throughout the year, declining approximately 75% through Wednesday’s closing price.
The company’s mining hardware operations generated $4.8 million in revenue during the third quarter, representing a 96% plunge from the $118.6 million recorded in the same period last year. Canaan attributed the sharp drop to weaker demand and falling equipment prices.
In contrast, revenue from its own Bitcoin mining operations reached $9.5 million, nearly double the contribution from equipment sales.
CEO Nangeng Zhang said the company plans to maintain its long-term cryptocurrency treasury strategy while selectively selling digital assets to finance share repurchases.
Cryptocurrency Liquidations Support Share Repurchases
Canaan’s previous disclosures highlight how it has used digital asset sales to fund its buyback activities.
In an October update, the company revealed that it had sold 3,952 ETH and 54.5 BTC, generating approximately $13.9 million. It subsequently directed $5.4 million toward purchasing 13.6 million American depositary shares (ADSs), representing its Nasdaq-listed equity, in late August.
However, the latest repurchase announcement comes as much of Canaan’s remaining Bitcoin treasury is already tied up in financial commitments.
The company reported holding 1,875.5 BTC as of September 30. Approximately 1,258 BTC had been pledged as collateral for loans, while another 100 BTC was allocated to a fixed-term investment product.
That left 517.5 BTC recorded as directly held cryptocurrency assets, with a quarter-end valuation of approximately $43.7 million.
Canaan also reported $72.8 million in cash and restricted cash. Of this amount, $50 million was committed to a letter of credit supporting infrastructure obligations, leaving approximately $22.8 million outside the restricted balance.
Bitcoin Valuation Gains Help Canaan Report a Profit
Canaan posted an $8 million net profit for the third quarter despite recording an operating loss of $42.9 million.
Gains from the revaluation of cryptocurrency holdings and financial derivatives helped offset the operating deficit, reflecting Bitcoin’s higher price at the end of September.
Company management believes its shares are trading below the underlying value of its operations and long-term growth opportunities.
The $100 million buyback authorization will remain in place for 12 months. Canaan can adjust the pace and size of its purchases depending on available capital, financing conditions, and operational requirements.
