Canaan, the maker of Avalon mining machines, has launched a $20 million share buyback and is selling some of its cryptocurrency holdings to fund it. Third-quarter hardware revenue fell 96%, and much of the company's treasury is already committed elsewhere.
Bitcoin mining-machine maker Canaan is using its cryptocurrency holdings to buy back its own shares as revenue from selling mining equipment collapses. The company launched a $20 million program on Tuesday under a broader $100 million authorization its board approved on Nov. 6.
Hardware sales collapse
Hardware generated just $4.8 million in third-quarter revenue, down 96% from $118.6 million a year earlier, and Canaan blamed weaker demand and lower selling prices.
Its own mining operation brought in $9.5 million, nearly double its hardware revenue. Meanwhile, the shares have lost about 75% this year through Wednesday's close.
Selling crypto to fund repurchases
CEO Nangeng Zhang said Canaan was maintaining a long-term digital-asset treasury while "selectively monetizing cryptocurrency holdings to fund share repurchases." The company says it intends to pursue repurchases more actively as funds become available.
Earlier disclosures show how that works. In an October update, Canaan said it had sold 3,952 ETH and 54.5 BTC for about $13.9 million, then used $5.4 million to buy back 13.6 million American depositary shares in late August.
Much of the treasury is committed
The new program comes with much of the remaining treasury tied up. Canaan held 1,875.5 BTC as of Sept. 30, including 1,258 pledged against loans and 100 placed in a fixed-term product. The remaining 517.5 BTC was recorded directly as cryptocurrency assets, worth $43.7 million at quarter-end.
Of its $72.8 million in cash and restricted cash, $50 million backed a letter of credit supporting infrastructure commitments, leaving about $22.8 million outside the restricted balance.
Canaan still reported an $8 million quarterly profit despite a $42.9 million operating loss, as gains from revaluing cryptocurrency and financial derivatives helped produce the profit.
Source: CoinDesk
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