- Canaan, the Nasdaq-listed Avalon mining-machine maker, launched a $20 million share buyback on Tuesday under a broader $100 million authorization its board approved on Nov. 6, CoinDesk reported. Management said it intends to pursue repurchases more actively as funds become available. The stock has lost about 75% this year through Wednesday’s close.
- Third-quarter mining-equipment revenue fell 96% to $4.8 million from $118.6 million a year earlier, which Canaan blamed on weaker demand and lower selling prices. Its own mining operation brought in $9.5 million, nearly double its hardware revenue. The company reported an $8 million quarterly profit despite a $42.9 million operating loss, helped by gains from revaluing cryptocurrency and financial derivatives.
- CEO Nangeng Zhang said Canaan was maintaining a long-term digital-asset treasury while “selectively monetizing cryptocurrency holdings to fund share repurchases.” In an October update, the company said it had sold 3,952 ether and 54.5 bitcoin for about $13.9 million and used $5.4 million of that to buy back 13.6 million American depositary shares in late August.
- Much of the remaining treasury is already spoken for. Canaan held 1,875.5 bitcoin as of Sept. 30, including 1,258 pledged against loans — about 67%, by our calculation — and 100 placed in a fixed-term product. The remaining 517.5 bitcoin was recorded as cryptocurrency assets, worth $43.7 million at quarter-end. Of $72.8 million in cash and restricted cash, $50 million backed a letter of credit for infrastructure commitments, leaving about $22.8 million unrestricted.
What Happened?
The new $20 million program is only a slice of the $100 million authorization and lasts 12 months, with purchases adjustable to operating and funding needs. Management argues the stock undervalues the business and its growth prospects, but the hardware collapse is severe: machine sales that generated $118.6 million a year earlier shrank to $4.8 million, leaving self-mining and treasury gains to carry the quarter. Funding buybacks by selling coins also ties the repurchase to bitcoin’s price at a time when a large share of the hoard is pledged or restricted.
Why It Matters?
Canaan is a window into how listed miners and machine makers are using treasuries once the hardware cycle turns. Selling bitcoin and ether to retire a beaten-down stock can support the share price in the short run, but it shrinks the very asset pile investors have been asked to value, and the restricted cash and pledged coins leave limited dry powder. The 75% year-to-date decline shows equity holders have already marked the hardware slump aggressively; a buyback funded by coin sales will only change that if investors believe the remaining business is worth more than the cash and bitcoin left behind.
What’s Next?
Investors will watch how quickly Canaan taps the $20 million program, whether further coin sales are disclosed, and whether hardware demand stabilizes in the fourth quarter. The 517.5 unencumbered bitcoin, worth $43.7 million at Sept. 30 prices, and the $22.8 million of unrestricted cash are the practical limits on how much repurchase capacity it can fund without additional borrowing or a recovery in rig sales. The authorization can be adjusted, and the company can slow or stop purchases if funding needs change.
Affected Tickers and Coins: CAN, Bitcoin, Ethereum
Source: CoinDesk
