Chinese Bitcoin mining company Canaan has reported small improvements in some of its financial results for the first quarter of 2023. However, progress is far behind where it was at this time last year.
According to an unannounced report published on its investor relations page, Canaan’s net loss was $84.4 million in the first quarter, up from a net loss of $91.6 million in the previous quarter. The net loss represents a significant disadvantage compared to the same period in 2022, when the company posted a net profit of USD 65.1 million.
Diluted net loss per American depositary share (ADS) in the first quarter of 2023 was USD 0.51, compared to USD 0.55 in the previous quarter, while diluted net profit per ADS in the same period of 2022 was USD 0.38. According to Investopedia, an ADS is a share of equity in a non-US company that is held by a US custodian bank and is available for purchase by investors.
The company is clamoring to expand its operations despite the bear market and falling profits as a result.
Quarterly results were affected by a number of factors, including weak market demand that weighed on income, the ongoing crisis in the banking system, and the slow recovery of the value of Bitcoin (BTC). Revenues for the first quarter amounted to USD 55.1 million, compared to USD 58.3 million in the previous quarter and USD 201.8 million in the same period of 2012.
“During the first half of 2013, we experienced a further contraction in our sales revenue, due to industry-wide and unexpected delays in payments and shipping due to a series of bank failures in the United States. In addition, our mining business was delayed due to problems that resulted in increased hash rates. our “Canaan CFO James Cheng stated in the report that the revenue results fell “below expectations”.
The revenue breakdown shows revenue of USD 44.1 million from products and USD 11.1 million from mining operations, as well as USD 300,000 from other income. Revenues generated by mining activities increased by 3.3% compared to USD 10.7 million in the fourth quarter of 2022 and represent an increase of 130.2% compared to USD 4.8 million in the same period of 2022.
Costs associated with mining operations include electricity and hosting, as well as depreciation and amortization of equipment.
Total operating expenses in the first quarter of 2023 were USD 38.1 million, compared to USD 60.8 million in the fourth quarter of 2022, and almost the same as the same period last year, when it stood at USD 38 million. “We managed to reduce our operating loss by 31.4% for the last quarter,” said Cheng.
The report shows a decline in investment in research and development. Chanaan spent USD 19.1 million in the first quarter, compared to USD 33.4 million in the previous season. The decline was due to USD 14.3 million in research and development for the A13 series of products. At the same time in 2022, the company committed USD 15.1 million in R&D.
Cryptocurrency assets held by Canaan as of March 31, 2023, at 623 BTC, are worth $13.4 million, according to the report. Cash and cash equivalents stood at USD 72 million, compared to USD 101.6 million as of December 31, 2022.
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