Bitcoin Mining Company Spending $10M to Buy Back Shares

In brief

  • Canaan is spending $ 10 million to buy back stock, which currently costs about $ 2.
  • The maker of Bitcoin mining hardware received $ 90 from a 2019 IPO that sold shares for $ 9.
  • The Chinese company reported a year-over-year decline in net sales of 26% in the second quarter.

Last November, Canaan, the Chinese company that makes computer chips and other hardware for Bitcoin mining rigs, priced its shares at $ 9 on the Nasdaq stock exchange as part of a $ 90 million IPO.

With the price below $ 2 and nearing an all-time low, the company will spend up to $ 10 million to buy back stock.

According to one company press release, “The number of [American Depositary Shares] Goods repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with Canaan’s working capital requirements and general business conditions. “

Canaan has not been audited financial results for the second quarter, released last week, shed some light on the thinking of the hardware manufacturer. It reported year-over-year declines in total computing power sold and total net income of 18.2% and 26.3%, respectively.

At the time, CEO Nangeng Zhang blamed the drop in the COVID-19 pandemic and Bitcoin price volatility associated with Bitcoin’s halving in May.when mining block rewards were cut in half.

The COVID-19 outbreak, which originated in China, already showed a downward trend there in February, before the pandemic in the US and much of the rest of the world had intensified. This partly explains why Kanaan’s earnings from April to June seem fine. Quarter over quarter net sales increased 160.9% to $ 25.2 million.

CFO Quanfu Hong said, “Looking ahead, we will continue to invest in those areas that can strengthen our product offering, streamline our operations and strengthen our market leadership.”

He added that the company “was confident in the underlying strength of our fundamentals and was optimistic about our company’s long-term growth prospects.”

If that’s true, as the stock price is hovering at a low level and China’s industry is emerging from the pandemic, now is the time for Canaan to invest in himself.