Despite the drop in the price of Bitcoin (BTC) in the second quarter of 2021, mining equipment manufacturer Canaan has achieved excellent performance over the period. This performance was boosted by significant investments from the company’s foreign customers, mostly North Americans.
Canaan sells 5.9 million TH/s of ASIC in 3 months
According to Canaan’s financial statements for the second quarter of 2021, released on September 14, the company sold a total of 5.9 million terrahashes per second (TH/s). This amount of hashrate represents about 4 percent of the current total hash power of the Bitcoin network. This record amount represents a 126.9% increase over the first quarter of 2021. Furthermore, it is an increase of over 200% compared to the same period in 2020.
This spectacular growth is mostly related to the increase in the number of machines sold, but also to the sale of machines with a higher hashrate in terms of TH/s.
Canaan’s third quarter is expected to be just as good, as the company has signed one of the largest contracts in mining history with Genesis Digital Assets. This contract is for the purchase of 20,000 ASICs, with an option to purchase an additional 180,000 ASICs.
But the first half of 2021 isn’t just about mining device sales for Canaan. Indeed, the company also continued its own mining business. Nevertheless, Canaan has had to flee China and seems to have made Kazakhstan its permanent home. This country is becoming a particularly popular destination for bitcoin miners, as Bitmain is also planning to set up shop there.
Canaan reports strong quarter
The ASIC manufacturer reported revenue of $167.5 million. That’s a 168 percent increase over the first quarter and a 507.3 percent jump from Q2 2020.
Total revenue wasn’t the only improvement in Q2, as the report shows a net income of $36.3 million. This marks the company’s highest quarterly net income since its IPO. In comparison, Canaan posted a net loss of $33 million in the first quarter.
As expected for a high-end electronics manufacturer, the company’s largest expense item remains cost of revenues.
Spending $101 million on ASIC manufacturing, Canaan’s gross margin was 39.5% ($66 million). This is a good performance for Canaan. On the one hand, it is because of the economic recovery context creating component price inflation and even shortages. On the other hand, the average gross margin for the manufacturer is around 35%.
On the balance sheet side, Canaan had $188 million in cash and cash equivalents as of June 30, 2021. With this war chest, the company should be fully capable of accommodating its full order book. Indeed, the $161 million contract liabilities item means that Canaan still needs to build $161 million worth of ASICs to fulfill its orders.
Canaan’s management committee was pleased with the company’s progress in research and development. Canaan’s income statement shows $9 million in R&D expenses, mostly related to hiring. According to the CEO, important advances have been made in the field of artificial intelligence.