Bitcoin mining company Canaan announced its unaudited financial results for Q2 2023, showing growth in computing power sold and BTC mining revenues while it tackled a significant net loss of $110 million. up 31% on Q1.
The NASDAQ-listed company outlined a variety of reasons influencing increased revenues and a significant headwind that included an inventory write-down and equipment impairment totaling $54 million.
Canaan recorded $73.9 million in revenue in Q2 2023, up from $55.2 million quarter-on-quarter. This consisted of $57.9 million from products revenue and $15.9 million in Bitcoin mining revenue.
BTC mining revenues reflected 43.3% growth compared to Q1’s $11.1 million, with Canaan’s 2023 Q2 more than doubling Q2 2022’s $7.8 million in BTC mining revenues. The company attributed this surge to the recovery in Bitcoin prices and the consequent rise in Bitcoin rewards.
“The sequential increase was mainly driven by the Bitcoin price recovery and increased Bitcoin rewards across the network during the quarter.”
Canaan also reported significant growth in its total computing power sold, reaching 6.1 million Thash/s, up 45% quarter-on-quarter, with the sector becoming a major driver of revenue for the company.
Canaan also detailed net losses totalling $110.7 million in Q2, which it attributed to non-cash accruals and provisions reflecting changes in selling prices, regulatory shifts, and partner agreements.
Canaan CFO James Jin Cheng added that the losses included inventory write-down, provision for commitment reserve and impairment of property and equipment which totaled US$54.7 million.
“These non-cash accruals and provisions reflect our consideration of the latest selling price change, regulation changes in Kazakhstan, and the default by the partner at a U.S. project, which did not influence our cash flow.”
As of June 2023, Canaan’s listed cryptocurrency holdings included 1,125 BTC valued at US$28.8 million. 747 BTC are owned by Canaan, while 378 BTC are attributed to customer deposits.
Canaan also reported that it had suspended 2.0 exahash/s of its mining computing power based in Kazakhstan to ensure legal compliance with the Rules for Licensing of Digital Mining Activities coming into effect.
The company is in the process of obtaining a specialized license to continue its operations and expects a reduction in its Q3 BTC generation as a result of the offline hardware.