China-based bitcoin mining machine maker Canaan reported a net loss of $ 5.6 million for the first quarter of 2020, despite lowering its hardware prices by more than half in an effort to sell more cars.
The drop due to the effects of the pandemic and Bitcoin halving …
In a earnings report released last week, the company said it had revenues of $ 9.4 million for the first three months of this year, up 44.6% from the same period last year. .
But it also incurred expenses of $ 9.3 million and $ 5.9 million respectively in the cost of the goods sold and in research and development. To have this revenue, Canaan sold 0.9 million terahash per second (TH / s). of Bitcoin processing power, which represents less than 1% of the network's current total.
This means that Canaan has reduced the prices of its mining hardware sold in the first three months by more than 50% to just $ 10 per TH / s, reflecting a general slowdown in interest in purchasing mining hardware in the weeks. close to the Bitcoin halving event and the COVID-19 pandemic that disrupted global logistics.
Previously, Canaan had reported sales of $ 66.5 million in 2019 with 2.9 million TH / s of Bitcoin processing power sold, meaning that average prices were around $ 22 for TH / s the Last year. Other major manufacturers have also adopted a similar price reduction strategy in recent months.
“The general market situation from December last year until January has not been too good. So the unit price for TH / s was really low, "said Zhang Nangeng, CEO and president of Canaan. The report also shows that Canaan had $ 37 million in cash and cash equivalents as of March 31, up from $ 71 million at the end of last year.
… but also of new investments in research and development
"The decrease is mainly due to higher short-term investments as the Company invested RMB173.4 million (US $ 24.5 million) in short-term investments as of March 31, 2020," Canaan said in the report.
Zhang said the company has partnered with China Semiconductor Manufacturing International Corporation – in addition to the current supply chain partnership with Samsung and TSMC – to implement 14nm chip bitcoin mining equipment that it plans to be able to to ship in large quantities in the second quarter.
But the company refuses to comment on the business prospects for the second quarter of 2020 by citing the uncertainty due to the COVID-19 pandemic and that for the post-halving of Bitcoin which give "very limited visibility on the potential impacts on its business and on the markets in which it operates ”.
And what do you think of all this. Will Zhang manage to reduce his company's losses and stay on top of the wave? Let us know in the comments below.