There are several companies that are dedicated to creating Bitcoin miners, including the giant Canaan Creative.
The company revealed a net loss of $ 148.6 million for 2019, on revenue of $ 204.3 million. This reflects the decrease in profitability in the last three years.
The company released its first unaudited earnings report since it was released in the United States in November.
Bitcoin mining giant’s shares
Since its initial public offering of $ 90 million, the mining giant’s share price has followed a downward trend. It currently stands at around $ 3.5 a share. That is, 61% below its offer price.
The company said it recorded a net loss of $ 114.7 million in the last three months of 2019 alone, expanding its loss of $ 31.2 million in the first nine months of 2019.
Nangeng Zhang, CEO and Founder of Canaan Creative, said in a call Thursday, that although the company reported increased sales in October and November. It saw a considerable drop in volume in December due to the volatility of Bitcoin’s price.
“As a result of the impact of COVID-19, a health crisis that negatively affected commercial activities in general, economies, and financial markets. As well as the activities of the cryptocurrency market, we have reduced our business expectations in 2020 ”, according to the report.
Also notable is the increase in the “cost of revenue” ratio of Bitcoin miners’ sales over the past year, leading to decreased profitability.
In 2019, Canaan Creative’s cost of revenue was $ 278 million, $ 78 million more than total revenue for the year. Largely due to the reduction of inventories and prepayments of 104.7 million dollars in the fourth quarter.
In the cost of Canaan Creative’s income, it generally includes: raw material costs; production and logistics for the manufacture of mining equipment, as well as settlements of prepayments and inventories.
The Canaan Decline
In 2017, Canaan Creative’s total cost of revenue was $ 100 million with no inventory reduction. Representing 54% of its $ 183 million revenue was due to the uptrend of the crypto market by then. Thus, the company took home $ 53 million with a 30% net profit margin.
In 2018, its total cost of income rose to $ 307.4m, representing 80% of its revenue of $ 378 million. But the total cost included a reduction of $ 110 million dollars in inventories, since the fall of the market made it difficult to sell machines.
Also, the increased cost of revenue may be due to more advanced mining equipment relying on more expensive chip technology.
According to Canaan Creative’s prospectus, the cost of its Avalon 10, the latest range of miners, is around $ 751. Compared to $ 354 and $ 600 for its old Avalon 8 and 9 series. And prices for December were not far behind, they were around $ 1,200 for the Avalon 10.
According to information announced by Canaan Creative Authorized Resellers, several Avalon 10 models are currently for sale. Because, the wave of investor buying has cooled in recent months.