<p>Beijing-headquartered crypto mining equipment manufacturer Canaan recently <a href="https://www.prnewswire.com/news-releases/canaan-inc-reports-unaudited-fourth-quarter-and-full-year-2023-financial-results-302072568.html" rel="noopener noreferrer nofollow">revealed</a> its financial results for the fourth quarter of 2023, demonstrating that it continues to struggle with profitability despite positive numbers relative to revenues and growth.</p><h2 id="header-0">Increased revenues and sales</h2><p>According to the company’s <a href="https://capedge.com/filing/1780652/0001104659-24-027913/CAN-6K/file/2" rel="noopener noreferrer nofollow">filing</a>, during the last quarter of 2023 Canaan reported a surge of 45.7% in total computing power sold compared to the preceding quarter, reaching 5.5 million Thash/s. This ascent, which reflects a 191.9% increase from the same period in 2022, signifies not just a recovery but a robust resurgence in demand and operational ability.</p><p>The company&#39;s dispatch of 19.6 million Thash/s throughout the year, marking a 29.6% leap from 2022, aligns with the rebound in bitcoin prices observed in Q4 2023, a pivotal factor shaping Canaan&#39;s operational revitalization.</p><h2 id="header-1">47% growth on previous quarter</h2><p>A closer examination of the financials reveals not only surpassing total revenues but also a notable 47.3% quarter-over-quarter growth. Canaan&#39;s foray into international markets, bolstered by securing substantial orders from esteemed public company clients, underscores a buoyant sales performance and a positive outlook for the computing sector.</p><p>Despite the buoyant sales and revenue figures particularly in the mining machine market, the sector has faced ongoing regulatory uncertainties and market fluctuations. Nonetheless, the company&#39;s strategic initiatives, alongside the positive market effects of the approval and listing of spot bitcoin exchange-traded funds (ETFs), have been positive.</p><p>Moreover, Canaan&#39;s investments in wafer supply capabilities and strategic financial maneuvers garnered approximately US$136 million through at-the-market (ATM) programs and preferred shares.</p><h2 id="header-2">Recording a loss</h2><p>Yet, the company’s journey in 2023 was not without its hurdles. Q4 2023 witnessed a significant increase in product revenues from the previous quarter but a decline from Q4 2022, attributed to dwindling sales prices as the halving event loomed, underscoring the volatility inherent in the cryptocurrency market. <a href="https://coinnesslive.page.link/qWZL4cPg6fjKLnFr5" rel="noopener noreferrer nofollow">Results</a> published last year are indicative of the company’s difficulty. In Q2 2023, revenues were strong, yet the company wasn’t turning a profit.</p><p>With Q4 results, it’s now clear that the firm lost $421 million in 2023. In Q4, Canaan recorded a net loss of $139 million. That compares with a loss of $91 million in Q4, 2022. The company also expects tough market conditions in 2024. In its forward-looking outlook, it stated:</p><p>”For the first quarter of 2024, and the second quarter of 2024, the Company expects total revenues to be approximately US$33 million and US$70 million, respectively, considering the challenging market conditions across the industry. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.”</p><p>The crypto mining sector remains a very challenging market. With the upcoming Bitcoin halving event set to occur in April, it’s <a href="https://cointelegraph.com/news/bitcoin-halving-knock-20-percent-hash-rate-offline-galaxy" rel="noopener noreferrer nofollow">expected</a> that as much as 20% of mining capacity could be forced offline, as some equipment would simply fail to mine on a profitable basis.</p><p>Indicative of the challenges within the sector, crypto miner Core Scientific was forced into bankruptcy due to market difficulties in December 2022. It has only recently <a href="https://www.coindesk.com/business/2024/01/16/bitcoin-miner-core-scientific-to-emerge-from-bankruptcy-re-list-shares-this-month/" rel="noopener noreferrer nofollow">exited</a> that bankruptcy process and now expects to generate revenues of $600 million in 2024. Another Bitcoin miner, Riot Platforms, has <a href="https://cryptonews.com/news/bitcoin-miner-riot-warns-of-profit-risks-due-to-chip-shortage-and-climate-regulations.htm" rel="noopener noreferrer nofollow">warned</a> that profitability may be difficult to achieve in 2024 due to chip shortages.</p>

Profitability eludes Canaan despite further growth

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