Canaan launches $20m buyback as mining rig revenue drops 96%
The Avalon manufacturer may sell more of its bitcoin holdings to fund the share repurchases after pledging most of its cryptocurrency reserves in September.
Key takeaways
- 1Canaan launched a $20 million share repurchase programme.
- 2Mining-rig revenue at the manufacturer fell 96 percent.
- 3Most of Canaan's bitcoin reserves were pledged or placed in fixed-term products at the end of September.
Bitcoin hardware manufacturer Canaan has launched a $20 million share repurchase programme and indicated it may sell additional bitcoin from its corporate reserves after reporting a 96 percent fall in mining-rig revenue. The company announced the buyback initiative to support its stock performance as sales of its primary hardware products experienced a sharp decline.
Most of Canaan's bitcoin holdings were pledged or placed into fixed-term financial products at the end of September, according to company disclosures. The manufacturer is preparing to liquidate part of its cryptocurrency treasury to fund the buybacks, compensating for the reduction in cash flow generated by its core equipment manufacturing division.
Canaan designs and manufactures the Avalon series of specialized bitcoin mining rigs, supplying hardware units to commercial mining operations worldwide. Revenue for rig vendors is tied to network mining conditions, as lower operational margins often cause mining firms to cut hardware budgets and defer spending on new computing fleets.
Using reserve assets to buy back equity demonstrates how hardware suppliers manage balance sheet liquidity during periods of reduced hardware demand. Market participants will watch the rate at which Canaan unencumbers its pledged holdings and liquidates bitcoin to execute the $20 million repurchase plan in upcoming reporting periods.
Reported and edited by the YourKhabri desk under our editorial policy. Nothing here is investment advice.