SINGAPORE, May 17, 2024 — Canaan Inc. (NASDAQ: CAN) (“Canaan” or the “Company”), a leading high-performance computing solutions provider, today announced its unaudited financial results for the three months ended March 31, 2024.
Revenues for the first quarter of 2024 were $35.1 million, exceeding previous guidance of $33 million by 6%. Mining revenue was $10.5 million, representing a sequential increase of 182.1%. The number of Bitcoins held by the Company surpassed 1,000 for the first time to reach a record-high 1,057 Bitcoins. Net loss narrowed 71.7% sequentially and 53.3% year-over-year to $39.4 million.
Mr. Nangeng Zhang, Chairman and Chief Executive Officer of Canaan, commented, “As we navigate through the last full quarter before the Bitcoin halving, Canaan has demonstrated resilience and strategic foresight. Despite the traditional slow season in the first quarter of 2024, we successfully delivered 3.4 million Thash/s of computing power sold while driving our mining revenue to an impressive $10.5 million, a significant sequential growth of 182.1%. Our total revenue for the quarter reached $35 million, surpassing our previous forecasts. This topline performance is underpinned by relentless sales efforts and the optimization of our mining operations. Furthermore, the introduction of our new A1566 mining machines and the continued demand for our A14 series post the halving underscore our consistent capabilities in product innovation and market responsiveness.”
“The industry has witnessed several positive developments early this year, such as the approval of Bitcoin spot ETFs in the U.S. and Hong Kong markets, a record high Bitcoin price, and the seamless completion of the fourth Bitcoin halving. These milestones herald the beginning of a new bullish cycle for Bitcoin, attracting a larger base of participants and fostering a more concrete consensus within the industry. With the upcoming mass deliveries of our A14 series and the launch of the A1566 Avalon Miner, Canaan is well-prepared to capitalize on these emerging opportunities. We remain committed to enhancing our technology and offering advanced mining solutions that meet the evolving needs of our clients, ensuring that Canaan continues to be a pivotal player in the blockchain ecosystem.”
Mr. James Jin Cheng, Chief Financial Officer of Canaan, stated, “In the first quarter of 2024, we anticipated a quiet season but were proactive in propelling our market approach to meet various computing power needs. This strategy enabled us to exceed our revenue expectations and nearly double our customer advances from the end of 2023. These advances are poised to translate into future revenues in Q2 and Q3 this year as we ramp up the mass delivery of our A14 series products since April. Additionally, our balance sheet has been fortified with a record holding of 1,057 bitcoins, benefiting from our resumed self-mining operations. With the adoption of new accounting standards in 2024, we now reflect the fair value of our crypto assets, enhancing our financial transparency and balance sheet strength under increased bitcoin prices.”
“Financially, we have strategically invested in locking wafer supply capacities for mass production, which is reflected by the substantial increase in our prepayments to our foundry partner. Furthermore, our stringent expense control measures continued to yield financial benefits in the first quarter. In spite of inventory write-downs as a result of the continued destocking campaign, our net loss prominently narrowed year over year and sequentially during the first quarter. With the Bitcoin halving now behind us, we anticipate a renewed interest in mining hardware upgrades and expansions. We are well-prepared to meet this upcoming demand surge, having strategically strengthened our supply chain to fulfill our customers’ success in the mining landscape.”
Revenues in the first quarter of 2024 were $35.1 million, as compared to $49.1 million in the fourth quarter of 2023 and $55.2 million in the same period of 2023. Total revenues consisted of $23.4 million in products revenue, $10.5 million in mining revenue and $1.2 million in other revenues.
Products revenue in the first quarter of 2024 was $23.4 million, compared to $44.9 million in the fourth quarter of 2023 and $44.1 million in the same period of 2023. The decreases compared to the fourth quarter of 2023 and the first quarter of 2023 were mainly due to the decrease in total computing power sold and average selling price resulting from the softened demand before the halving event, despite a gradual recovery in the price of bitcoin. AI product revenue was $0.1 million in the first quarter of 2024.
Mining revenue in the first quarter of 2024 was $10.5 million, representing an increase of 182.1% from $3.7 million in the fourth quarter of 2023 and a decrease of 5.7% from $11.1 million in the same period of 2023. The sequential increase was mainly driven by the recovery of the bitcoin price and the resumed mining computing power in Kazakhstan. The year-over-year decrease was due to the deployment change.
Cost of revenues in the first quarter of 2024 was $72.4 million, compared to $103.1 million in the fourth quarter of 2023 and $102.8 million in the same period of 2023.
Products costs in the first quarter of 2024 were $59.8 million, compared to $95.8 million in the fourth quarter of 2023 and $75.4 million in the same period of 2023. The sequential and year-over-year decreases were consistent with the decrease of computing power sold. The inventory write-down, prepayment write-down and provision for inventory purchase commitments accrued for this quarter was $47.5 million, compared to $55.5 million for the fourth quarter of 2023 and $34.9 million for the same period of 2023. Products costs consist of direct production costs of mining machines and AI products and indirect costs related to production, as well as inventory write-down, prepayment write-down and provision for inventory purchase commitments.
Mining costs in the first quarter of 2024 were $12.2 million, compared to $6.0 million in the fourth quarter of 2023 and $27.3 million in the same period of 2023. Mining costs herein consist of direct production costs of mining operations, including electricity and hosting, as well as depreciation of deployed mining machines. The sequential increase was mainly due to the increased electricity cost, which was driven by the increase in energized mining computing power. The year-over-year decrease was mainly due to the decreased depreciation, which was driven by the end of the depreciation period of early deployed mining machines and the impairment of the currently deployed mining