coinculture.com
Bitcoin ASIC manufacturer Canaan has reported stagnant revenue despite the ongoing crypto bull market. In its Q4 2023 earnings report released on Feb. 27, the company revealed a revenue of $49 million, marking a 16% decrease compared to the same period last year. Additionally, Canaan reported a widened net loss of $139 million, up from $91.6 million in Q4 2022. The company attributed this decline in revenue to selling its ASICs at lower prices compared to the market last year, despite an increase in the amount of computing power sold and Bitcoin price recovery.
Looking ahead, Canaan foresees challenging market conditions for the first and second quarters of 2024, expecting total revenues of approximately US$33 million and US$70 million, respectively. During the quarter, the company also recognized a non-cash inventory writedown of $55 million due to pricing pressures.
Despite Bitcoin’s recent stellar gains, with a return of 144.4% over the past year, and a doubling of BTC’s mining difficulty to 81.73 trillion, the Bitcoin mining industry faces new challenges. These challenges include persistently high electricity prices and the upcoming Bitcoin halving in April, which will reduce mining rewards by 50%. Canaan remains hopeful, citing the recent approval and listing of spot Bitcoin ETFs as a milestone that signals the potential for Bitcoin to attract a larger user base and foster a more concrete consensus in the long run.
In a related development, analysts at Galaxy Research have estimated that between 15 – 20% of network hash rate from ASIC models could go offline post-halving due to lack of profitability, highlighting the sensitivity of ASIC models’ breakevens to Bitcoin price and transaction fees.