Bitcoin mining-machine maker Canaan (CAN) is drawing on its cryptocurrency holdings to buy back its own shares as revenue from selling mining equipment collapses.
The company launched a $20 million buyback program on Tuesday under a broader $100 million authorization approved by its board on Nov. 6. Management says it intends to pursue repurchases more actively as funds become available.
Canaan’s shares have lost about 75% this year through Wednesday’s close, data shows.
Its hardware business generated just $4.8 million in third-quarter revenue, down 96% from $118.6 million a year earlier. Canaan blamed weaker demand and lower selling prices. Its own mining operation brought in $9.5 million, nearly double its hardware revenue.
CEO Nangeng Zhang said Canaan was maintaining a long-term digital-asset treasury while “selectively monetizing cryptocurrency holdings to fund share repurchases.”
Earlier disclosures show how that works.
In an October update, Canaan said it had sold 3,952 ETH and 54.5 $BTC for about $13.9 million. It used $5.4 million to buy back 13.6 million American depositary shares, the securities representing its shares on Nasdaq, in late August.
The new program comes with much of its remaining treasury tied up.
Canaan held 1,875.5 $BTC as of Sept. 30, including 1,258 pledged against loans and 100 placed in a fixed-term product. The remaining 517.5 $BTC was recorded directly as cryptocurrency assets, worth $43.7 million at quarter-end.
Of its $72.8 million in cash and restricted cash, $50 million backed a letter of credit supporting infrastructure commitments. That left about $22.8 million outside the restricted balance.
The company reported an $8 million quarterly profit despite a $42.9 million operating loss. Gains from revaluing cryptocurrency and financial derivatives helped produce the profit, reflecting bitcoin’s higher quarter-end price.
Management says its stock undervalues the business and its growth prospects. The buyback authorization lasts 12 months, and the company can adjust purchases according to its operating and funding needs.
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