It is believed that the decline in revenue came after the company changed its business strategy from selling rigs to mining crypto.
Crypto application-specific integrated circuits (ASICs) manufacturer Canaan Inc. released its quarterly report on Tuesday, March 7th.
According to the figures, the company earned a crypto mining revenue of $10.5 million in the fourth quarter of 2022 (Q4). However, overall returns took a huge dive compared to the same period in 2021.
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The figures revealed that mining revenue increased by 16.3% from the third quarter of 2022 (Q3) and recorded a 368.2% year-on-year increase. However, total revenues fell by 82.1% year-on-year and 59.9% from the previous quarter to $56.8 million.
The company also revealed that product revenue fell to $46.3 million, a 65.1% drop compared to the third quarter of 2022. This figure represents an 85.3% decrease compared to the revenue report from the same time in 2021.
Consequently, Canaan reported a significant decrease in revenue and gross profit for the whole year of 2022. Gross profit decreased to $253.4 million from $411.2 million reported in 2021.
The decrease in revenue is directly attributed to a drop in total computing power the company sold and a decline in prices due to the decreasing value of Bitcoin (BTC).
Falling revenues caused the company stock to lose 60% of its value in 2022, rebounding nearly 22% from its near-record low in 2023. Currently, Canaan's stock retails for around $2.5 per share, which is a significant drop from its all-time high of $40.
When talking about the fourth quarter, Canaan CEO and Chair Nangeng Zhang noted:
We went through a tough fourth quarter as the further sinking Bitcoin price during the quarter led to lackluster market demand for mining machines as we expected.
Another factor that contributed to falling revenues is the change in business strategy. The company is shifting its focus from selling ASICs to mining crypto. Overall mining revenue in 2022 rose to $31.7 million. Further orienting its business in this direction will likely result in better revenue diversification in the coming quarters.