Talk about a bad time to not have product to sell.
Shares of bitcoin mining machine maker Canaan (Nasdaq: CAN) plummeted after the company reported a 75% drop in Q4 revenue on Monday as supply-chain issues prevented the company from capitalizing on a roaring bull market and a resulting surge in demand for mining machines.
“The outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter,” according to CEO Nangen Zhang. For the Q4, the Hangzhou-based firm posted Q4 revenue of $5.9 million, down from $24 million in Q3 of the same year. Total computing power sold was 0.2 million Thash/s, representing a year-over-year decrease of 93.1% from 2.9 million. The market didn’t respond kindly to the report, with American Depositary Receipts of the maker of ASIC mining machines dropping 34.2%, down $6.41, to 12.25 in recent trading. The company’s adjusted loss, however, narrowed to $11.2 million from $28.6 million as the company reported drops in R&D expense, selling & marketing costs, and general and administrative costs.
Looking ahead, the mining machine maker said it already had $174 million of contracted orders with $66 million of cash advance from customers as of Dec. 31, 2020. The company forecasts at least $61 million in revenue for the ongoing Q1.
Canaan’s supply hangup comes at a time when demand from mining farms couldn’t be higher. North American mining firms Marathon Patent Group and Blockcap, for example, are entering 2021 with aggressive plans to expand their hashrates as much as ten fold into 2022. Both Blockcap and Marathon purchased their machines from Canaan rival, Bitmain.
As CoinDesk previously reported, the demand has sent prices for machinery soaring on secondary markets.