Canaan NASDAQ: CAN reported third-quarter 2026 net income of $8 million, driven primarily by gains on digital assets, as the Bitcoin mining equipment maker outlined plans to shift more of its focus toward energy and artificial intelligence computing infrastructure.
Revenue was $14.5 million, within the company’s guidance range of $11 million to $15 million. For the fourth quarter, Canaan forecast revenue of $18 million to $22 million, though Chairman and CEO Nangeng Zhang cautioned that the outlook should not be interpreted as evidence of a recovery in demand for new mining machines.
“Higher Bitcoin prices have not translated sufficiently into new equipment orders,” Zhang said. Customers remain focused on payback periods, and current mining returns and equipment prices are not attractive enough to support large-scale purchases, he said.
Digital Asset Gains Drive Profit
CFO James Jin Cheng said third-quarter net income was driven primarily by $51.9 million in fair value gains on digital assets and related financial derivatives, reflecting a recovery in Bitcoin prices. Adjusted EBITDA was $22.4 million and also benefited from those gains.
Canaan generated 133 Bitcoin during the quarter and held approximately 1,875 Bitcoin at September 30, even after selling a portion of its holdings. Its mining gross margin improved to nearly 30% from about 20% in the second quarter, Cheng said.
Operating expenses fell 15.5% from the prior quarter to $34.2 million. Management said several next-generation mining chip projects have been completed or are nearly complete, allowing the company to reduce ongoing research and development spending while retaining the ability to begin mass production when conditions warrant.
Zhang said Canaan would weigh customer demand, production costs and expected returns before starting volume production. Advanced chipmaking capacity is being absorbed by AI demand, pushing wafer costs higher while mining hardware demand remains weak, he said.
Texas Power Projects Advance
Canaan’s 1-gigawatt project in Duval County, Texas, recently received a conditional “Studied Load – Firm” classification under grid operator ERCOT’s Batch Zero process, Zhang said. The company is continuing with the remaining grid interconnection procedures.
Canaan is also in discussions with a U.S. institution with an investment-grade credit profile about a potential strategic partnership. Asked whether a partner might take equity in the project or handle development, Zhang said confidentiality agreements prevented him from providing further details.
The company is pursuing a second 1-gigawatt power resources project in Zapata County, Texas, where preparations for grid studies are underway. Cheng said Canaan completed an approximately $1.1 million power-related land purchase for that project in October.
Zhang said Canaan was looking broadly toward 2027 for the next stage of grid studies and capacity allocation at Duval, subject to ERCOT updates. He did not provide a date for energization or an initial power allocation.
The company intends to seek partners that can contribute capital and infrastructure development capabilities, allowing Canaan to participate while limiting its own capital commitments and risk, Zhang said. Depending on project economics, the company may pursue AI and high-performance computing opportunities or prioritize Bitcoin mining.
Buyback Plans and Cash Position
Canaan’s board approved up to $100 million in share repurchases over the next 12 months, with an initial program of up to $20 million. Cheng said the pace and size of purchases will depend on the company’s financial position, market conditions and regulations, after funding normal operations and committed projects.
During the third quarter, Canaan sold its Ethereum holdings and a portion of its Bitcoin, generating approximately $14 million in cash. It used $5.4 million of the proceeds to repurchase 13.6 million American depositary shares, Cheng said.
Cash and cash equivalents stood at $22.8 million at September 30. Canaan also held $50 million in restricted cash as collateral for a letter of credit related to power projects, bringing its total cash position, including the collateral, to $72.8 million. The company had approximately $3.3 million in infrastructure-related project prepayments.
Canaan also plans an ADS ratio change intended to increase the per-ADS trading price while preserving the overall economic interest represented by investors’ holdings. Cheng said the company believes a higher trading price could make the securities more accessible to institutional investors.
Inventory and Mining Demand
Management gave differing inventory figures during the call. In prepared remarks, Cheng said inventory declined to $119 million at September 30, its lowest level in five quarters. In response to an analyst’s question, Zhang said the carrying value was approximately $8.2 million, down from $25.3 million in the second quarter. The discrepancy was not explained on the call.
Zhang declined to disclose the amount of outstanding purchase commitments, citing commercial confidentiality. He said Canaan was deferring delivery of some previously secured wafers with supplier support and warned that further inventory write-downs remain a risk.
The company is also exploring uses for mining equipment beyond Bitcoin production. An 8-megawatt district heating project in Northern Europe uses recovered heat from liquid-cooled equipment to serve approximately 2,800 households, Cheng said. Other applications under exploration include greenhouse and home heating and the use of associated gas from oil fields.
About Canaan (NASDAQ:CAN)
Canaan Inc is a technology company that develops application-specific integrated circuit (ASIC) products and related computing solutions. The company is best known for its Avalon series of Bitcoin mining machines, which are designed to perform the specialized computations required to validate transactions and support blockchain networks.
In addition to cryptocurrency-mining equipment, Canaan develops high-performance computing hardware and artificial intelligence (AI) solutions. Its product portfolio has included AI accelerator chips, edge-computing devices and related software or systems intended for applications such as intelligent transportation, security, robotics and other data-intensive technologies.
Founded in 2013, Canaan is headquartered in China and serves customers and business partners in international markets.
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