Canaan Secures $50M in Preferred Shares Sale to Bolster Expansion Efforts

Canaan Secures $50M in Preferred Shares Sale to Bolster Expansion Efforts

UTC by Chimamanda U. Martha · 3 min read
Canaan Secures $50M in Preferred Shares Sale to Bolster Expansion Efforts
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Canaan disclosed in the SEC’s Form 6-K filing that the new funding round would enhance its research and development capabilities, support innovation in its crypto mining rigs, and expand its production scale.

Canaan, a leading crypto mining rig manufacturer for Bitcoin (BTC) and other digital assets, has raised an impressive $50 million through a preferred shares financing round.

The Nasdaq-listed company revealed in a recent filing with the US Securities and Exchange Commission (SEC) that it issued and sold 125,000 Series A convertible preferred shares to an institutional investor. However, Canaan failed to disclose the buyer’s identity in the SEC’s filing on January 22, 2024.

Canaan Plans to Expand Its Business Offerings

The company has a history of not revealing buyers of its shares. On December 11, 2023, the blockchain mining manufacturer announced that it had closed the first tranche of its preferred shares financing, raising $25 million from the sales.

At the time, the company said it planned to use the net profits from the sale of securities to fund its research and development of products and services.

Like the previous financing, Canaan disclosed in the SEC’s Form 6-K filing that the new funding round would enhance its research and development capabilities, support innovation in its crypto mining rigs, and expand its production scale. Furthermore, the funds will be used to facilitate general corporate purposes.

Canaan Shares Drop 6.45%

Despite the recent financial success, Canaan shares (NASDAQ: CAN) faced a 6.45% decline, closing at $1.45 on Thursday. So far, the stock has seen a notable 32.87% decrease since the beginning of this month, underscoring the industry’s inherent volatility.

In the third quarter of 2023, the company reported a significant net loss of $80.1 million, in stark contrast to the net income of $6.3 million recorded during the same period in 2022. The financial disclosure highlights the hurdles faced by the company, making the recent $50 million funding round pivotal in overcoming challenges and pushing forward with its strategic initiatives.

Despite the recent downturn in the company’s stock value, Canaan has demonstrated resilience and adaptability. Celebrating its tenth anniversary in 2023, the company unveiled innovative mining devices in September.

One of these devices boasts remarkable efficiency, with a rating of under 20 joules per terahash, positioning it competitively among high-performance rigs from industry rivals.

The company unveiled the launch of the new products at the Avalon Bitcoin & Crypto Day event held in Singapore last year.

The crypto mining provider is famous for producing Avalon-branded application-specific integrated circuit (ASIC) bitcoin mining rigs for major players in the emerging market.

Cipher and Stronghold Digital Secures Purchase Order

Meanwhile, the latest financing round comes after Canaan announced on January 3, 2024, that it secured substantial follow-on purchase orders for over 17,000 BTC mining machines from Cipher Mining Inc and Stronghold Digital Mining Inc. Both companies are listed and traded on Nasdaq.

The deal was built upon Canaan’s existing relationships with Cipher and Stronghold.

Last December, Cipher entered into an agreement with Canaan that allowed two undisclosed venture companies to purchase a total of 16,700 A1466 model mining machines with an average hash rate of 150T/s. Cipher gained 49% interest from the business arrangement.

That same month, Stronghold also entered into a deal with Canaan that allowed the firm to buy 1,100 A1346 model mining machines with an average hash rate of 123T/s scheduled to be delivered this January. The agreement also enables Stronghold to acquire an additional 2,500 A1466 model mining machines with an average hash rate of 140T/s-150T/s from Canaan.

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