Chinese cryptocurrency mining company Canaan posted its unaudited report for the first quarter of 2023, reporting a net loss of $84.4m, down from $91.6m in the previous quarter. This represents a large reduction compared to Q1 2022, when the company reported a net income of $65.1m. Despite the disappointing figures, Canaan CEO James Cheng said that the company was still expanding operations during the bear market and associated drop in earnings. Revenue in Q1 decreased to $55.1m from $58.3m in the previous quarter and $201.8m in the same period in 2022.
The decline in revenue was attributed to low market demand that affected product revenue, the crisis in the banking system and the slow recovery of Bitcoin’s price. Canaan’s report showed a breakdown of revenue, with $44.1m coming from product revenue and $11.1m from mining activities, while $300,000 was generated from other revenues.
Despite the decrease in revenue, income generated from mining activities rose by 3.3% from $10.7m in Q4 2022 and by 130.2% from $4.8m during the same period of 2022. Operating expenses in Q1 2023 were $38.1m, compared to $60.8m in Q4 2022, and nearly equal to the same period last year, when it was $38m.
Canaan attributed the decline in its revenue to the industry-wide reduction in selling prices and unforeseen delays in payment and shipment caused by the failures of a series of US banks. The company also encountered difficulties that postponed the increase of its installed hash rates.
Although it was a challenging quarter for Canaan, the company managed to narrow its operating loss by 31.4% compared to the previous quarter. Canaan’s total investment in research and development decreased to $19.1m in Q1 2023, compared to $33.4m during the previous quarter, due to one-off expenditures of $14.3m for research and development for the A13 series products.
Cryptocurrency assets held by Canaan as of 31 March 2023 totaled 623 BTC worth $13.4m, while its cash and cash equivalents were $72m, compared to $101.6m as of 31 December 2022.
Canaan expects to continue expanding its operations despite the market challenges. However, the company will need to work on improving its financial metrics significantly to return to profitability in the future.