Bitcoin mining hardware maker Canaan Inc. has announced a significant strategic equity investment totaling $72 million. The investment comes from prominent firms including Galaxy Digital, Weiss Asset Management, and Brevan Howard’s digital asset arm, Brevan Howard Digital.
This transaction, officially announced on Tuesday, is expected to strengthen Canaan's balance sheet and decrease its reliance on future at-the-market (ATM) capital raises. Under the terms of the agreement, the investors collectively purchased 63.7 million American depositary shares, representing Canaan’s Class A stock, at a price of $1.13 per share through a registered direct offering.
Established in 2013, Canaan is a specialist in application-specific integrated circuit (ASIC) chip design and the development of high-performance computing equipment. The company introduced the first Avalon-branded Bitcoin mining rigs in 2013 and subsequently went public on Nasdaq in 2019.
Canaan has indicated that this investment signifies a shift in its capital markets strategy, emphasizing a move towards collaboration with investment companies that focus on fundamental value.
As of the time of writing, Canaan's stock price had seen an intraday increase of approximately 9% on the Nasdaq, according to data from Yahoo Finance.
Canaan Reinforces Focus on Core Bitcoin Mining Business
While many companies in the Bitcoin mining sector have explored diversification into artificial intelligence (AI) and high-performance computing (HPC) to enhance revenue streams, Canaan has chosen to double down on its core business of Bitcoin mining hardware and infrastructure.
In June, the company announced its decision to cease efforts related to the production of AI hardware. Canaan Chairman and CEO Nangeng Zhang stated that the most strategic direction for the company is to concentrate on its "core strengths in crypto infrastructure and Bitcoin mining."
Further demonstrating its commitment to the US market, Canaan also reported in June the completion of a pilot production run in the United States. This initiative is aimed at shortening delivery times for its customers in the region. The company's stock experienced a notable rise of over 26% in October following the announcement of a 50,000-rig order from an undisclosed US company, marking its largest order in more than three years.
The United States currently accounts for nearly 38% of the global Bitcoin hashrate. Additionally, six of the ten largest publicly listed Bitcoin mining companies are headquartered in the US, highlighting the country's significant role in the industry.
