When a company that once rode the crypto hardware boom watches its core product sales crater by 96 percent in a single quarter, most executives would hit the brakes. Canaan did the opposite. It just authorized a fresh $20 million share repurchase on top of a larger $100 million program, and it is leaning heavily on its Bitcoin stash to make it happen. That move alone tells you how differently this management team views the current price of its stock versus the long-term value of the business.
Canaan Turns to Bitcoin Holdings as Mining Machine Sales Fall 96%
I’ve been watching the mining equipment sector for years, and this kind of revenue collapse still lands with a thud. Canaan’s third-quarter mining-machine revenue landed at just $4.8 million. A year earlier the same line item contributed $118.6 million. That is not a soft patch. That is a near-total freeze in demand for new ASICs at the prices the company was previously able to command.
Yet the same quarter produced an $8 million net profit. How does that math work? Gains tied to the value of cryptocurrency holdings and related derivatives added roughly $52 million to the bottom line. Operating results still showed a $42.9 million loss, so the profit is almost entirely a function of asset appreciation rather than selling more boxes. Chief financial officers usually wave those gains away as non-cash noise, and Canaan’s own CFO did exactly that. Still, the number sits on the income statement and gives the board breathing room to act on the share price.
Why the Board Authorized a New Buyback Now
The board approved a $100 million repurchase authorization that runs for twelve months starting early November. Management immediately earmarked up to $20 million as the first tranche. They can buy American depositary shares or Class A ordinary shares in the open market, through private deals, or in block trades. Timing and size remain flexible and will depend on market conditions, cash needs, and existing commitments.
Chairman and CEO Nangeng Zhang did not mince words. He believes the current share price “materially undervalues the strength of our business model and long-term growth potential.” That is the classic language of a management team that thinks the market has over-punished the stock. Shares have lost roughly three-quarters of their value this year, so the frustration is understandable.
This new share repurchase program reflects our belief that our shares are trading at levels that materially undervalue the strength of our business model and long-term growth potential.
The company has already tested the waters. Earlier this year it sold 54.5 Bitcoin and nearly 4,000 Ethereum, raising about $13.9 million. Roughly $5.4 million of those proceeds went into buying back 13.6 million ADSs in late August. By mid-October total 2026 repurchases had reached approximately 16.4 million shares. The latest authorization simply scales that approach.
The Hard Numbers Behind the Sales Collapse
Let’s dig into the revenue breakdown because the details matter. Mining equipment sales of $4.8 million came from machines delivering roughly one million terahashes per second. Average selling prices clearly softened, and buyers simply stayed on the sidelines. Self-mining operations generated $9.5 million, almost double the hardware contribution, yet that figure still represented a sharp drop from $30.6 million a year earlier.
Total quarterly revenue landed at $14.5 million versus $150.5 million in the prior-year period. Those are brutal comparisons. The silver lining, if you can call it that, is that the company still managed to produce a positive net result thanks to the crypto side of the balance sheet.
At the end of September Canaan held 1,875.5 Bitcoin. Most of that stash is not freely available. About 1,258 BTC sits pledged as collateral for secured loans, and another 100 BTC is locked in a fixed-term product. That leaves only 517.5 BTC sitting as unrestricted cryptocurrency assets, valued at roughly $43.7 million at the time. Cash and restricted cash totaled $72.8 million, but $50 million of that supports a letter of credit tied to infrastructure projects, leaving a thinner free cash cushion.
Funding the Buyback Without Starving Operations
Management has been clear that it will not sacrifice operational liquidity or ongoing infrastructure projects just to buy shares. The plan is to use available cash first and, when it makes sense, additional cryptocurrency sales. That approach already worked once this year. The question is how much more of the Bitcoin pile the company is willing to liquidate if the stock remains depressed.
In my view this is a calculated risk. Selling Bitcoin at current levels locks in gains that have already been marked to market, but it also reduces the very asset that helped deliver the quarterly profit. If Bitcoin prices soften further, the buffer shrinks. If prices rise, the opportunity cost of selling earlier becomes visible. Management appears comfortable walking that line.
Texas Energy Ambitions Keep Moving Forward
While the hardware business struggles, Canaan continues to push large-scale power projects in Texas. The 1-gigawatt Duval County proposal recently received conditional classification under the regional grid operator’s Batch Zero process. That status is encouraging but far from final; additional studies and approvals still stand in the way. A second 1-gigawatt project in Zapata County remains in early planning.
These energy initiatives matter because they could eventually support both self-mining and third-party power sales. In a world where pure hardware margins have compressed dramatically, controlling low-cost power becomes a strategic advantage. Canaan’s September mining operations produced 44 Bitcoin, and the full third quarter delivered 133 Bitcoin. Those numbers are modest relative to the largest miners, yet they keep the company inside the ecosystem rather than purely as a equipment vendor.
The Coming Reverse ADS Split
Alongside the buyback, Canaan plans to adjust its American depositary share ratio from one ADS representing 15 ordinary shares to one ADS representing 375 ordinary shares. The change is effectively a 1-for-25 reverse ADS split and is expected to take effect around early December. Reverse splits often arrive when a stock has traded at low absolute prices for an extended period. They do not change the underlying value of the company, but they can improve the optics and help maintain exchange compliance.
Some investors dislike reverse splits because they can signal management is more focused on share price presentation than operational recovery. Others see them as a practical housekeeping step. Given how far Canaan’s shares have fallen this year, the move is hardly surprising.
What the Numbers Really Say About Demand
A 96 percent drop in equipment sales does not happen in isolation. The broader mining industry has faced several headwinds at once. Hashprice, the revenue a miner earns per unit of computing power, has been under pressure. Many operators delayed or canceled expansion plans after the last major network difficulty adjustment cycle. At the same time, newer, more efficient machines continue to enter the market, making older inventory harder to sell at previous price points.
Canaan is not alone in feeling the pinch. Other hardware manufacturers have also reported softer order books. The difference is how each company chooses to respond. Some cut research and development. Others lean into self-mining or power assets. Canaan is doing a bit of everything: defending the share price with buybacks, preserving its Bitcoin treasury as both a balance-sheet asset and potential funding source, and advancing large energy projects that could reshape its cost structure years from now.
Balancing Short-Term Optics and Long-Term Strategy
Share buybacks are always a statement of confidence, but they also reduce the cash available for other uses. In Canaan’s case the company is careful to note that it will only repurchase shares as additional funds become available and while still protecting liquidity for operations and infrastructure. That language is important. It signals that the board is not prepared to mortgage the future simply to prop up the stock in the near term.
Still, the decision to sell Bitcoin and Ethereum earlier this year shows a willingness to convert digital assets into equity value when the gap between perceived intrinsic value and market price grows wide enough. That flexibility is useful, yet it also means the size of the remaining treasury becomes a running indicator of how much dry powder is left.
Looking at the Bigger Picture for Mining Hardware
The mining equipment market has always been cyclical. Periods of euphoria produce order backlogs that manufacturers struggle to fill. Periods of caution produce exactly the kind of revenue drought Canaan just reported. What separates survivors from the rest is the ability to weather the dry spells without destroying the balance sheet or abandoning the technology roadmap.
Canaan’s current approach tries to thread that needle. By keeping research and product development alive while using both cash and selective crypto sales to support the share price, management is betting that demand will eventually return. The Texas power projects add another layer: if those come online, the company could shift more of its economic engine toward low-cost self-mining and power services rather than pure hardware sales.
Whether that transition succeeds remains an open question. Conditional grid classification is progress, but it is not a power-purchase agreement or a construction timeline. Investors will want to see clearer milestones before assigning meaningful value to those projects.
Key Takeaways from the Latest Quarter
- Mining machine revenue fell 96 percent year over year to $4.8 million.
- Self-mining revenue of $9.5 million outpaced hardware sales but still declined sharply from the prior year.
- Net profit of $8 million was driven by roughly $52 million in crypto-related gains despite a $42.9 million operating loss.
- The company held 1,875.5 Bitcoin at quarter-end, most of it pledged or committed.
- A new $20 million buyback forms the first part of a $100 million authorization.
- Texas energy projects continue to advance, though they remain years from full realization.
Those points paint a company in transition. The pure hardware growth story that once defined Canaan has paused. In its place is a more hybrid model that mixes selective self-mining, a still-valuable Bitcoin treasury, and longer-term energy infrastructure ambitions.
What Investors Should Watch Next
Several data points will matter over the coming quarters. First, the pace of actual share repurchases under the new program. An authorization is not the same as executed buys. Second, any further sales of Bitcoin or Ethereum and the prices realized. Third, updates on the Duval and Zapata power projects, especially movement from conditional status toward firm interconnection or financing. Fourth, signs that equipment demand is stabilizing or that average selling prices have found a floor.
I’ve found that markets often overreact to single-quarter disasters in cyclical industries. The opposite is also true: they can stay skeptical longer than management expects. Canaan’s leadership is clearly trying to close that perception gap with capital allocation. Whether the market eventually agrees will depend less on the size of the buyback authorization and more on evidence that the underlying business can generate sustainable cash flow again.
For now the story is straightforward. Hardware sales have collapsed. The company is using its Bitcoin holdings and available cash to support the share price. At the same time it is planting seeds in the Texas energy market that could matter years from now. That combination of short-term defense and longer-term repositioning is the real narrative behind the latest announcement.
The mining sector rarely moves in straight lines. Companies that survive the downturns usually emerge with leaner cost structures and clearer strategic focus. Canaan is attempting exactly that transformation. The $20 million buyback is only the most visible piece of a broader effort to navigate a difficult stretch while keeping options open for the next cycle. How successfully it executes on both the capital-return side and the energy-project side will determine whether the current share price truly represents a temporary discount or a more permanent reset.
In the end, management is putting real capital behind its conviction that the market has gone too far. That is always worth watching, even when the near-term operating numbers look as bleak as they do right now.
