Summary Canaan Inc. essentially develops ASIC miners, mostly under the Avalon series, targeting both industrial and home Bitcoin mining. Still, there are regulatory and trade pressures from China and the US chip export constraints. Their recent Q4 2024 report showed record computing power sales and strong Bitcoin production. CAN is also expanding its self‑mining and North American collaborations should diversify its revenue base while it grows its Bitcoin holdings. Overall, I think CAN is again at a compelling valuation, albeit with high Bitcoin dependency. In my view, it’s a positive EV play on Bitcoin at these levels. Canaan Inc. ( CAN ) is a technology firm that develops application-specific integrated circuits [ASICs] for Bitcoin mining. They produce their "Avalon series," which is mostly used by industrial-scale mining, but also by individual Bitcoin (Bitcoin-USD) enthusiasts. Since January 2025, the company has faced regulatory pressures from China and supply chain constraints from the new US chip export rules. However, the company is adapting to these changes and still appears focused on scaling its self-mining operations, which should diversify its revenue streams going forward as well. Overall, I believe CAN is once again at a good "Buy" zone, although it's a highly speculative (almost binary) type of investment. So, make sure you size your position on CAN carefully. A Bitcoin Play Back In Accumulation Levels Canaan Inc. is basically a technology company founded back in 2013 that develops application-specific integrated circuits [ ASIC ]. It's worth noting that they also produce other related components used for Bitcoin mining. Currently, they're headquartered in Singapore, making them a foreign issuer , but they do have offices across the world. Its locations include the US, Australia, Kazakhstan, Canada, Indonesia, Mainland China, Malaysia, Thailand, and Cyprus. Source: Operating and Financial Results for Q4 and FY 2024 (March 26, 2025) In any event, one of CAN's main value drivers is its Avalon series , which is a high-performance solution for Bitcoin mining. The Avalon series mostly caters to industrial-scale farms hosted by large companies like Cipher Mining ( CIFR ), CleanSpark ( CLSK ), and HIVE Digital ( HIVE ), as well as home customers served with the product line Avalon Nano. This is why CAN is very adjacent to being a Bitcoin mining pure play, though it's more akin to selling picks for mining, rather than mining itself. Moreover, CAN's products also target hobbyist miners, educational users, and crypto enthusiasts. And as of late 2024, more than 24,000 Avalon Nano computers were sold in over 80 countries. In 2025, CAN has sold roughly 12,000 units of new home miners, such as Nano 3S and Avalon Mini 2, as well. Plus, they recently launched the Avalon A15 (in 2024), which has shown excellent energy efficiency. This particular product has less than 20 J/TH with an average hashrate of 200 TH/s, which, I believe, should make it competitive in its niche. From Chip Constraints to Crypto Gains Now, looking at their recent report, their FY 2024 figures showed a revenue composition of 82.5% from mining machine sales. And just 16.3% of its 2024 revenues came from self-mining operations, which is interesting because this mining contribution has continued increasing since 2021. Besides, their total 2024 revenues grew by 27.3% YoY, thanks to increased hardware demand, a bullish Bitcoin market price in 2024, and improved efficiency in its operations. Source: Operating and Financial Results for Q4 and FY 2024 (March 26, 2025) I also like that in Q4 2024 , CAN continued putting its own mining equipment to good use as well. And in their latest earnings call , management highlighted that this contributed to their growth in revenue, hashrate, and profitability. In fact, CAN mined 186 Bitcoin, which is an impressive 27% increase QoQ. Currently, they also hold approximately 1,293 Bitcoin, which alone could make it a viable play on the price of Bitcoin as well. You see, betting markets like Polymarket still show there's a 66% chance of Bitcoin trading higher than $110.0 thousand in 2025. If that price target materializes, it would put its current Bitcoin balances at roughly $142.2 million. Not to mention that CAN has consistently been accumulating Bitcoin since Q1 2023, so by the time the price of Bitcoin recovers, they will likely have more Bitcoin as well in their balance sheet. Source: Polymarket. Retrieved March 27, 2025 Additionally, by December 31, 2024, CAN had an installed computing power of 5.4 exahashes per second [EH/s] for self-mining. This is why their revenue jumped by 70.7% QoQ. They also partner with hosting services in the US to scale operations without having to deploy CAPEX on building infrastructure. Still, CAN did announce new mining collaborations that would also add another 4.7 EH/s, further expanding their already sizeable self-mining operations. This particular infrastructure will be located in North American facilities (Pennsylvania and Texas). This way, CAN seems to be moving towards more diversified revenues by combining mining equipment sales and direct mining profits. Source: Operating and Financial Results for Q4 and FY 2024 (March 26, 2025) In my view, this de-risking strategy will help them deal with the effects of the Chinese government's introduction of new restrictions on crypto. Remember that in January 2025, the State Administration of Foreign Exchange [SAFE] in China issued measures to prevent illegal activities. This is why they started requiring banks to detect and report dubious international transactions, especially related to cryptocurrencies. In fact, the Chinese anti-money laundering laws were amended to explicitly cover crypto transactions. And while CAN is not doing anything illegal itself, these are still regulatory headwinds in one of the world's largest Bitcoin markets. It's also worth mentioning that China does promote the use of its " digital yuan ." Source: Operating and Financial Results for Q4 and FY 2024 (March 26, 2025) It's challenging to anticipate how China's ultimate posture will be with Bitcoin, but it could go either way. If they start cracking down on any crypto to favor their digital yuan, it could become a massive headwind for CAN and Bitcoin. Conversely, it's also possible that cryptocurrencies could coexist with this new digital yuan in a well-regulated environment. But in any event, uncertainty is typically a headwind for Bitcoin, and CAN is inherently related to its price. And on top of that, the US Bureau of Industry and Security [ BIS ] issued new rules in January 2025. This new set of regulations adds even more uncertainty to CAN's chip production supply chain, which is mainly an outsourced semiconductor assembly and testing process [OSAT]. The new rules say that only approved vendors are permitted, which, in other words, reduces the number of potentially compliant providers. CAN appears to be securing new semiconductor packaging from this whitelist to guarantee continuation in its production. Source: Operating and Financial Results for Q4 and FY 2024 (March 26, 2025) This could help reduce its exposure to these new rules. So, as long as their in-production wafers switch to new whitelisted vendors, it shouldn't be a major issue. And indeed, it seems CAN has reacted quickly this time, but it does show that regulatory risks are inherent to CAN due to its links to Bitcoin and chips. Also, if trade tensions between the US and China continue rising, it would only add more headwinds over time. So bear that in mind when considering CAN, because it has a lot of headline risk in it. Valuation And Risk Analysis Still, from a valuation perspective, CAN now trades again near the bottom of its 1-year trading range. It's down a whopping 71% from its recent December 2024 highs, so that alone suggests to me that CAN might be near good value levels again. And remember, this is a $350.6 million market cap stock, so if Bitcoin recovers later this year as I previously mentioned, that alone could very well bring substantial upside potential. Source: Seeking Alpha Charts Also, if we look at their recently updated balance sheet , they currently hold $96.2 million in cash. They also have a book value of roughly $348.2 million, pricing them at a cheap P/B of just 1.0. For comparison, their sector's median P/B is much higher at 3.2. Unfortunately, their quarterly EBIT loss of $55.6 million is probably their biggest problem. If that continues, it could strain their cash balances, and the market would probably punish CAN's valuation even further. Still, remember they do hold 1,293 Bitcoin as well, which they can sell if needed. Plus, the recent $200 million raise should help them get through the current Bitcoin price downturn. Lastly, while it's hard to project CAN's future revenues because they're tied to the price of Bitcoin, we do have a general idea of their overall outlook. According to Seeking Alpha's dashboard , CAN is on track to generate $946.1 million in revenues by 2026, which again prices them at an incredibly low forward P/S of 0.4. For comparison, their peers' forward P/S is also higher at 2.7. Source: Seeking Alpha. So I believe CAN's massive discount at these levels is probably due to the market pricing in the potential for even lower Bitcoin prices. Since CAN is a very high beta play on Bitcoin, much lower prices could mean substantial losses for shareholders. Remember, the market knew CAN was doing great in Q4 2024 precisely because the price of Bitcoin was trading much higher. And CAN itself recognizes that higher Bitcoin prices were the key driver for their strong revenues in the past report. This, unfortunately, also implies that the next quarter might be a bit weaker since Bitcoin has pulled back since then. But, on the flip side, I would argue that in Q4 2024, when Bitcoin breached $100.0 thousand , CAN also traded above $3.00 per share. Source: Polymarket. Retrieved March 27, 2025. Thus, I believe we can use Polymarket's odds of Bitcoin recovering this year as a reference ( about 66% today , but remember that odds fluctuate). With that, my back-of-the-envelope risk-reward analysis suggests there's a 66% chance of CAN also potentially making a move to the $3.00 levels again (like it did in Q4 2024 when Bitcoin traded higher). Conversely, even if we assume the remaining 34% odds result in major losses for CAN shareholders, that still would result in a positive expected value [EV] bet at these levels for the stock. Source: Operating and Financial Results for Q4 and FY 2024. March 26, 2025. So I believe it shouldn't take much of a rally in Bitcoin to lead to substantial returns with CAN at these levels. Nonetheless, I wouldn't be surprised if CAN had to substantially dilute its equity if Bitcoin started making new lows this year. So be aware that you could definitely lose most, if not all, of your investment in CAN if the price of Bitcoin doesn't cooperate. But since the upside potential is also high in the bullish Bitcoin scenario, I believe it's, on balance, again a good speculative "Buy" today. Conclusion: Again, A Positive EV Bet Overall, I believe that if you're bullish on Bitcoin, CAN is now again in a very compelling "Buy" zone. Conversely, if Bitcoin continues trending lower, then you should definitely stay away from CAN. In my view, the odds of Bitcoin bouncing higher this year remain fairly good, and I think CAN will probably outperform Bitcoin in that scenario. In the end, CAN is a highly speculative Bitcoin play, but in the favorable scenario, I believe the upside would be much greater than the downside risks at these levels.
