Canaan Authorizes Crypto Sales to Fund $20M Stock Buyback Program

Canaan, the bitcoin mining-rig maker, may sell part of its crypto holdings to fund share repurchases, CoinDesk reported on November 12. The company launched a $20 million buyback on Tuesday, part of a $100 million authorization its board approved on November 6. The authorization runs for 12 months, and Canaan can adjust purchases to its funding needs. Its shares are down about 75% this year through Wednesday’s close, CoinDesk said.

CEO Nangeng Zhang said Canaan is keeping a long-term digital-asset treasury while “selectively monetizing cryptocurrency holdings to fund share repurchases.” Management believes the stock undervalues the business, CoinDesk reported. The backdrop is a hardware slump: third-quarter hardware revenue fell 96% to $4.8 million from $118.6 million a year earlier.

The treasury is less liquid than its size suggests. As of September 30, Canaan held 1,875.5 BTC, of which 1,258 BTC were pledged against loans and 100 BTC sat in a fixed-term product. That leaves 517.5 BTC held directly, worth $43.7 million, according to CoinDesk.

Cash is also tight. Of $72.8 million in cash and restricted cash, $50 million backs a letter of credit for infrastructure commitments, leaving about $22.8 million unrestricted. In October, Canaan said it had sold 3,952 ETH and 54.5 BTC for about $13.9 million and used $5.4 million of the proceeds to repurchase shares in late August.

CoinDesk did not report a specific amount of bitcoin that Canaan plans to sell. The figures above come from the company’s disclosures as reported by CoinDesk.

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Sources:

• CoinDesk: BTC news: Canaan may sell bitcoin to buy back its own stock after mining-rig sales collapsed 96%