In the tumultuous arena of crypto assets, the harshest reality is not the halving of coin prices, but rather the realization that sellers of tools find that downstream can no longer afford even the tools.

The second quarter performance report of Canaan Technology is indeed startlingly grim, with single-quarter revenue plummeting nearly 70%, and net losses soaring to 97.6 million dollars. However, this hardware giant, driven to the brink of a cliff, did not sit idle during the cold winter.

It quickly shed its image as a "hard tech seller of shovels," rolled up its pants, jumped into the muck, and even relied on extremely rigorous cost control and self-rescue methods to boost its cash reserves by 50%...

1. Gritting its teeth to mine for gold

The most dramatic change in Canaan's latest financial report is that its "bread and butter" has completely shifted location.

In the second quarter, Canaan earned 17.66 million dollars from self-operated mining, surpassing for the first time the 13.63 million dollars earned from selling mining machines.

Transforming from a hardware manufacturer that profits from chips and manufacturing to an "operating miner" that relies on mining machines for over half of its income may not look sexy from the perspective of the capital market, but from the survival angle, the execution is incredibly impressive.

Faced with unsold machines, Canaan did not let its computing power gather dust in the warehouse, but instead pushed them to the front lines as quickly as possible.

Throughout the second quarter, Canaan's self-operated computing power reached 10.05 EH/s, mining out 243 bitcoins over three months. More critically, it compressed its average electricity cost to 0.043 dollars per kilowatt-hour—this scheduling ability to push industrial electricity to the limit is not something ordinary small and medium-sized mining sites can match under the current high network difficulty.

At its Project ABC joint mining site, in which it holds a 49% stake, it had installed 4.85 EH/s of computing power by the end of July, with 4.20 EH/s already operational.

Of course, the practical approach of the old player is also reflected in asset realization. On paper, Canaan holds 1,915.5 bitcoins, which looks quite substantial. However, breaking it down, only 698.5 are freely disposable; 1,117 have long been pledged to lenders for circulating cash; an additional 100 are locked in fixed-term financial products, and 70.9 million dollars are tied up in cryptocurrency accounts receivable.

By late August, Canaan decisively sold 3,952 ethers and 54 bitcoins in the secondary market, reclaiming about 13.9 million dollars in cash, while simultaneously replenishing liquidity and buying back shares. Quickly converting mined coins into winter ammunition, without being attached to paper wealth, but responding to the situation as it arises.

2. Cutting losses to reduce inventory and preserve cash

The reason why Canaan is so desperate to mine is that the freezing period for upstream hardware is much longer than expected.

In the second quarter, mining machine sales fell to 13.63 million dollars, with only 2.5 EH/s of computing power sold over three months. With machines unsold, the warehouse became a bleeding wound.

Facing reality, Canaan did not choose to bury its head in the sand but very decisively wrote down 25.3 million dollars for inventory impairment, clearing the valuation burden of old machines in one go.

Even though the remaining inventory in the warehouse still has a book value of as high as 128.8 million dollars, shareholder equity shrank by 33% within half a year, accumulating losses reached 847 million dollars, but the management's defense line did not collapse.

On the contrary, in such an extremely harsh environment, Canaan demonstrated exceptional resilience in cash management.

By the end of the second quarter, the company's cash reserves were forcefully lifted back to 66 million dollars, a substantial rise of 52% sequentially. At a time when the stock price had fallen to freezing point, Canaan by September 8 had cumulatively used 7.4 million dollars in actual cash to buy back 16.4 million ADS to stabilize the morale.

Even with R&D expenses compressed year-on-year to 14.9 million dollars, it still focused on developing the next generation A16 mining machine and even laid out a household mining machine, Avalon Home, that can mine while providing heating.

Although the official forecast for third-quarter revenue still hangs around a low range of 11 to 15 million dollars, the bottom line is very clear. Even if its main business is frozen at rock bottom, R&D must continue, and cash flow cannot be interrupted.

3. Market value falls below asset fundamentals

If looking solely at the balance sheet, the capital market's pricing of Canaan is extremely harsh. As of early September 2026, Canaan has hard assets totaling 184 million dollars (66 million cash plus 118 million in cryptocurrency assets and accounts receivable). Yet its total market capitalization in the U.S. stock market dropped to as low as around 250 million dollars. The share price plummeted from a high of 2.22 dollars to around 0.32 dollars, down by 85% from its peak, almost trading on the brink of its net asset value. The management may feel wronged, after all, among the 97.6 million dollars lost in the second quarter, 43.8 million dollars comes from "paper accounting" losses in inventory, equipment impairment, and the fair value deterioration of tokens, rather than a sudden evaporation of cash. However, the concerns of the capital market are equally real; the cash-generating machine is currently under significant pressure.

In the second quarter, Canaan’s adjusted EBITDA still posted a loss of 74.9 million dollars, with a negative gross margin. To fund its massive self-rescue plan, the company's total share capital was diluted from 5.99 billion shares to 10.85 billion shares, significantly diluting the equity of old shareholders. The market is not oblivious to that 184 million worth of hard assets and massive computing power of 10 EH/s, but is calculating a sum. Can the existing foundation last until the dawn of the next super cycle?

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The semiconductor and mining machine industries have historically undergone countless rounds of brutal reshuffling. Each time the cycle bottoms out, the script is strikingly similar: downstream demand freezes, assets depreciate wildly, and companies are forced to humble themselves to rescue themselves.

Canaan's transformation from a "tool seller" to a "gold miner" may seem to have discarded the halo of a pure hard technology company, but for a hardware giant deeply trapped in the industry's winter, surviving is a thousand times more important than looking good.

Holding 184 million in hard assets, slashing electricity costs to the limit, and still advancing the next generation of chips, Canaan evidently has no intention of leaving the table.

However, whether this “self-operated mining as a hedge against the hardware winter” strategy is a lifeboat to see it through to spring or a shackle that accelerates the depletion of its assets remains to be seen. The true answer can only be revealed by the bell of the next cycle.

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