Despite the ongoing bull market in the cryptocurrency industry, it seems that there is not much demand for Bitcoin application-specific integrated circuit (ASIC) miners and servers.
On February 27, Canaan, a manufacturer of Bitcoin ASICs, reported its earnings for the fourth quarter of 2023. According to the company’s report, its revenue was $49 million, which is a 16% decrease compared to the same period last year. Additionally, Canaan’s net loss widened to $139 million, up from $91.6 million in the fourth quarter of 2022. Despite selling more computing power and the recovery of Bitcoin’s price, Canaan stated that its ASICs were sold at lower prices compared to the market last year.
Furthermore, Canaan predicts that the market conditions will become even tougher in the future. “For the first quarter of 2024 and the second quarter of 2024, the Company expects total revenues to be approximately US$33 million and US$70 million, respectively, considering the challenging market conditions across the industry,” Canaan stated. During the quarter, the company had to write down $55 million of its inventory due to pricing pressures.
Bitcoin has recently experienced significant gains, with a return of 144.4% over the past year. Alongside the price increase, the mining difficulty of BTC has also doubled to 81.73 trillion during the same period. Combined with high electricity prices and the upcoming Bitcoin halving in April, where mining rewards will be reduced by 50%, the Bitcoin mining industry is likely to face new challenges despite the coin’s price reaching all-time highs. Canaan expressed this sentiment, stating:
“On February 16, Cointelegraph reported that around 20% of Bitcoin miners’ hash rate could go offline after the halving due to lack of profitability. ‘Given how sensitive the breakevens are for the various ASIC models to Bitcoin price and transaction fees as a percent of rewards, we estimate that between 15 – 20% of network hash rate coming from the ASIC models could come offline,’ wrote analysts at Galaxy Research.”
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