Chinese Bitcoin miner and application-specific integrated circuit (ASIC) mining machine maker Canaan reported a revenue decline of 82.1% year-on-year to $56.8 million in Q4 2022, according to a new report. filing with the US Securities and Exchange Commission on March 7. This represents a significant drop in revenue for the company, which sold 1.9 million terahash per second worth of computing power for Bitcoin mining during the quarter. However, this figure does not take into account lower ASIC prices and represents a 75.8% decrease from Q4 2021.

Despite the revenue decline, Canaan’s mining revenues improved 368.2% year-on-year to $10.46 million. Nangeng Zhang, Canaan’s president and chief executive officer, said the company had been “diligently improving and developing our mining business” to mitigate demand risks during the market downturn. This effort produced further progress in early 2023, with a hash rate of 3.8 EH/s installed for mining in late February. For this reason, the company has made decisive investments to strengthen its productive capacity and expand its mining operations to more varied geographical regions that offer advantageous conditions.

However, the company’s net income turned to a loss of $63.6 million in the fourth quarter of 2022 compared with a profit of $182.0 million in the fourth quarter of 2021. According to Jin Cheng, Canaan’s CFO, the loss was due to inventory write-downs and research expenses related to its new fleet of ASICs. He said, “Considering the very weak market demand and low sales price, we incurred a further inventory reduction of RMB 205.3 million, which also reduced our gross margin. Along with research and development expenses for the only time tape-related highs – outside of our A13 series, our bottom line suffered losses during the quarter.”

For the full year, Canaan revenues decreased 13.8% to $634.9 million, primarily due to better industry conditions in the first and second quarters of 2022. Despite the revenue decline, the company has a strong balance sheet, with $706 million in total assets compared to $67 million in total liabilities.

Looking ahead, Canaan expects to face continued challenges and market volatility, but remains committed to developing its mining business and investing in new technology to drive long-term growth. The company’s recent investments in production capacity and geographic expansion suggest that it is well positioned to capitalize on any future recovery in the Bitcoin market.