Canaan to Exit AI Chip Business, Double Down on Bitcoin Mining Amid Realignment
Despite the growing trend of bitcoin miners diversifying their revenue through AI-related businesses, building AI chips is likely very competitive and not cost-effective for smaller companies.
Canaan said that its AI unit, which brought in just about $900,000 in revenue in 2024 (versus total revenue of $269.3 million) and accounted for 15% of company-wide operating expenses, failed to align with the firm's long-term strategy, the company said on Monday.
'Doubling down on our core strengths in crypto infrastructure and bitcoin mining is the most strategic path forward,' CEO Nangeng Zhang said in the statement.
Before the move, the company said it began exploring options for the AI unit as far back as March 2022, including selling it or shutting it down entirely. Now, Canaan expects to complete the phase-out in the coming months and anticipates a sharp drop in costs once the exit is finalized.
Canaan is best known for its Avalon mining rigs, one of the earliest brands of ASIC (application-specific integrated circuit) miners built for bitcoin. The firm went public on Nasdaq in 2019 and continues to develop mining hardware while also expanding into self-mining and consumer mining products.
The decision, which comes after years of trying to diversify into edge computing chips, is hardly a surprise given the recent focus of miners and mining chip makers on "American Made" bitcoin after Trump's U.S. election win.
Recently, Benchmark's Mark Palmer wrote in his research that rig maker's shares don't reflect upside potential from the expansion of the company's self-mining operations, especially in the United States.
Canaan's shares were slightly down on Monday, while the broader digital assets and equities markets were mostly positive. The stock fell 71% this year, while a bitcoin mining ETF, WGMI, declined about 20%.
CORRECTION (June 23, 17:17 UTC): Corrects 2024 total revenue number to $269.3 million.
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