Canaan to liquidate part of its $130M crypto stash to fund share repurchases
Bitcoin mining manufacturer Canaan is preparing to dip into its sizable cryptocurrency treasury, authorizing the sale of a portion of its Bitcoin and Ethereum holdings to bankroll an existing stock buyback plan worth up to $30 million.
The company, listed on Nasdaq, said management can now convert part of its digital asset reserve into cash and use the proceeds to repurchase American depositary shares (ADSs) and Class A ordinary shares. The move folds into a previously announced 12‑month repurchase authorization that allows Canaan to buy back as much as $30 million in equity between Dec. 12, 2025, and Dec. 11, 2026, according to its Aug. 4 disclosure.
Canaan stopped short of specifying how much Bitcoin or Ether it intends to sell, nor did it lay out a concrete timetable. The firm also did not promise to deploy the full remaining authorization, framing the program instead as a flexible tool it can use if and when conditions look favorable.
Management said any additional buybacks will depend on several factors: the company’s trading price on Nasdaq, overall market sentiment, internal liquidity needs, and future board approval. Repurchases could be executed via open‑market purchases, block trades, or directly negotiated deals with shareholders, giving Canaan room to adapt its tactics.
As of May 19, Canaan had already used about $2 million to buy back roughly 2.8 million ADSs, leaving a theoretical $28 million still available under the program at that time. The company has not clarified whether it conducted more repurchases between May and the most recent announcement, so the exact remaining capacity today is unclear.
A $130 million crypto war chest
Canaan ended June holding 1,915 BTC and 3,952 ETH. Using Aug. 3 market prices, the company valued this combined cryptocurrency portfolio at approximately $130 million. That stash has been quietly growing: in June alone Canaan’s net Bitcoin position increased by 49 BTC, after factoring in operating expenses and customer payments made in BTC for mining equipment. The firm produced 64 BTC from its mining activities during the month.
Chairman and CEO Nangeng Zhang framed the company’s mining operations as an ongoing source of strategic capital. Because Canaan both mines Bitcoin and earns BTC through machine sales, it accumulates a stream of digital assets that it can later redeploy. Selling a portion of that treasury to fund buybacks is, in that sense, a way of turning mined coins into shareholder returns.
Zhang also argued that the market is not adequately valuing the company’s financial position. At recent trading levels, management believes Canaan’s market capitalization sits below the combined value of its cryptocurrency holdings plus its cash and cash equivalents as of the end of March. That comparison, however, does not reflect the company’s debt and other liabilities, nor the fact that some of its BTC is encumbered or subject to restrictions.
As of March 31, Canaan reported $43.5 million in cash. At the same time, 905 BTC had been pledged as collateral for secured term loans, and another 100 BTC had been locked into a fixed‑term financial product. Those obligations limit how much of the crypto reserve can be quickly or freely liquidated.
Mining efficiency improves despite idle capacity
The buyback decision comes against the backdrop of a mixed operational picture for Canaan’s North American mining business: rising efficiency, but declining utilization.
In May, the company achieved a fleet efficiency of 17.9 joules per terahash (J/TH) across its non‑joint venture North American sites. That represented an 11% improvement year over year and about a 4% gain relative to the 18.7 J/TH efficiency it recorded in March and April. These gains suggest Canaan has been upgrading hardware, optimizing energy use, or improving its site management-key levers for any miner trying to stay competitive after repeated Bitcoin halvings.
Yet those efficiency wins have been offset by underused infrastructure. At the end of May, Canaan boasted an installed non‑joint venture capacity of 10.05 exahashes per second (EH/s), but only 6.47 EH/s was actually operating. The drop in active hashpower followed the expiration of a hosting agreement, underscoring the company’s dependence on third‑party arrangements for running part of its fleet.
By June, the situation had deteriorated further: operating non‑joint venture hashrate fell to 3.36 EH/s. Joint venture operations, however, saw a recovery to 4.09 EH/s after earlier disruptions caused by wildfires at facilities in West Texas. Taken together, the numbers show Canaan still has substantial installed capacity that is either idle or underutilized-a potential upside lever if the company can secure new hosting partners or build out more self‑owned infrastructure.
Nasdaq listing still at risk
Financial engineering is not the only pressure point. Canaan’s shares have been trading at penny‑stock levels. On Aug. 6, its ADSs changed hands around $0.19, well below Nasdaq’s minimum bid price requirement of $1 per share. Each ADS corresponds to 15 Class A ordinary shares, magnifying the effect of any sustained price weakness on the company’s perceived value.
Nasdaq has granted Canaan additional time to repair this deficiency. The company now has until Jan. 11, 2027, to push its closing bid back to at least $1 and maintain that level for a minimum of ten consecutive trading days. Failing to meet that condition could ultimately result in delisting, which would severely restrict access to capital markets and likely weigh further on investor confidence.
Canaan has not explicitly tied its share repurchase initiative to the listing issue. Nonetheless, buybacks often serve as a signaling and price‑support tool. Reducing the total number of shares outstanding can boost earnings per share and sometimes helps stabilize or lift the trading price, especially when investors see management as willing to deploy real capital behind its conviction that the stock is undervalued.
The trade‑offs of selling down the crypto treasury
Using Bitcoin and Ethereum reserves to fund share repurchases comes with clear trade‑offs. On the one hand, monetizing a portion of the digital asset treasury allows Canaan to return value to shareholders without needing to raise fresh equity or take on additional debt. It can also highlight the gap between the company’s net asset value and its market capitalization-potentially attracting value‑oriented investors.
On the other hand, drawing down crypto reserves shrinks the cushion available to absorb volatility in Bitcoin prices, power costs, or mining revenue. That same treasury also serves as a resource for funding operations, servicing secured loans, and investing in new infrastructure or equipment. Selling coins now may limit Canaan’s flexibility if market conditions turn against miners or if attractive expansion opportunities arise.
The timing of any treasury sales will be crucial. If Bitcoin or Ether prices rally substantially, selling too early could mean leaving upside on the table. Conversely, if crypto markets weaken, Canaan may be forced to accept lower proceeds or reconsider how aggressively it wants to pursue buybacks. Management’s stated intention to remain opportunistic suggests it will try to match repurchases and sales to favorable market windows rather than pursuing a rigid schedule.
Why buybacks, and why now?
For a capital‑intensive business like Bitcoin mining, choosing buybacks over, say, fresh hardware investments can signal both confidence and caution. Confidence, because management is effectively saying the best use of marginal capital is to purchase its own shares at what it sees as a discount. Caution, because it may also reflect limited near‑term opportunities for high‑return expansion, especially amid regulatory uncertainty and intense competition for cheap power.
Canaan’s belief that the market is undervaluing its crypto holdings and cash suggests it views buybacks as a way to close that disconnect. If the equity continues to trade below the net value of the company’s more liquid assets, an aggressive repurchase program could theoretically be accretive even without strong profit growth, simply by concentrating ownership in remaining shareholders.
At the same time, the looming Nasdaq compliance deadline hangs over any capital allocation decision. Even if Canaan doesn’t explicitly frame buybacks as a rescue strategy for the listing, any upward pressure on the share price helps. If management can combine improved operating performance, a clearer narrative around its crypto treasury, and visible buyback activity, it may stand a better chance of regaining the $1 threshold organically, without resorting to a reverse stock split.
How this compares with other Bitcoin miners
Canaan’s approach fits into a broader pattern among publicly traded miners that now treat Bitcoin reserves as a balance‑sheet asset, not just a mined product to be immediately sold. Many large miners have experimented with treasury strategies that range from aggressive HODLing to active trading and hedging. Some have used BTC as collateral for loans, while others have liquidated major portions of their holdings during market downturns to cover operating costs.
By using its crypto holdings to fund buybacks rather than simply to pay bills, Canaan is taking a somewhat hybrid approach. It continues to rely on mined Bitcoin as a funding source, but it is channeling that value into financial engineering aimed at boosting shareholder returns and shoring up its capital markets profile. Whether investors see this as prudent or risky will hinge on how effectively the company balances buybacks with ongoing investment in its mining infrastructure.
Investors will also watch how Canaan manages its encumbered Bitcoin. The fact that hundreds of BTC are pledged against loans underscores the leverage embedded in some miners’ balance sheets. If crypto prices move sharply lower, loan covenants and collateral requirements could constrain Canaan’s ability to maneuver. Conversely, a strong bull market would increase the value of both the unencumbered and pledged coins, expanding the company’s financial options.
What to watch going forward
Over the coming quarters, several data points will be critical for assessing whether Canaan’s strategy is working:
– The pace and scale of actual buybacks versus the $30 million authorization.
– Any disclosed sales of Bitcoin and Ethereum, and the realized prices relative to market conditions.
– Changes in mining efficiency, installed capacity, and active hashrate, particularly in North America.
– Progress on restoring and sustaining a Nasdaq‑compliant share price without extreme measures.
– Adjustments in the mix of cash, unencumbered crypto, and pledged assets on the balance sheet.
If Canaan can continue improving its mining efficiency, reactivate idle capacity, and carefully monetize its crypto holdings to support both operations and shareholder returns, the current gap between its asset base and market value could narrow. If it misjudges the timing of sales, underinvests in its core business, or fails to stabilize its share price, the decision to tap its $130 million crypto reserve could be viewed more as a defensive maneuver than a strategic advantage.
For now, the company is effectively betting that turning a slice of its digital assets into equity buybacks will help it navigate a challenging market, defend its listing, and demonstrate that the Bitcoin it mines can power more than just hash rate-it can also underpin a broader capital allocation strategy.