The fall in the price of Canaan shares in NASDAQ and the value of Bitcoin could compromise the operations of the mining company.
The mining device manufacturer, Canaan, registered a sharp drop in the value of its shares listed on the NASDAQ stock exchange, which could possibly be associated with the low view on the price of Bitcoin in recent days.
According to information reviewed by several news portals, Canaan was one of the first companies in the crypto mining space to quote its shares this year in one of the most important stock exchanges in the world. However, a little less than a month after its entry, both the price of its shares and the volume of trading saw a shocking fall, which could hardly recover in the short term.
The reports detail that the price of the shares fell by 40%, but the trading volume went from USD $4 million to USD $164 thousand, representing a drop of more than 90% in less than a month.
Not only the shares in NASDAQ of Canaan experienced significant losses, since during the month of November the company carried out an IPO (Public Offer for Sale) campaign in which it traded its shares for a value between USD $9 and 11. Currently the value of them is only around USD $5.6 per unit.
Bitcoin falls: Consequences for Canaan
Canaan is one of the leading companies that manufacture mining devices, which is based in China and enjoyed a certain boom for some time competing within the mining ecosystem with companies such as Bitmain and Bitfury.
However, given that the cost of ASIC devices tends to be quite high along with the electricity consumption required by this specialized hardware, the fall in the price of digital currencies has meant that mining activities in general cease to be profitable for those they do not carry out this work at medium or large scale.
According to Blockchain.com, the Bitcoin network registered its highest HASH peak at the end of October (114 million TH/s), at which time the digital currency approached USD $10,000 per unit. But currently the levels of processing power experienced a drop of almost 20% to be around 85 million TH/s.
When this usually happens, the companies that manufacture mining devices are among the first affected precisely because of how unprofitable it is to buy and operate these equipment, precisely because the profit margin is remarkably compromised unless there is another kind of livelihood and the idea It is to accumulate BTC with the expectation that the situation will improve in the future. In the case of Canaan, 99% of its income comes from the trade of these devices, so the incident significantly undermines its possibilities of continuing to operate normally without cutting costs.
The competition takes action
While the Canaan case seems to be one of the most catastrophic these days, other companies in the ecosystem seem to adjust to the current state of the markets and take measures that appear to be good in general.
In the case of Bitmain, the mining company recently re-granted the position of CEO to Jihan Wu after the conflicts with one of the important managers, who had to leave unfavorably after a lot of disagreements with the executive board of the company. In turn, the company announced expansion plans in South American territory to further consolidate its operations in the region.