Canaan Turns to Crypto to Fund Buybacks as Core Business Struggles

• Bitcoin miner Canaan is using crypto holdings to fund buybacks worth nearly 20% of its market value.
• The move comes as the company’s core mining hardware business continues burning cash.
• It’s the latest sign of miners leaning on treasury strategy rather than operations for support.

Bitcoin mining hardware maker Canaan is turning to its crypto holdings to fund a buyback program covering close to 20% of its total market value. Its core business is still losing money.

The move fits a pattern that’s become common among publicly traded miners this year. Crypto reserves are increasingly treated as a balance sheet lever to support share price, running independently of whatever’s happening in day-to-day operations. Canaan’s core business, manufacturing and selling Bitcoin mining rigs, has continued to burn cash as margins compress across the hardware industry.

Why Canaan Is Leaning on Its Crypto Treasury 

The buyback uses the company’s crypto assets as a lever the operating business currently can’t pull on its own, which is a real shift in how a hardware manufacturer approaches its own stock. Instead of relying on product sales or margin improvement to support valuation, Canaan is drawing on holdings that move independently of its manufacturing results entirely.

Several other miners and crypto-adjacent companies have leaned on treasury holdings this year to fund buybacks, debt service or shareholder returns while their underlying businesses face pressure from falling hardware demand and thin margins. 

Canaan’s case stands out mainly for its scale. Committing buyback funding worth close to a fifth of total market value is a sizable bet that the market is undervaluing the stock relative to what the company actually holds on its books.

The Risk Behind Funding Buybacks With Crypto 

The approach works only as long as crypto prices hold up well enough to fund the buyback without draining reserves too fast. Spend down a volatile asset to defend your own share price, and a downturn leaves the company worse off than if the treasury had been left alone.

Canaan is betting its stock trades cheap relative to its balance sheet. Whether that bet pays off has almost nothing to do with mining hardware sales, and almost everything to do with where crypto prices sit by the time the buyback runs its course.

Sources:

The Globe and Mail: Canaan to Use Digital Asset Treasury for Share Buybacks Amid Undervaluation Signal