[CAN] Canaan Mining Performance Jan-May 2026: Record-High BTC Holdings and Transition to Energy-Integrated Infrastructure

1. Monthly Mining Operational Performance Trends (January - May 2026)

Canaan's proprietary mining business has shown steady production growth and asset accumulation since the beginning of 2026.
It is clear that the company is shifting from a 'spending phase' to a 'hoarding phase' while monitoring market prices.

Operational Highlights:

• Strengthening Financial Foundation: As of the end of May, crypto asset holdings reached a record high of 1,867 BTC and 3,952 ETH.

• Business Expansion in North America: In February, the company acquired a 49% interest in a joint venture (JV) in West Texas from Cipher Mining, adding 120 MW of power capacity to its North American operations.

• Background of Localized Operational Decline in May: Installed hashrate decreased in May due to the planned termination of hosting contracts. Additionally, the JV's operating hashrate declined due to the impact of wildfires at the Alborz JV site, but full recovery is expected by mid-June.

• Continuous Improvement in Power Efficiency: The average power efficiency of the self-mining fleet in North America improved by approximately 11% year-over-year, reaching a record high of 17.9 J/TH.

Current Situation of the Mining Industry as a Whole

The current Bitcoin mining market is in the midst of a historic 'extreme survival competition' and 'structural industry transformation'.

• High Hashrate and Deteriorating Profitability: The network-wide hashrate is hovering at a record high of around 1,000 EH/s (1 ZH/s). On the other hand, due to the reduction in rewards after the halving and Bitcoin price volatility, mining profitability (hashprice) has fallen to its lowest level, forcing inefficient miners to exit the market.

• The '20 J/TH' Survival Line: As an absolute condition for profitability, moving away from older machines and replacing them with the latest equipment with a power efficiency of '20 J/TH or less' has become the industry survival standard.

• Business Diversification (Pivot) to AI/HPC Data Centers: To compensate for tight mining profits, a major trend among large miners is to repurpose or combine secured large-capacity power grids and cooling infrastructure for data center businesses targeting AI and high-performance computing (HPC), where demand is tight.

Canaan's Position and Strategic Evaluation

Given this harsh market environment, Canaan can be highly evaluated for 'transforming from a mere hardware manufacturer into a resilient, vertically integrated energy infrastructure company'.

• Strengths of In-house Manufacturing and 'Hoarding' Durability:

  1. The 17.9 J/TH power efficiency of the North American fleet is an extremely excellent level, well below the current survival line of 20 J/TH. By leveraging the strength of being able to deploy the latest self-developed machines at cost, the company keeps its break-even point low, allowing it to absorb the shock of a sudden drop in hashprice. The fact that it mines 90 BTC per month and has built up reserves to 1,867 BTC is proof that it is executing a 'strong HODL (long-term holding) strategy' with an eye on the future, rather than selling at low prices during difficult market times.

• Direct Control of Infrastructure Networks through M&A:

  1. The acquisition of the JV interest (120 MW) from Cipher Mining is highly strategic. By not only selling and hosting machines but also owning cheap and stable power grids in North America (Texas) itself, the company has eliminated the risk of relying on external contractors and gained the ability to control its revenue.

• Energy and AI Strategy Looking Toward the Next Generation:

  1. As evidenced by the conversion of the acquired Cipher Mining facilities into AI data centers, the 120MW power infrastructure acquired by Canaan goes beyond mere Bitcoin mining. By leveraging its own high-density computing expertise, the company is building a flexible position that allows it to both balance and transition between mining and AI/HPC operations.

Canaan now possesses both the "spear" of its own high-efficiency machines and the "shield" of low-cost power infrastructure secured directly through acquisitions. It is one of the few players that has successfully transitioned from the "active turn" (infrastructure construction and M&A) to the "accumulation turn" (solid asset buildup), and it is establishing a significant competitive advantage as industry consolidation progresses.

2. Forward-looking Prospects

Short-term Operational Recovery Plan

• Full Recovery of JV Mining Sites: Regarding the Alborz JV (joint venture) site, where operations temporarily declined in May due to wildfires, urgent power restoration work is currently underway. This site is expected to be fully restored by mid-June 2026.

Sequential Deployment (Start of Operations) of Next-Generation Machines

• Energizing the AvalonMiner A15 Series: The deployment of the next-generation "AvalonMiner A15" series (totaling 12,500 units) ordered by Canaan is underway.

  • For the air-cooled A1566 (approx. 2,500 units) and water-cooled A1566I (approx. 1,000 units) that have already arrived in the U.S., we are proceeding with sequential energization and operation.

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