Canaan Sets Aside $50 Million in Collateral for Texas Push

Canaan Inc. (NASDAQ: CAN) set aside $50 million as collateral for a letter of credit tied to infrastructure contracts as it advances two planned one-gigawatt power projects in Texas. The move comes as the Bitcoin (BTC) mining-machine maker’s product revenue dropped to $4.8 million in the third quarter from $118.6 million a year earlier.

Canaan’s project in Duval County received a conditional “Studied Load – Firm” classification through the Electric Reliability Council of Texas’ (ERCOT) Batch Zero process. Chairman and CEO Nangeng Zhang said the project still requires further studies and approvals. A separate one-gigawatt project in Zapata County remains in early development.

The company also made about $3.3 million in project prepayments. It ended Sept. 30 with $72.8 million in cash, including the $50 million restricted as collateral, leaving $22.8 million unrestricted. In October, Canaan purchased U.S. land for about $1.1 million.

The company recorded $8 million in net income alongside a $42.9 million operating loss. The quarter’s results included fair-value gains of $20.1 million on cryptocurrency and $31.9 million on financial derivatives. The latest infrastructure details build on Canaan’s earlier quarterly results and Texas project update.

Canaan also plans a 1-for-25 reverse split of its American depositary shares, effective on or about Dec. 4. After the split, each ADS would represent 375 Class A ordinary shares, up from 15. The move is intended to help the company regain compliance with Nasdaq’s minimum bid-price requirement.