Investment bank Benchmark has doubled the price target for Nasdaq-listed Bitcoin mining rig manufacturer Canaan Inc. from $2 to $4, while maintaining a buy rating on the stock. This upgrade came after Canaan regained compliance with Nasdaq listing requirements by maintaining a stock price above $1.00 for 10 consecutive business days, alleviating concerns about potential delisting.
Canaan secured its largest U.S. order in three years, involving over 50,000 Avalon A15 Pro Bitcoin mining rigs scheduled to ship in the fourth quarter of 2024. This deal signals a recovery in demand, with the company's Avalon line gaining traction for its efficiency, reliability, and cost competitiveness. Additionally, CleanSpark placed follow-on orders for Canaan's immersion-optimized A1566I rigs, and the company introduced the compact Avalon Q model for potential consumer mining applications.
In September, Canaan's self-mining operations reached 9.3 exahashes per second (EH/s) of deployed capacity, with 7.84 EH/s operational by month-end. The company mined 92 bitcoins during the month and now holds a digital asset treasury of 1,582 BTC and 2,830 ETH, valued at over $186 million. This strong balance sheet was cited as a key factor in the analyst upgrade.
Canaan's average power cost stands at $0.042 per kilowatt-hour, among the lowest in the industry, driving mining profitability. The company is further reducing costs through initiatives like a pilot project in Calgary, set to begin in early 2025, which converts flared natural gas into electricity for Bitcoin mining using over $2 million worth of Avalon A15 Pro miners.
Following the news, Canaan's stock jumped 5% in early trading to around $1.79, and it has surged 102% over the past six months. Analyst Mark Palmer described the recent stock weakness as an attractive entry point, emphasizing the combination of equipment sales and self-mining as drivers for future gains. H.C. Wainwright also maintains a buy rating with a $3 price target, highlighting the flare gas venture as an additional revenue stream.
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