Canaan Stock Surges as Benchmark Doubles Price Target After Major Mining Rig Deal

TLDR

• Benchmark doubled Canaan’s price target from $2 to $4 after the company regained Nasdaq compliance by maintaining a stock price above $1.00 for 10 consecutive business days
• Canaan secured its largest U.S. order in three years with over 50,000 Avalon A15 Pro mining rigs scheduled to ship in Q4 2024
• The company’s self-mining operations reached 9.3 EH/s of deployed capacity in September with competitive power costs at $0.042 per kWh
• Canaan mined 92 bitcoins in September and holds 1,582 BTC and 2,830 ETH in its digital asset treasury
• Shares jumped 5% in early trading Thursday to around $1.79 following the analyst upgrade

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Canaan Inc. received a major vote of confidence from Wall Street this week. Benchmark raised the mining rig manufacturer’s price target from $2 to $4 while maintaining its buy rating on the stock.

Canaan Inc., CAN

The company’s shares climbed 5% in early Thursday trading to around $1.79. The stock has surged 102% over the past six months according to market data.

The upgrade comes after Nasdaq confirmed last week that Canaan met its minimum bid requirement. The company’s stock closed at or above $1.00 for 10 straight business days.

Benchmark analyst Mark Palmer said the compliance issue had dampened liquidity. The problem also kept some institutional investors on the sidelines.

Major U.S. Order Signals Market Recovery

Canaan landed its biggest U.S. order in three years. More than 50,000 Avalon A15 Pro mining rigs will ship in the fourth quarter of 2024.

The order represents a turning point for the company. Canaan hasn’t seen U.S. demand at this level since 2021.

CleanSpark placed follow-on orders for Canaan’s immersion-optimized A1566I rigs. The company also introduced the compact Avalon Q model for potential consumer mining applications.

Canaan’s September operational data showed 9.3 exahashes per second of deployed capacity for its mining operations. Of that total, 7.84 EH/s was running by the end of the month.

The company mined 92 bitcoins in September. Its digital asset holdings now stand at 1,582 Bitcoin and 2,830 ETH.

Low Power Costs Drive Mining Efficiency

Power costs play a critical role in mining profitability. Canaan’s average power cost comes in at $0.042 per kilowatt hour.

That rate ranks among the lowest in the industry. The company expects to reduce costs further through better energy deals and site selection.

Canaan launched a pilot project in Calgary to convert flared natural gas into power for mining. The joint venture with Aurora AZ Energy Ltd. should start operations in early 2025.

The project deploys over $2 million worth of Avalon A15 Pro miners. The initiative will convert waste gas from Alberta oil wells into electricity for bitcoin mining.

H.C. Wainwright maintains its buy rating with a $3 price target. The firm pointed to the flare gas venture as an additional revenue stream for the company.

Palmer called the recent stock weakness an attractive entry point. The compliance overhang is gone and the shipment schedule looks solid for Q4.

Benchmark expects the combination of equipment sales and self-mining to drive further gains. Canaan’s deployed hashrate reached 9.30 EH/s with operations continuing to scale through the fall months.

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