The shares of Canaan Creative, one of the few listed crypto miner producers, plummeted to less than $ 2, the lowest level since the publication last November.
Actions, listed al Nasdaq, have been steadily declining since bitcoin halving on May 11, according to Yahoo Finance data. Canaan closed at $ 1,98 at the end of the trading session on Monday, down 3,9%.
The demand for mining machines is falling
The demand for cryptocurrency mining machines by some Chinese miners may have started to decline a few months before the halving of May, said Aries Wang, co-founder of the Bibox cryptocurrency exchange.
As early as last July, "Some of China's biggest miners had started raising funds from institutional investors and buying new models to gradually get rid of old machines so that they were ready for halving," said Wang, whose company he invested in a cryptocurrency mining business.
"Many had already completed the update on infrastructure such as mining sites and machines before the end of February." Canaan tried to stimulate sales earlier this year by cutting prices by 50% compared to the average prices in 2019.
Nonetheless, it reported a net loss of $ 5,6 million in that period, according to the latest quarterly report. First-quarter sales were also affected by the coronavirus epidemic in China, according to the report.
Logistics in mainland China stopped around the Chinese New Year on February 10th. The company was unable to deliver machines to customers even though demand had grown due to a rise in bitcoin prices, said Canaan CEO and President Nangeng Zhang.
The company rebounded in April after China said it managed to curb the spread of the coronavirus and logistical problems eased. The stock reached $ 5,99 per share on May 13, two days after halving, and has since started to decline.
From $ 9 to $ 2 in a few months
The initial public offering (IPO) of the Chinese cryptocurrency producer had set the stock price at $ 9 per share, but a month later the shares fell by 50%. They were briefly back above $ 8 on February 12 after rising more than 80% from $ 4,40 the previous day.
The price started to drop again when China imposed quarantine measures for the coronavirus. Canaan's cash holdings declined 48% in the first quarter, from $ 71 million at the end of last year.
The company said the drop was due in part to $ 24,5 million in short-term investments, including its partnership with Semiconductor Manufacturing International Corporation (SMIC), one of mainland China's largest computer chip makers.
