Canaan Shares Annual Revenue Projections, MicroStrategy Reveals Plans to Launch Bitcoin Lightning Solutions

‘Buy the dip,’ ‘Rekt,’ ‘No-coiner,’ ‘When moon?’, ‘NGMI’ and ‘Buy the rumor, Sell the news’ are some phrases whose usage has become common lately. This reigning bear market slang has conceivably drawn similarities to previous similar cycles. Industry experts, however, advance that the current crypto carnage differs from past ones.

Source: Twitter (IntoCryptoVerse)

Notable among the contrasting points is the network hash rate which is at odds with Bitcoin’s price. On-chain data shows that despite Bitcoin price bleeding as much as 68% from its yearly high, the network’s hash rate has almost steadily grown and set a high of 273 EH/s on Nov 02, according to Blockchain.com data.

This month, the hash rate surged to 267 EH/s on Dec 14.

Hash rate fluctuations

The network hash rate figure has fluctuated across either extreme in December, with the latest significant action being a sharp adjustment northward from 206 EH/s on Dec 27 to 310 EH/s as per CoinWarz data. Last week, the network hash rate briefly dipped by 40% between Friday and Saturday as most US mining firms announced a shutdown of operations to free up energy for residential demand in the wake of freezing temperatures across several US states. The figure recovered steadily afterward, heading into Christmas before falling again on the very day.

Bitcoin hash rate chart

Closely related to the hash rate, Bitcoin’s miner revenue has glaringly shrunk during this period because of the spot market’s falling prices, leaving only meager, if any, profits for the efficient mining operations that are still active. Glassnode data shows that popular Bitmain miners like Antminer S9 and Antminer S17 labor to maintain profitability. The former, released in 2017 with an all-in-sustaining cost of around $0.05/kWh, slipped into the ‘unprofitable’ zone in May and has a threshold Bitcoin price of $19,000 to be profitable.

The Antminer S17, launched two years later, is still profitable at the current Bitcoin prices, but the growing hash rate has crippled its returns to just a couple of dollars per day. Bitcoin price’s slip to $16,000 in the immediate aftermath of the Terra collapse marked the first unprofitable occurrence for the miner which failed to break even at the mark. The slim profits could be slashed even further to non-existent if Bitcoin slides below the $15,500 level.

MicroStrategy adds 2500 BTC in the latest purchase as Saylor teases Lightning Network solutions

Earlier today, business intelligence firm MicroStrategy shared that it has continued extending its exposure to the leading crypto asset despite the poor returns this year and an absence of buyer interest. A filing with the US Securities and Exchange Commission shows that the firm added 2,395 Bitcoins (BTC) between Nov 1 and Dec 21 for an average of $17,181. The company then completed a sale of 704 BTC on Dec 22, earning $11.8 million. Two days later, on Dec 24, it acquired approximately 810 BTC in a $13.6 million cash deal.

Source:The Block

In a Dec 28 tweet, the firm’s executive chairman Michael Saylor confirmed the purchase, which has now brought the total Bitcoin held by the firm to 132,500 BTC. To this date, MicroStrategy has spent $4.03 billion in its Bitcoin acquisition strategy. Saylor has denied any rumors of a planned dump on several occasions. Earlier this year, he reiterated the company’s objective of only holding Bitcoin on its balance sheet in a Bloomberg interview. The sale whose details became public today contradicts the same and represents a first after a series of purchases.

“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit,” Saylor said about the sale.

The mobile software firm revealed in September that it could resort to selling as much as $500 million worth of common stock. Records show that the Saylor-led company has sold 218,575 units for total net proceeds of $46.4 million thus far this quarter. In a Wednesday Twitter Spaces room, Saylor disclosed that the firm is working on releasing enterprise applications based on the Lightning network.

“We want to make it possible for any enterprise to spin up Lighting infrastructure in an afternoon [ …] We have teams working on it and are looking to bring something out by next year. We expect to show something in the first quarter.”

Notably, the purchase revelation comes barely a week after JPMorgan reported a lack of institutional investors in the digital asset class because of its inherent volatility.

Canaan anticipates a drop in annual revenue

In other news, crypto mining firm Canaan shared in a post today that it expects its annual RMB-denominated revenue to contract by a margin of not more than 15% despite the massive plunge in Bitcoin’s price. The mining giant Canaan has defied the general miners’ suffering narrative by generating significant revenues from crypto operations.

The company logged revenue of around $573 million between January and the end of September, according to a statement from the company’s spokesperson to CoinTelegraph. Canaan has projected a total revenue of $619 million this year, factoring in $46 million from the ongoing quarter. This expected overall figure would be around 14% lower than last year’s figure of $783 million but greater than annual revenues for 2020 and 2019 – $64 million and $201 million, respectively.

The firm’s representative said in a statement to CoinTelegraph that the company’s mining operation has grown to become “powerful support” in revenue generation by “supplementing proceeds from mining machine sales.” Canaan, which initially focused on manufacturing crypto mining devices, started proprietary mining operations in the second half of 2021 and has succeeded by putting to use some of its inventory during low mining machine demand periods. Most firms invested purely in mining have suffered a contrasting fate to Canaan. Argo Blockchain shared an update on its financial status earlier today, disclosing a $100 million bailout from Galaxy Digital that temporarily ameliorates its situation. Core Scientific, which filed for bankruptcy on Dec 21, separately secured interim approval from the US bankruptcy court this week to access a $37.5 million loan that will help it stay afloat pending completion of its restructuring arrangement.

Bitcoin price

The BTC/USD pair formed a high near $16,780 on major exchanges before the price tracked a decline below the $16,800 support zone to $16,600. For more than seven weeks now, Bitcoin has been restrained below the $20k mark down to limited buying demand as investors soak in the bankruptcy of FTX and its knock-on effects.

Bitcoin quarterly candles. Source:TradingView

At the current price range, the flagship crypto is staring at a fourth quarterly red candle which can only be invalidated if Bitcoin ends the year trading above $19,420. The former, and most likely outcome given current circumstances, will be an unprecedented bear market milestone – the worst correction run lasted three quarters between 2014 and 2015. Meanwhile, analysts contend that the first few months of 2023 will persist with the current tone as the market strolls into an accumulation phase dominated by minor sideways action.

To learn more about Bitcoin, visit our Investing in Bitcoin guide.