Crypto mining specialist Cipher Mining (CIFR) recently revealed its acquisition of 11,000 bitcoin mining rigs from Canaan Inc. (CAN) after achieving an impressive 6 exahash/second (EH/s) computing power. With the new Canaan A1346 rigs in place, Cipher projects its power output will jump to 7.2 EH/s once installations are complete by the end of Q3. Furthermore, the company foresees the potential to reach an 8.2 EH/s processing rate by the close of 2023.
On the other hand, investors who have taken notice of this development have aided a 6% surge in Cipher’s stocks to $2.07 in pre-market trading. This outcome is due to the company exceeding its initial hashrate target of 5.7 EH/s for the end of Q1. Notably, its net loss per share plummeted by over 50% in Q1 2023 compared to the same time the previous year—from $0.07 to $0.03.
Despite these impressive figures, some skepticism arises from Cipher’s expectations of a $0.027 average price per kilowatt-hour (kWh) of electricity consumption across its portfolio. The firm claims to be protected by fixed-price agreements for about 96% of its capacity—a boon for the company amid the 2022 energy crisis that left other miners with rising expenses.
However, as Cipher sees a notable uptick in its computing power and increased investor interest, Canaan, one of the world’s largest blockchain and AI chip designers and a prominent mining rig manufacturer, has faced a downturn in sales. Throughout 2023, the company grappled with market challenges and experienced a slowdown in sales while being outperformed by other manufacturers.
Is this a sign of early struggles in Canaan’s business growth, or simply a temporary setback due to depressed market conditions? As the cryptocurrency ecosystem continues to change and grow, so do its pain points and successes. As investors and enthusiasts, it’s crucial that we stay informed and cautious when navigating this market.
Time will tell how Cipher Mining’s investment in Canaan mining rigs will impact both parties in the long term, with Cipher set to benefit from the increased hashrate output, and Canaan hoping to see a boost in sales amidst challenging market conditions. The delicate balance between success and struggles within the blockchain industry highlights the importance of understanding technological advancements and market dynamics for long-term benefit.