Can CANAAN pull off a miracle?!

Added: 2026-05-13

[00:00:00]Hello my friend. So today's broadcast is going to be very different from some of our more recent broadcasts. Uh the focus today is going to be on Bitcoin, Bitcoin mining economics and specifically a publicly traded company named Kanan. So if you're somebody who's only here for information about Keel infrastructure, uh today's not going to be the day for that. For those of you who are interested in hearing more about uh Bitcoin, about mining economics, and specifically Kanan, which is a company that we have spoken about on this channel before, uh then stick around, but I would highly encourage you to consider playing this broadcast at one and a half to perhaps even twice the regular speed. There's going to be a lot of data that we're going to be going over. There's going to be a lot of detail in today's broadcast and so to the extent uh you are time pressured uh consider you know listening to this purely as a podcast and doing so at twice the speed. Okay. Broadly speaking Bitcoin has in my opinion entered into a period of time that traditionally has been something of a a crypto winter right or a Bitcoin winter. So, uh, without getting into laborious detail, uh, my opinion at the end of last year was that basically we'd transition into something of a crypto winter, uh, beginning this year and continuing into parts of next year with then perhaps there being a bit of an uptick uh, in Bitcoin mining economics uh, going into 2028, which of course would represent the next having.

[00:01:51]Now it is true that at this juncture the Bitcoin ecosystem has evolved quite dramatically from what it was uh you know 10 years ago even just two years ago. And so there are voices within the community, the Bitcoin community that argue, hey, you know, the traditional kind of like uh crypto winter cycles no longer apply and that perhaps what's really causing issues with the price of Bitcoin uh stalling out and kind of having some issues uh could very well have more to do with the protocol itself, right? the Bitcoin protocol and some internal debates that have resurfaced uh as to whether or not uh Bitcoin core uh is what should be used going forward or if alternatively something that has generally been described as the knots protocol should in fact be that which is governing uh Bitcoin. And there's a whole slew of issues that one could get into as to uh the merits of Bitcoin knots, you know, as compared to Bitcoin core. Um I don't know that we are going to get into that today because ultimately I want to get to Kanan. That's kind of what the focus of this uh broadcast is going to be, but I'm trying to just set the stage uh by beginning with Bitcoin itself. So my overall thesis is that Bitcoin would remain under pressure during 2026, parts of 2027, and maybe start to show life again sometime in 2028. Now, that can sound quite sobering and uh depressing if uh you like so many others, right?

[00:03:41]Hey, would like to believe that Bitcoin is simply going to continue going up and up and up until it reaches $50 million a coin, a billion dollars a coin, or whatever. uh uh some of the more outspoken uh Bitcoin evangelists uh have stated is their personal belief as to where the price of Bitcoin is going. Uh I'd love it if Bitcoin went to any of those numbers. I think anybody who's been in the Bitcoin uh ecosystem uh 10 or more years and managed to hang on to and perhaps even reacquire uh some some additional Bitcoin over that period of time. Would love to see that happen. Uh that being said, I think from my perspective that it's useful to just look at the Bitcoin ecosystem as it exists right now, the price of Bitcoin, hash prices, and just kind of assume that, you know what, we're kind of in something of a quasi crypto winter, and that we may very well remain in this state of affairs for the foreseeable future. I think this is particularly true if one were to conclude that inflation rates in the United States, not to mention around the world, but specifically the United States, uh, are elevated today, continue to be elevated, and present the US Federal Reserve with an increasingly challenging environment in which to consider lowering ing interest rates. Bitcoin, for better or for worse, uh seems to be quite sensitive to interest rates and to what the perception is as to where interest rates might be in the near uh the near-term, you know, future. And so with for example today's uh inflation data coming out pointing to inflation that continues to actually move up arguably propelled forward by energy prices which have been profoundly disrupted by geopolitical events that are beyond the scope of today's broadcast. Um the overall sentiment that I'm sort of reading and seeing is one where Bitcoin is likely to remain uh under pressure.

[00:06:03]Now that's just the price of Bitcoin.

[00:06:06]Bitcoin mining economics are driven by something called hash prices.

[00:06:12]I will spare you uh you know sort of the the the math behind how that's computed, but it's a basically a number. Okay? And right now that number stands at about 3.8 cents a terraash. And that is a particularly uh low number. Uh you may have heard that phrase referenced in terms of pahash. So it's say like roughly 38 uh dollars per pahash.

[00:06:42]That's a pretty challenging number uh for all but the most efficient Bitcoin mining machines to really confront.

[00:06:53]And so as we get into the Kanan specific details, which we are going to uh begin to do right now in just a moment, uh let's keep in mind that the overall Bitcoin ecosystem, the environment in which Kanan is operating remains incredibly challenging. And from my perspective, it's not useful to believe that that's going to change anytime soon. Could it change? Yes. Would we all love it to change? Those of us who still remain very active with Bitcoin uh in one form or another, yeah, I would imagine so, right? We'd all want for uh the environment to be one in which Bitcoin will go a lot higher. And I think an argument could be made without going too far into a tangent that if Satoshi's original title and subtitle, right, to the white paper, right, the idea of Bitcoin as being peer-to-peer electronic cash, right, if if we actually had maybe a Bitcoin environment in which Bitcoin were actually being used and improved upon so that it could be more and more of a of an electronic cash system that hey things might be very different today for reasons that are beyond the scope of today's broadcast. Hey, the Bitcoin community decided that it made more sense uh for Bitcoin to be positioned instead as something of a store of value. And so now we have something I guess you could call like a quasi digital gold. And uh yeah, you know, I think in an optimal environment where hey, inflation seems to be out of control, you would think that an inflation hedge then such as gold or digital gold in the case of Bitcoin, if you want to call it that, would be doing a lot better than it's doing uh at present. So, I'm not none of my thinking regarding Kanan is influenced by this belief that somehow Bitcoin is going to like turn around and start making brand new highs on its way to a million, 10 million, whatever, a gazillion dollars a coin. I I think that comments like that coming from some incredibly talented and highly intelligent people um right there's one person in particular who I think is somewhat famous or notorious for uh making these very very highriced Bitcoin price predictions. I I don't know that that's helpful because there are people that are going to hear this and be like, "Wow, man. If it's going to like, you know, 50 million a coin like, yeah, why don't I mortgage everything and and buy more Bitcoin, right?" Okay, let's get into Kanan now. Uh, as I said, uh, hey, please consider playing this back at double the speed, okay? Because we're going to go through a lot of data here.

[00:09:45]So, Kanan reported a record cryptocurrency treasury in its March 2026 mining update. Okay, they ended the month with about a,000 uh roughly 8,000 what am I saying? 1,88 Bitcoin according to Kanan at the end of March. Uh they had nearly 4,000 Ethereum as well. So they also happen to have mined 89 Bitcoin in March.

[00:10:11]That to me is quite interesting because they continue to increase their Bitcoin huddle, not to mention their Ethereum huddle. Uh the company disclosed an average all-in electricity cost of basically 4.5 cents a kilowatt hour which specifically referred to its reported mining operations during the month of March.

[00:10:33]So its North American fleet efficiency averaged 18.7 jewels per terahash while its global non-join venture fleet averaged around 24 jewels per terahash.

[00:10:45]Now, I did some uh back of the envelope math and calculated that you really uh you know, given where hash prices are right now, you really kind of need to be probably closer to uh a roughly 10 jewels per terahash average to kind of be in the hunt for uh some kind of margin. you know, where where Canon's at right now isn't like horrific. It's, you know, it's I think it's it's kind of decent, but um as we will see in a moment, the company continues to struggle to generate positive cash flow.

[00:11:25]So, uh yeah, it it's not helping that Bitcoin mining economics are as depressed as they are and that the fleet efficiencies are what they are for Kanan.

[00:11:38]So, one major concern is that Kenan reported a month-end deployed hash rate of about 11 exahash, but only around 7 exahash was actually operating, suggesting, at least I think it suggests that a portion of its installed mining capacity may not currently be economical to run. And that's kind of what I touched on just a moment ago. Now, despite difficult industry conditions, Kanan's topline growth has been strong.

[00:12:07]Fullear 2025 revenue rose to approximately $530 million, nearly doubling from its 2024 levels. Fourth quarter 2025 revenue alone increased more than $120 plus% yearover-year.

[00:12:27]So clearly there is interest in the marketplace for what Kanan is in primarily the business of doing which is right a designing engineering and manufacturing Bitcoin mining machines and doing so I might argue or I might add at price points that are I think very very competitive compared to Bitmain. Yes, there is a qualitative difference in so far as efficiency uh right with the machines that Kanan's selling, but as uh as I think is important to point out, you know, your your end of the day return on investment is heavily influenced by how much you actually spend on the Bitcoin mining machines themselves. I mean, if you overpay for an incredibly like efficient machine, your time to return on investment just gets longer. Whereas, hey, if you pay a lot less for a machine that might not be quite as efficient, your return on investment might be a lot shorter. So, again, I think the market appreciates having the optionality of Kanan's products being out there and available.

[00:13:39]Now, even with revenue growth, profitability remains a major issue.

[00:13:43]Kanan reported a fullear 2025 operating loss of approximately $110 million and a Q4 2025 net loss of roughly $85 million.

[00:14:00]Okay, that's that's not good. Right now, it gets a little bit worse.

[00:14:07]Cash flow remains one of the company's biggest concerns. So Kanan disclosed, okay, that they basically had a roughly $260 million uh dollar negative operating cash flow during 2025. So let me just repeat that cuz that sounded a bit clunky. Basically, they had negative cash flow of around, let's just call it $260 million for 2025.

[00:14:34]And that sadly continues what has really sort of been a multi-year pattern of generally negative cash flow.

[00:14:44]So what that basically means is that the business is basically not really generating like positive cash flow. Now the reason I'm pointing this out is because sometimes you know with companies like say you know Keel infrastructure or other well-known companies right hey you well I shouldn't say wellknown keel is not quite yet well known one day it will be but you know you'll have a situation where from an accounting perspective you have like a loss and that might be because you need to account for the fact that like basically the price of Bitcoin went down and you had Bitcoin on your balance sheet and you know but it's essentially a non-cash cash loss.

[00:15:24]But when you talk about negative cash flow, that's like literal cash that's just going out the door and that's not being sufficiently replenished. That is, I think, a a bigger deal.

[00:15:38]So Kanan finished 2025 with about 81 roughly $81 million in cash and cash equivalents which needless to say is something that we'd need to take a very close look at given the fact they've got ongoing losses and you know capital requirements associated with its Bitcoin mining infrastructure.

[00:16:01]Kanan continues to basically aggressively expand its infrastructure despite weak mining economics. Probably I'm guessing here, but probably because Kanan wants to be well positioned and well leveraged for the turn because eventually there's always a turn. In February 2026, the company acquired a 49% stake in several Texas mining projects, adding roughly 4 and a half exahash of hash rate and around 120 megawws of power capacity.

[00:16:31]So I think a reasonable question is hey if uh pardon me while I drink some water hey if uh the company is you know expanding and their sales seem to be booming isn't doesn't that kind of suggest that there's something at play here that might suggest that hey profitability might turn around and that cash flow itself might turn around and I think there's an argument to be made that yes that's probably a truism or at least one can certainly believe that but do we necessarily want to make you know like a bet the farm decision on something that may or may not materialize. So pardon me while I do the most uncou thing of all which is to drink some water during a live broadcast or a semilive broadcast. So that brings us to the next point and this is something that we kind of touched on a moment ago and I think it bears getting into like a little bit more detail about and it has to do with uh the basically the the efficiency of their Bitcoin mining machines.

[00:17:32]Its flagship Avalon A16 XP. Okay, I looked it up just to double check. It it's listed as having an efficiency of around 12.8 8 JW per terraash.

[00:17:46]But when I looked over on the Bit Main site, one of the most efficient hydro units which they have listed, I believe had an efficiency of about 9.5 jewels per terahash. Now you say, "Hey, Stephen, that's that's not a whole lot.

[00:18:01]I mean 9.5 versus 12.8, that's it's a small difference." And yeah, it's true.

[00:18:07]I mean it's uh it is to some degree a small difference but that small difference can mean the difference between actually being able to generate like positive cash flow with the machine right away in current mining conditions versus perhaps not being able to generate any positive cash flow from a particular mining machine given current mining conditions.

[00:18:32]So that's something that hey some you know some of the bigger industrial scale you know buyers they're they're going to look for that. Now the flip side as I alluded to is that BitMay traditionally charges a a pretty hefty price tag for that efficiency. And so if you do the math, often times, not always maybe, but often times you're actually better off with a slightly less efficient machine, that's going to cost less money in terms of just being able to earn back like a return on that investment like like a lot faster.

[00:19:08]But again, it's an issue, right?

[00:19:10]competing hardware from rivals like Bitmain is approaching sub 10 jewels per you know sub 10 jewels per terahash uh efficiency levels which is what I just described which can materially impact the profitability during periods of depressed hash prices kind of like what we're you know dealing with now.

[00:19:30]So Canon investors are increasingly focused on whether Canon can achieve sustainable profit. I'm sorry. They're focused on whether Kanan can achieve sustainable positive cash flow before future Bitcoin havings further compress mining economics. The company has improved gross profit met gross profit.

[00:19:52]The company has improved gross profit metrics and expanded scale, but the market remains skeptical that current mining margins are durable enough to justify continued heavy capital spending. You know, it's like you create these notes and I am just so not the kind of person to read notes. I really like being far more spontaneous, but sometimes I do think it's useful to just read the notes because there's so much detail and I want to make sure that we're covering all of the details that I'm willing to risk essentially sounding as though I'm reading from a script, which is kind of like what I'm doing.

[00:20:30]Um, so as to cover this in as detailed and as thorough as as a way as possible.

[00:20:38]Okay, so thank you for bearing with me.

[00:20:41]Okay. Now, in terms of catalyst, like, okay, so look at that doesn't the picture that I just painted is not exactly the nicest picture in the world, is it? I mean, right, we're not talking about a company that's printing money.

[00:20:53]We're not talking about a company that seems to really have a product that at least in terms of name plate efficiency is comparable to some of its main competitors. I mean, what's really going on? Why would anybody want to consider looking into shares of Canon today? And today being uh Tuesday, May uh 12th, 2026.

[00:21:15]Okay, couple of things. On March 3rd, 2026, not that long ago, Kanan's chairman and uh CEO as well as the CFO of the company purchased a combined roughly 1.5 million uh shares of the company in the open market at an average price of approximately 51 cents per share. Management explicitly stated the purchases reflected confidence that the stock was undervalued relative to the company's long-term strategy, technology platform, and growth potential. The insider buying also came while the stock was trading near NASDAQ minimum compliance territory, making the purchases especially notable to investors watching potential D-listing risk. So, what I mean by that is that on January, let me look at my note. On January 16th, in fact, yeah, that's the next bullet point. On January 16th, 2026, Kadan was informed by NASDAQ that the company had fallen out of compliance with NASDAQ minimum listing requirements related to the company's stock price, having traded below a dollar a share for 30 days.

[00:22:28]The company basically needs to come back into compliance with NASDAQ listing requirements by, and this is the key date here, July 13th, 2026, or face potential delisting.

[00:22:43]All right. Now, on I believe it's May 19th, the company just came out with this today. On May 19th of this year, Kanan is going to be hosting its next investor presentation.

[00:22:59]Today's May 12th. The meeting is on May 19th.

[00:23:03]I searched and I could not find any evidence of a time in the past where Kanan has ever had to execute a reverse stock split.

[00:23:15]So, what that suggests and implies is that if the company plans to keep that track record intact of never having uh to do a reverse stock split, they're going to have to do something quite dramatic between now and July 13, 2026, probably beginning with this investor presentation on uh May 19th to really invigorate the price of these shares.

[00:23:45]Now, when we look at what Wall Street's saying, and this is relatively recent data, you know, there's still a strong buy recommendation according to tipranks.com with an average price target of $2.19 a share. It's a 12-month price target. The uh lowest forecast price target is a buck 50, the highest being $3.

[00:24:09]uh and you know, hey, obviously that represents a really really huge upside uh to the price of the stock if it's able to get there.

[00:24:20]Now, when we look at all of the evidence that exists right now, do we think that Kanan could potentially rally and do really well going into the next couple of months because that's the only runway it's got?

[00:24:36]In my opinion, the answer really depends on whether or not the company's willing to do something that it may have never considered doing before, which is potentially really entering into a deeper partnership with another company, potentially a rival, considering maybe putting itself up for sale, possibly even allowing itself to do things in terms of its manufacturing process.

[00:25:06]that you know is different from what it's been doing so as to really achieve a dramatically lower uh cost structure which would allow them to potentially start generating some positive cash flow because clearly sales are there right but the issue is there's just not enough margin to generate a net profit let alone positive cash flow so in totality I'd be somewhat intrigued by what the company presents on May 19th because that could represent a significant catalyst that would conceivably really push the stock higher. Now, it's a bit of a climb. This thing's got to go up, you know, 100% just to get a minimum bid of about a buck a share. As some people on X.com have pointed out, the company meaning Kanan also has like all these like shelf registrations in place to potentially delude shareholders with more share offerings because after all, if you're not generating positive cash flow, you need money to operate and if you want to keep your treasury intact, like the money's got to come from somewhere to keep doing business.

[00:26:18]So, I am not sure that the setup as it exists right now is like a screaming sort of like speculative buy as I perhaps thought it was back at the end of last year. But I do think it merits further attention and further study and further analysis.

[00:26:42]If you believe that Kanan can pull this off and not have to, you know, do a reverse stock split, then now's the time to really consider, you know, shares of Kanan because now's the time they have to do this. Like there's a deadline.

[00:26:55]It's July 13th, 2026.

[00:26:59]So, I promise I'll circle back to Kanan on May 19th, right? So, we can talk about what their results were and like what they're planning to do. And no, I don't own shares of Kanan. Uh, as of right now, I do not own any shares of Kanan. So, what I'm sharing with you is just kind of like my uh unbiased feedback as to where I think the company's at, where the opportunities are, but of course where the challenges are as well. And uh I think for for from my perspective, the biggest issue for me is that I still think that we're in a bit of a crypto winter, for better or for worse. Okay, my friends, that's going to be all for today. Let's stay positive. Let's be great.