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Shares of bitcoin mining equipment manufacturer Canaan Creative skyrocketed as much as 41% on Tuesday as bitcoin passed the $50,000 mark for the first time.
Canaan’s stock has seen monumental price appreciation over the past six months, rising over 770% amid a historic run for cryptocurrencies and a shortage of crypto mining machines.
The Beijing-based company expects to benefit from higher bitcoin prices in 2021 as the cryptocurrency’s rise continues to spark increased demand for mining machines that suppliers can’t meet. The shortage will likely lead to higher premiums for Canaan’s in-demand products.
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Bitcoin broke the $50,000 mark for the first time on Tuesday after a slew of reports declared institutional investors are setting their sights on digital assets.
The news continues a bull run on bitcoin that started after Tesla announced a $1.5 billion investment in the digital currency on February 8. After Tesla’s move, there were reports that JP Morgan and Morgan Stanley are now eyeing bitcoin, leading more investors to jump into the currency for fear of missing out.
JPMorgan’s Co-President and Chief Operating Officer Daniel Pinto told CNBC on Friday: “If over time an asset class develops that is going to be used by different asset managers and investors, we will have to be involved.”
“The demand isn’t there yet, but I’m sure it will be at some point,” Pinto added.
This positive news for Canaan comes just a week after the company announced it would begin forecasting revenues more clearly because of a shift in its client base.
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Nangeng Zhang, Chairman and CEO of Canaan said in a statement to investors: “In late 2020, we shifted our client base to mostly publicly traded companies and bitcoin-focused investment funds which tend to place sizable orders with longer-term commitment. As a result, we can now forecast our revenue much more precisely.”
The company also reported it received over 100,000 unit orders for bitcoin mining machines for 2021.
“Our increased revenue visibility is not only enabling us to plan our production and logistics well in advance, but also helping us to optimize our cost structure and improve our customer satisfaction rate. Above all, it should help us achieve profitable growth for the long run,” Zhang said.
Canaan traded up 37.85%, at $17.98, as of 1:07 p.m. ET on Tuesday.
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Source:: Businessinsider – Finance
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