Benchmark calls Canaan a 'potent long-term play' in bitcoin mining, sets $3 price target

Benchmark has initiated coverage on Nasdaq-listed Canaan (ticker: CAN) with a “buy” rating and a $3 price target, calling the micro-cap bitcoin miner a long-term value play trading at a steep discount.

Equity analyst Mark Palmer cited Canaan’s vertically integrated business model — combining bitcoin mining hardware production with its own proprietary mining operations — as a key differentiator poised to benefit from rising bitcoin prices.

"CAN's vertically integrated approach differentiates it within the bitcoin mining space while positioning it to capitalize on both chip/rig sales and proprietary mining revenues," Palmer wrote in a note to clients. "We believe the company’s ADRs are very inexpensive...and expect their price to appreciate as it executes on its strategy, with a potential tailwind coming from the rising price of bitcoin."

Canaan, which introduced the first ASIC-powered bitcoin mining rigs in 2013 under its Avalon brand, recently began mass delivery of its A15 series machines. The company sold a record 9.1 million TH/s in the fourth quarter, up 66% year-over-year, with equipment revenue hitting a two-year high of $73 million. Canaan also completed the tape-out of its next-generation A16 series, which is expected to deliver up to 300 TH/s in its standard air-cooled configuration.

The company is also scaling its self-mining operations. While only 16.3% of 2024 revenue came from self-mining, Canaan aims to boost its computing power to 10 EH/s in North America and 15 EH/s globally by mid-2025, up from 3.02 and 8.11 EH/s, respectively, as of March 31.

Canaan is also expanding into the consumer market with the Avalon Q, a professional-grade miner designed for residential use. The device delivers up to 90 TH/s and features adjustable power consumption and low-noise operation, positioning the company to diversify its revenue base.

The company's bitcoin holdings provide an additional valuation floor. As of March 31, Canaan held 1,408 BTC, valued at approximately $133 million, equivalent to nearly 70% of its market capitalization. With shares currently trading at 0.2 times projected 2025 revenue, Palmer said the stock appears meaningfully undervalued relative to peers.

Canaan's stock trades around $0.60 per share with a market cap of $245 million. The stock is down more than 30% over the past year.