Bitcoin News: Canaan Shuts Down AI Chip Business to Refocus on Bitcoin Mining Operations

Key Takeaways:Canaan (NASDAQ: CAN) to wind down its AI chip unit, which contributed only $0.9M in 2024 revenue.The business made up 15% of company operating expenses, prompting the pivot to core crypto operations.CEO says realignment will sharpen focus on bitcoin mining and infrastructure amid broader market changes.Shares are down 71% YTD despite growing investor interest in U.S.-focused mining strategies.Canaan Inc. (CAN), the Singapore-based manufacturer of Avalon bitcoin mining rigs, announced it will exit the AI chip business to concentrate fully on its bitcoin mining and infrastructure operations, as part of a broader strategic realignment.The decision comes after the company evaluated the long-term viability of its artificial intelligence semiconductor division, which generated just $0.9 million in revenue in 2024, while consuming approximately 15% of total operating expenses.“Doubling down on our core strengths in crypto infrastructure and bitcoin mining is the most strategic path forward,” said CEO Nangeng Zhang in a statement released Monday.Canaan Abandons Diversification into AICanaan had initially launched its AI chip unit as part of a diversification effort into edge computing, but the business failed to gain traction in a competitive market dominated by industry giants.The company revealed that it explored exit options since March 2022, including a potential sale, but ultimately decided to shut it down. The wind-down process will conclude in the coming months and is expected to significantly reduce costs, improving the company’s bottom line.Refocusing on Bitcoin Mining Amid U.S. ShiftCanaan’s move aligns with a broader industry trend of reinvesting in Bitcoin-focused operations, particularly after former U.S. President Donald Trump’s reelection campaign boosted calls for “American Made” bitcoin production.The company, which went public on Nasdaq in 2019, is known for producing ASIC mining rigs under the Avalon brand and has since expanded into self-mining and consumer hardware. Analysts have noted that Canaan’s stock does not yet reflect upside potential from its mining expansions, especially in the U.S.“The recent pivot shows that building AI chips is highly capital-intensive and may not be viable for firms that lack scale,” said Benchmark analyst Mark Palmer, who maintains a bullish outlook on Canaan’s core mining strategy.Market Reaction and OutlookDespite the strategic shift, Canaan shares slipped slightly on Monday, continuing a broader downtrend. The stock is down 71% year-to-date, significantly underperforming the bitcoin mining ETF (WGMI), which is off by about 20% in the same period.However, analysts suggest the leaner, crypto-focused model could improve long-term prospects, especially as bitcoin mining firms position for regulatory and infrastructure tailwinds in key markets like the U.S.