Ladies and gentlemen, thank you for standing by and welcome to Canaan Inc.'s First Quarter of 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the managements’ prepared remarks, we will have a question-and-answer session. Please note that this event is being recorded. The company's financial and operating results were released by the Newswire services earlier today and are currently available online. The company has also prepared a presentation for today's call. You may view the presentation and navigate through the slides on the webcast page for the first quarter 2024 earnings call on the company's IR website. Joining us today are Canaan Inc.'s Chairman and CEO, Mr. Nangeng Zhang, and CFO, Mr. Jin Cheng James. In addition, Mr. Leo Wang, Head of Capital Markets, and Ms. Xi Zhang, IR Manager, will also be available during the question-and-answer session. Mr. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Cheng will then provide details on the company's operating and financial results for the period before we open the call up for your questions. Before we continue, I would like to refer you to our Safe Harbor statement in our earnings press release. Today's call will include forward-looking statements. These statements include but are not limited to our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements speak only as of the date hereof and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks, uncertainties and assumptions. Please refer to the press release and the risk factors and documents we filed with the Securities and Exchange Commission, including our most recent Annual Report on Form 20-F for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call and webcast, we will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website. And with that I'll turn the call over to our Chairman and CEO, Mr. Nangeng Zhang. Please go ahead, sir.

Hello everyone, this is Nangeng Zhang, CEO of Canaan. Thank you for joining our conference call. Our CFO James and I are at the company's headquarters in Singapore to share our quarter results with you. The first quarter of 2024 was the last quarter before Bitcoin's post-halving. During the Q4 of 2023 earnings call, I forecasted this to be a super wait-and-see period. Based on past experience, in the last quarter before halving in the Bitcoin system, miners typically wait for the halving to actually occur, and the market dynamics become stable before adjusting their investments and mining rig purchasing plans. They also try to maintain the stable operation of existing computing power to maximize the remaining value of their equipment. Therefore, transactions during this period are generally very flat. The only variable was a rapid fluctuation in Bitcoin price during this quarter, reaching a historical high of $33,000. We see this opportunity to make maximum efforts in sales activities, selling a total computing power of 3.4 million terahash per second and achieving a total revenue of $35 million, surpassing previous expectations. At the same time, anticipating a market recovery, we will continue to proactively prepare, including the mass production of new products and the R&D integration of next-generation products. Striving to improve mining operations and computing power deployment, we maintain close cooperation with our foundry partners on the supply side, laying out capacity in advance for the bull market. Our efforts have yielded positive results. Now let me share with you one by one. In terms of research and development, we are delighted to announce that we officially launched our company's new generation of mining machines, the A15 series, at Bitcoin Asia 2024 in Hong Kong on May 9. The A15 series adopts more than one design and process knowledge, achieving significant improvements in both computing power and energy efficiency compared to the previous generation. At the event, we showcased the A1566 engineering prototype machine with actual computing power exceeding 185 terahash per second and energy efficiency better than 18.5 joules per terahash. The machine operated very stably, demonstrating excellent performance. We believe that the A15 series will become a more competitive product choice in the post-halving computing power market. Meanwhile, this quarter our A14 products have entered mass production and delivery. Through close collaboration with foundry partners, we have completed the capacity ramp-ups and yield rate improvements this quarter. As we enter the second quarter, the A14 series products have begun concentrated delivery and will transition to support sales in the third quarter. We will continue to manage the pace of capacity locking in, invest capital into mass production, and meet older delivery needs. Additionally, the R&D of our next-generation product, the A16 series, is proceeding as planned. This quarter, we once again introduced products to the consumer market, the Avalon Nano 3 Mining Heater. This product, with its compact and lightweight design and various colors, received active contract orders from consumers since its launch. We continue to provide customers with more diverse and customized products in our comprehensive mining solutions, such as integrated mining container products. We have received positive feedback from customers regarding product performance, durability, and service quality. In terms of mining machine sales, this quarter we delivered 3.4 million terahash per second of computing power, reflecting the wait-and-see attitude towards purchasing mining machines before the halving. Additionally, as we transition through product iterations, we have completed the first batch delivery of our A14 presale orders in the fourth quarter and are now accelerating mass production deliveries. Since the pre-sale launch of the A14 product in late 2023, it has continued to be popular, with customer advances primarily driven by A14 products amounting to about $39 million, nearly double the $19.6 million at the end of 2023. After the successful completion of the halving in the second quarter, we have seen a significant increase in purchasing inquiries and expect to receive more customer advances. Our A15 series products made their official debut at Bitcoin Asia 2024 in Hong Kong on May 9. And within three days after the summit on May 12, we signed MOUs and received earliest deposits from 26 customers, which we are currently following up on forming contract sales. Over the past few years, the company has established presales coverage in markets with energy cost advantages. After the halving, customers in these markets continue to show active interest in our traditional models. Based on the current situation, we are optimistic about the sales pace of A13 spot inventory and expect to complete the transaction of mainstream products for sales in the third quarter of this year. Additionally, in North America, where institutional miners are concentrated, we are working to enhance brand and product recognition. Besides various cooperation with publicly traded companies such as Cipher and Stronghold, this quarter we signed an agreement with Marathon Digital for the first time. At the Bitcoin industry conference in Dubai and Hong Kong this year, we actively discussed cooperation opportunities within institutional and distributor customers. In Southeast Asia, distributor customers generated sales revenue of $5.7 million for the quarter, up by 27% sequentially, making a stable contribution to sales orders. Our online store, for overseas retail clients, continues to diligently serve each customer, especially after the launch of the consumer-oriented mining machine, Avalon Nano 3, which has attracted active orders from individual customers, with current orders nearing 10,000 units, occasionally selling out. The company's comprehensive mining solutions also received more orders this quarter. By the end of the first quarter, our mining business installed a computing power increased to 3.8 Exahash per second, nearly 100% growth quarter-over-quarter. The growth is primarily due to our continued partnership adjustments and the recovery efforts in Kazakhstan after obtaining the necessary licenses, as well as the progressive deployment of mining cooperation projects in other regions, further diversifying our mining operations. During this quarter, the energization condition was favorable, and with the combined impact of the rapid increase of Bitcoin price from January to March, along with the rise in transaction fee rewards, we achieved mining revenue exceeding $10 million this quarter. By the end of Q1, the number of bitcoins held by the company increased by 148, surpassing 1,000 for the first time to reach 1,057 bitcoins with a current market value of over $65 million. We will continue to carefully balance policy, stability, and location-based advantages of energy costs and persist in cultivating our mining business. Since the first quarter, the company has continued to improve its overall operational level by pushing forward and adopting flexible sales strategies. We have made good progress in clearing out inventory, significantly reducing the inventory levels on the balance sheet. We are also optimizing the inventory mix, coupled with gradual collection of accounts receivable. Sales cash inflows have continued to improve. As the number and the value of Bitcoin held by the company increased, this portion of cryptocurrency assets will provide us with substantial potential liquidity safeguards. While maintaining an overall robust balance sheet and keeping cash at a safe level, we endeavor to direct cash towards mass production. This is reflected in increased prepayments, primarily used for securing production capacity for advanced processing technologies. On the expense side, similar optimizations made previously showed further positive effects in the first quarter. Despite overall market conditions this quarter, the company continues to implement pricing strategies to drive sales, which has resulted in some inventory write-downs. However, the overall net loss of this quarter has significantly narrowed. Since the first quarter, apart from the previously disclosed $50 million settlement of preferred stock, the company has not engaged in any other financing activities, including ATM offerings. In-line with routine practice for US-listed companies, a new shelf registration statement was submitted to the SEC just before the expiration of the last one to maintain the validity of our financing eligibility. Looking ahead to the second and third quarter of 2024, our A14 mining machines have successfully passed through the stages of transition to mass production, capacity ramp-up, and yield rate improvement, entering the phase of accelerated bulk delivery. Regarding our mining operations post-halving, we are evaluating and adjusting our existing mining projects. Recently, especially after the official launch of the new product A1566, there has been a significant increase in inquiries for mining machine sales. We have already received several earnest deposits. Now we are swiftly advancing the shipment for Proco machines, aiming to convert these intentional orders into actual sales contracts as quickly as possible. Based on my personal experience in the weeks following the halving, miners will gradually start their computing power purchases preparing for the new full-year cycle. This process will also initially reflect in volumes, and our supply and the dynamic shift, computing power prices expected to recover more quickly. However, we need to note that the Fed's interest rate cut cycle has not yet begun, resulting in high financing costs for miners, and there is uncertainty regarding the timing of Bitcoin price increases, posing challenges to the industry. Based on the comprehensive situation described above, we maintain a cautiously optimistic outlook for the second and third quarters of 2024. For the second quarter of 2024, the company expects total revenue to be approximately $70 million. For the third quarter of 2024, the company expects total revenue to be approximately $70 million. This forecast is based on the current market and operational conditions of the company and actual results may vary. Overall, the period leading up to the 2024 Bitcoin halving, including the entire first quarter, represents a super wait-and-see season for the mining machine market. However, we also witnessed many positive changes within the industry and at the company’s level. At the beginning of 2024, the Bitcoin spot ETF was approved for listing by the US SEC. And by the end of April, the Hong Kong Stock Exchange approved the listing of multiple cryptocurrencies for ETFs. These milestone events will further encourage traditional finance to participate in Bitcoin's development. By the end of the first quarter, the price of Bitcoin reached a new all-time high of $73,000. On April 20, the Bitcoin trading system, which has been operating smoothly for 15 years, completed its fourth halving schedule, starting a new four-year cycle. This series of events confirms that the Bitcoin trading system has formed a strong consensus and continuously expands its user base, forming a closer connection with traditional finance, all of which indicates a broader potential for industry growth. Looking at the underlying operation of the Bitcoin trading system, we anticipate that on one hand, existing miners will face a new wave of equipment upgrades. On the other hand, as the Bitcoin price stabilizes and increases after halving, more miners are expected to join mining activities, which will significantly boost the demand for computing power. However, due to the limited production capacity on the Bitcoin computing power supply side, the shift in supply and demand relationships may potentially drive the prices of computing power. Our A14 products are being delivered successfully, and the new A15 series products have debuted and opened for pre-sales. Our one-stop comprehensive mining solutions and Avalon Nano 3 products are being brought to market. They are aggressively gaining recognition from more customers. On the product side, the company is addressing the needs of different customers with a richer and more efficient selection of products. At the same time, we continue to lock in production capacity on the supply side with advanced processes and comprehensively reach customers at a sales level. Recently, the company's management, including myself, announced a proposed ownership expansion plan. We are very confident in seizing the market opportunities driven by the certain demand for hash rate, continuously supporting the Bitcoin network with our computing power and creating long-term value for our shareholders. This concludes my prepared remarks. Thank you, everyone. I will now turn the call over to our CFO, James. Thank you.

Thank you, Nangeng, and good day, everyone. This is James speaking from our Singapore headquarters. As Nangeng stated at the top of the call, this quarter was a super wait-and-see period that occurs every four years, as the last complete quarter before the halving event. Despite the subdued market, we continue to execute our strategy. First, we were committed to wafer capacity investments and R&D activities for new generation machines. This allowed us to deliver the A14 series since April, to upgrade our products, achieve breakthroughs in the A15 series, and enrich our product portfolio with Avalon Nano 3 and integrated mining solutions. Secondly, we enhanced the flexible and multichannel sales strategy to enable us to accelerate the destocking of existing products and accumulate contract sales orders for the A14 series. Thirdly, we adhered to our mining strategy, continuing to expand mining deployment and strive for operational excellence. Lastly, we continued to manage cash in a prudent way and streamline our expenses to ensure strategic tickets are prioritized. Let's start with profit and loss. Q1 total revenue was $35 million, which beat our guidance by $2 million or 6%. Our revenue from machine sales was $23 million, and our mining revenue was $10 million. Regarding our machine sales, we delivered a total computing power sold of 3.4 million terahash per second, representing a year-over-year decrease of 20% and a quarter-over-quarter decrease of 38%. The average selling price decreased from $8.2 per terahash per second in the fourth quarter to $6.9 per terahash per second in the first quarter, coupled with various factors, including the timing around the halving event and the Lunar New Year. The market demand in this quarter was quite weak, and we could only sell the current inventory of older generation products. These factors led to the decrease in our computing power sold and average selling price. From the sales side, we committed to executing a multichannel sales strategy. Our distribution channels in Southeast Asia performed well, contributing $5.7 million to our total Q1 revenue, representing a 27% sequential growth. We continue to gain from Southeast Asia after moving our headquarters to Singapore and developing distribution channels in different countries like Thailand, Malaysia, and Indonesia. I'd like to discuss the orders and revenue of our integrated mining solutions, which diversified our product revenue streams. In Q1, we received customer payments of $4.9 million from purchase orders for our integrated mining solutions. These orders are gradually delivered; therefore, $0.2 million was recognized in Q1 revenue, and the remaining $4.7 million will be delivered in Q2 and contribute to our Q2 revenue. Specifically for our mining machine sales, we accrued $47.5 million for inventory write-downs, prepayment write-downs, and provisions for inventory purchase commitments in this quarter, representing a 14% decrease sequentially. The decrease was driven by accelerated destocking in this quarter. Those non-cash write-downs and provisions are made under US GAAP rules, jeopardizing our gross profit but do not impact our cash status. If the above write-downs and provisions were excluded, we would have had a gross profit of $0.1 million for mining machine sales. Turning to our mining businesses, our mining revenue increased 182% quarter-over-quarter. We mined 195 bitcoins this quarter, an increase of 92% over the last quarter. The increases were not only driven by increases in Bitcoin prices but also by improvements in our energized hash rate. Our average revenue per bitcoin in Q1 increased 47% over the last quarter, from almost $37,000 to almost $54,000. Our energized computing power in Kazakhstan recovered to 1.1 Exahash in Q1. We also further expanded our mining business in Africa, increasing our energized hash rate to 0.9 Exahash. At the end of Q1, our energized hash rate totaled 3.0 Exahash per second, marking a 58% increase over the last quarter. Our mining profit was 121 bitcoins, which increased 250% compared to the last quarter. Gross profit doubled quarter-over-quarter to $3.5 million for our mining business. Please note here that mining profit or loss is defined as revenues net of costs for energy and hosting without consideration of depreciation for the deployed machines. Now turning to expenses. Our operating expenses totaled $31 million, decreasing 19% year-over-year and 22% quarter-over-quarter, respectively. Staff costs, including share-based compensation, decreased 27% year-over-year and 11% quarter-over-quarter, driven by organizational optimization performed in Q4 last year. As the Bitcoin price rose, no further impairment for our self-mining machine was accrued in this quarter, reducing operating expenses by $6 million compared to the last quarter. I want to point out that we chose to early adopt the FASB new accounting rules on cryptocurrency assets since January 1, 2024, allowing cryptocurrencies to be carried at their fair market value. According to these accounting rules, the cumulative effect of $19 million was recorded to the opening balance of our retained earnings. As the Bitcoin price increased from $42,000 on January 1, 2024, to $70,000 on March 31, 2024, a fair value change of $33 million was recognized in our Q1 profit and loss. As the second tranche of preferred shares was issued in January, we recognized the remaining unconverted preferred shares as liabilities and recorded a non-cash gain on the fair value of $2 million according to US accounting rules compared to a non-cash loss of $10.9 million in Q4. Benefiting from the narrowed gross loss, lower expenses, and gain from fair value changes of cryptocurrency and financial instruments, our Q1 net loss was $39 million, narrowing by 72% quarter-over-quarter and 53% year-over-year. Turning to our balance sheet and cash flow, in Q1, we generated $48 million of cash inflows from sales, received $50 million from preferred shares financing facilities, and $10 million from export VAT refunds. We paid $88 million to secure our wafer supply and $61 million for production and operation. Our increasing investment in wafer supply is intended to enable the concentrated delivery and spot sales of our A14 series product in the following quarters. Consequently, at the end of Q1, we held cash and cash equivalents of $55 million on our balance sheet. Now moving on to our contract liability, our A14 series has continued to be popular since the presale began in late 2023. The balance of contract advances reached $39 million as of this quarter-end, nearly doubling from $19.5 million at the end of the last quarter. As of the end of Q1, we recorded account receivable of $1.6 million, a decrease of 45% compared to last year-end. We will continuously evaluate market demand and adopt corresponding credit policies with caution. Now turning our attention to our Bitcoin assets, the Bitcoin we held as our own holding assets kept growing in this quarter and reached a record high of 1,057 bitcoins as of March 31, which is 148 more than the 909 at the end of last year. As previously mentioned, we adopted the FASB new rules effective January 1, 2024. On March 31, the fair value of our owned bitcoins totaled $75 million. Combined, our balance of cash and owned bitcoins demonstrated approximately $130 million of liquidity. Turning to our fundraising, in early January 2024, we closed the second tranche of our preferred share financing, raising total net proceeds of $49.9 million. This has been reported in the previous quarterly release. After that, we have not conducted any fundraising. We expect our Q2 revenues to be $70 million and Q3 revenues to be $70 million, respectively. We are pleased to see that our A14 products are being successfully delivered, the new A15 series products have debuted and opened for pre-sales, and our one-stop comprehensive mining solutions and Avalon Nano 3 products are gaining recognition from more customers. We will continue to meet the diverse needs of our varied customers with a richer and more efficient selection of products. This concludes our prepared remarks. We are now open for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Kevin Dede from H.C. Wainwright. Please ask your question.

Hi James and NG, thank you for having me on the call. Can you hear me?

Yes, Kevin.

Great. Okay. So NG, right off the bat, I'm going to apologize because my first question is long and a little convoluted. But I think you will understand where I'm going, and I know you gave me a great answer. So I'm wondering how these all these factors combined together, number one, we have the many Canaan new products coming to market. We have the A14, we have the A15 coming soon and the A16 in R&D. So I'm wondering how you balance product cycles against the fact that liquid cooled machines tend to last longer and semiconductor improvements are incrementally less from process geometry change to process geometry change.

Good morning, Kevin. In terms of our major product series, we are still in the cycle of iterating generations roughly every three quarters. This pattern also applies to our next-generation product. I think this is beneficial for both customer choices and hash rate deployment planning because you have a quite clear prediction of new product. In terms of power efficiency, our mainstream products released last year have entered the range of 20 to 25 joules per hash. The products released in the first half of this year are in the 15 to 20 joules per terahash range. I believe the next target for the industry will be in the 10 to 15 joules per hash later this year or early next year. These R&D efforts are progressing systematically. Yes. I also want to mention that apart from the chief development, we are actually accelerating the chip to machines to mass production stages. I have examples here; for the A15 batch, we went from receiving the chips to having a stable running machine in less than 72 hours. And within less than 10 days, multiple prototype machines with excellent performance and stable operations will showcase in public events like exhibitions. Yes, so we are continuing to improve our user experience. Yes. We have comprehensive solutions from the machines to Avalon Box containers, even the consumer Avalon Nano 3 products. Yes, I think this will give you some guidance for what will happen in the next 18 months or two years.

Thank you, NG. You clearly stated that both you and James are holding over 1,000 bitcoin. I'm curious, and I believe others might be as well, about your perspective on that. Would you consider selling them at some point to raise capital for the business? I'm aware of the $88 million deferred amount, which is significant, so I'm interested in your thoughts on this.

I think for the Bitcoin we are holding, today, our company's policy is to only use the Bitcoin to pay the mining electricity bill. All other bitcoins we will hold. And also when we receive some bitcoins from our small sales, we will hold most of them. I mean we will realize most of the profit from the sale. Yes, and we currently have no plans to sell the bitcoins. But I think we are considering making some financing operations to let the bitcoins generate more bitcoins. I think maybe James can have some ideas on this.

Yes. Currently, we are starting on different approaches such as using bitcoin as collateral and also can generate new financing interest either in bitcoins or in other cryptocurrencies like USDT. So we are talking to different vendors to see the possibility and the potential to generate more cash flows and the profit for our shareholders. I think we are still in the starting phase, and once we get some solutions, we will let our investors know that. Thank you, Kevin.

Last question for me. Just curious about your perspective on the competitive environment. Obviously, Jihan Wu is back in the market a bit there. The Aerodyne machines are expected to come out this year. I appreciate your perspective on Canaan's revenue. You're obviously a pretty bright outlook. I'm just wondering how you see that competitive environment shaking up?

Thank you, Kevin. Yes, we have also noticed some new entries in the market recently. Some have announced that their designs are in the tape-out space, while others have shared results from chip testing. However, I think the results expectations have not yet been delivered in the open market. Once machines are actually delivered, we will conduct thorough research. However, we cannot comment on products that have not been delivered. I think the entry of new players indicates that the bull market for mining machines is approaching. It mainly reflects the industry prospects and the decision to invest and enter the market. At the same time, this phenomenon suggests that the industry, including ourselves, eventually have areas that do not fully satisfy our market partners or customers in terms of products, pricing, customer service, customization, and sales coverage. I think this led us to accelerate progress and improvement. The entry of these new players clearly brings more vitality to the industry. But of course, the barrier to entering the mining machine business is extremely high now, and developing an excellent mining chip is already very challenging at this stage. However, this is just the beginning of the journey of hardships towards growing into an excellent brand, and the road ahead is indeed challenging. It has been 11 years since we delivered the world’s first AC bitcoin mining machines to customers. Although we have accumulated a lot of experience over time, my respect for this industry has only grown. So, in preparation for this cycle, we have made a lot of preparations, including not only a roadmap for new products but also production capacity deployment. Additionally, as mining machine providers, we must continuously serve our customers, especially during industry downturns, which is not easy. I have endured several past cycles; only a few, including us, have persisted, and we are the only publicly listed company among others. Sorry for the lengthy response. Thank you.

Thank you very much, gentlemen. I appreciate you taking the time to answer my questions. And thanks for having me on the call.

Thank you, Kevin.

Thank you.

Thank you, Kevin. Our next question comes from the line of Shuang Sun from Guosheng Securities. Please ask your question.

Please provide more details about the A1566 product.

You mean the performance or.

Yes.

Yes, I believe we have already showcased our A15 series. The model is A1566, which was presented at the Hong Kong event, featuring an average computing power of 185 terahash per second and a power efficiency of better than 18.5 joules per hash. This performance is comparable to other products available in the market. Currently, we are preparing prototype machines for our customers to demonstrate their capabilities in the field. Everything is progressing smoothly, and we aim to move to mass production as soon as possible. However, there is a lengthy production period due to the advanced technology involved, so it will still take some months.

Please share your view on the continuity of the company's operations.

Thank you, Sun. I will take this question. First of all, we should take a look at our balance sheet at the end of March 31. We have $55 million cash on hand, and also we have another 1,057 bitcoins as of today, equaling about $65 million. Putting this together, we have total liquidity of approximately $120 million. In Q1, our expenses totaled about $31 million, which includes one-third of non-cash expenses. The cash expense for routine business is about $20 million per quarter. So $120 million compared to the $20 million spending means we have enough runway for about six quarters to go if we don't do anything. But of course, we are making preparations for the bull market. We have to be very careful about cash management. I think currently, we are already seeing a lot of improvements from cash inflows as the A14 series has been delivered on schedule, and we have gradually collected cash from our customers. Step by step, we will collect more cash in Q2 and Q3, as we predicted the revenue will be higher. Most of the credit customers have already completed payments for their orders, and our account receivables have decreased sequentially. The sales cash inflows already show significant good news. On the other hand, we must control the capacity and pace of cash unlocking in two months of production, which is essential. That's why in Q1, our cash payment to lock the wafer was about $88 million. So it's a lot. Collectively, while we maintain our sales level of cash reserves, we have more than 1,000 coins, providing substantial potential liquidity safeguards on hand. Overall, I believe the company is able to maintain continuous operations with controllable overall risks. But of course, we have to work very carefully and prudently to manage the cash. Thank you for the question, Shuang.

Please share your view on when you expect to return to profitability this year.

Yes. I think profitability is always a question from investors. People would like to see the bear market end and see our profit return as the bull market resurfaces. The most interesting aspect in our industry is the average selling price. Our average selling price has varied greatly over the past three years, from below $7 per terahash to above $70 per terahash. I think the primary factor driving profitability is still the increase in computing power prices. The underlying reason behind the rise in computing power prices is the shift in supply and demand dynamics. As the price of Bitcoin increases, it attracts more miners into the market, resulting in heightened demand for computing power. Under such conditions, we anticipate that mining profitability could significantly improve, especially over the last two quarters of 2024. So, currently, computing power prices have already been recovering from market lows. Our current assessment is that losses could continue through the first two to three quarters of 2024. However, we expect a substantial opportunity for gross margin to turn positive or significantly improve in the third and fourth quarters, particularly the fourth quarter. For the full year, we will try our best to see if there is any possibility to achieve breakeven. But it appears to me that the trajectory will be from loss to earnings over the coming year. Step by step, we will get there.

You still have financing plans going forward.

I think after the A14 series shipment, we have already seen more active purchasing inquiries and stronger sales cash inflows following the halving and after our A14 series shipment. Currently, our cash flow operations and balance sheet are also improving. We have already done financing in Q4 and Q1 of 2024, with our total cash now at around $136 million. We do not have any urgent equity financing plans in the near term. So I think that is a clear answer — we do not have urgent equity financing plans in the near term. Thank you, Shuang.

We have already observed increased purchasing inquiries and stronger sales cash inflows following the halving and after our A14 series shipment. Currently, our cash flow operations and balance sheet are also improving. We have already undertaken financing in Q4 and Q1 of 2024, and our total cash now stands at approximately $136 million. We do not have any immediate plans for equity financing. So to clarify, we do not have urgent equity financing plans in the near term. Thank you, Shuang.

As there are no further questions now, I'd like to turn the call back to the company for any closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to reach us through the contact information provided on our website.

Thank you. That concludes the call today. Thank you everyone for attending. You may now disconnect.