Canaan Inc. (CAN) Q2 2026 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by and welcome to Hainan's second quarter 2026 earnings conference call. At this time, all participants are in the listen-only mode. After the management prepare remarks, we will have a question and answer session. Please note that this event is being recorded. I'll now hand the conference over to your speaker today, Gwen Lauper, investor relations for the company. Please go ahead, Gwen.

Thank you, operator. Hello, everyone, and welcome to our earnings conference call. Joining us today are our Chairman and CEO, Nangong Zhang, and our CFO, Jin James Zhang. Leo Wang, Vice President of Capital Markets and Corporate Development, and Shi Zhang, Senior IR Manager, will also be available during the question and answer session. Our CEO will start the call by providing an overview of the company and performance highlights for the quarter. Our CFO will then provide details on the company's operating and financial results for the period before we open up the call for your questions. Before we begin, 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 outlets for the company and statements that estimate or project future operating results and the performance of the company. These statements speak only as of today, and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call, or webcast. Accept is 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 file with the Securities and Exchange Commission, including our most recent annual report on Form 20F 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, 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. With that, I will now turn the call over to our Chairman and CEO, Nangong Zhang. Engie, please go ahead.

Nangong Zhang Thank you, Glenn. Hello, everyone. This is Angie, CEO of Canon. Thank you for joining our earnings conference call today. James, our CEO and I are here at our Singapore headquarters to share our financial results and recent business updates for the second quarter of 2026. Q2 2026 remained a difficult environment for the Bitcoin mining industry. In the first half of the quarter, coupon prices recovered from approximately $62,000 to $82,000 before declining sharply and reaching a period low of about $58,000 at the end of the quarter. Due to the quarter, hash price fluctuates between $2.8 and $3.9 per tera hash per second per day and remain at low levels. At the same time, in the US, the capital markets and the traditional mining companies continue to shift more attention toward AI and HPC, localize armed conflict in certain countries and regions, and tighter mining-related policies in China and elsewhere are factors that affected miners' investment readiness and capacity. From the second half of the quarter onward, miner sales weakened noticeably and elevated industry inventory levels further intensified price competition. During the quarter, the company generated total revenues of approximately $32 million US dollars, below our previous guidance range of $35 million US dollars to $45 million US We sold 2.5 extra head per second of computing power, and our mining business produced 243 bitcoins. When we issued guidance in May, our demand outlook was primarily based on the market conditions in the first half of the quarter. We did not fully expect the later decline in the demand and pricing. In the second half of the quarter, Bitcoin prices fall quickly. miners become more cautious about equipment purchases and high industry inventory levels increased price competition. These were the main reasons revenues came in below expectations. In response to the revenue decline, we further tightened our spending, strengthened cash growth, and liquidity management, and continued organizational organization. As of quarter-end, the company held 1,915 bitcoins and 3,952 ETH, bringing our digital assets treasury to another record high. I'll start with our mining machine business. As mining economics weakened, many miners delayed equipment purchases, and the average selling prices remained under pressure. During the quarter, we generated approximately $14 million in product revenue. In response to softened demand, we adjusted pricing more flexibility. At the same time, we again emphasize production based on actual sales. We control new production according to real orders and put more focus on inventory management, cash flow and order quality. For existing machines, we will evaluate whether to sell them to customers or deploy them in our own mining operations based on cash collection, deployment conditions, and additional investment required. Now, let me turn to our mining operations. In Q2, we adjusted our deployed half-rate in a timely manner based on power prices, loan management, and operating conditions at different sites. We allocated resources to projects with better economics. Mining revenues was approximately $80 million, according for more than 50% of the company's total revenue in Q2, and continued to cover direct operating costs such as power and hosting. At the end of June, our installed half rate in GV projects was approximately 10.05 X hash per second, and the average all-in power cost in June was about 4.3 cents U.S. dollar per kilowatt hour. overall power and hosting costs remain relatively competitive. Project ABC remains one of our key priorities. For Project ABC, we focus not only on current period profit but more importantly on the cash it can generate and the long term returns that can be created this is consistent with the transformation the company is assuring. Whether it is project ABC or the longer term power resources we are developing, our goal is to gradually build money and energy infrastructure assets that have a cost advantage and can generate sustainable cash flow. In Q2, together with our partner, we continued the mining machine upgrade at Project ABC. The project generated positive cash flow and maintained efficient operations. At the end of July, installed half-grade at project ABC, which is 4.85 heads per second, up 10% from the end of March. Through this project, while increasing half-grade and cache generation, we also gained experience in operations, power dispatch, fleet upgrades, and the management of low cost power resources. Beyond traditional mining use consists, we continue to advance energy utilization partnerships such as compute to heat. Our earlier Nordic project has already validated the feasibility of using hydro-cooled equipment for district heating. Our high temperature hydro-cooled equipment can supply the hot water needed for heating, which is particularly suitable for winter heating demand. These products are still relatively small in scale, but using the heat generated from computing for comfort heating is useful explanation of compute to heat a closed loop. Regarding R&D and the products, we continued advance in the A16 series in the second quarter with a focus on cost-effective air-cooled models and high-temperature hydro-cooled models. We pay close attention to products' full life-cycle economics, including purchase cost, power consumption, stability, maintenance, and deployment efficiency. On the consumer side, the second quarter was mainly devoted to R&D on new Evernote home products which we will prepare for mass perfection in the third quarter. These home series products are designed for home heating use cases and we hope to capitalize on the winter heating season in the Northern Hemisphere and deliver solid sales performance. Long-term power resources remain another key focus of the company's transformation. Over the past several quarters, we have been advancing long-term, stable, cost-advanced and expandable power resources projects in North America. On our first project, 2025 earnings form, we mentioned our confidence in our ability to secure substantial load by year-end 2026, potentially reaching the gigawatts scale. Based on the progress we have made so far, our confidence in securing gigawatts scale load by the end of 2026 remains intent. We continue to work with all the stakeholders and hope to provide an update when we are in a position to do so. Finally, let me discuss capital allocation. Since the beginning of the second quarter to date, the company has not utilized the CPM program or right capital. Under the existing 30 million share purchase authorization, we recently mentioned a portion of our digital assets and used to proceed to repurchase the company's ADIs. We believe that the current share price meaningfully undervalues the company, while retaining the capital needed for operations and project environment, their investment. We choose to use a portion of our digital assets for buybacks. We deployed around 2 million U.S. dollars in the first quarter and around 5.4 million U.S. dollars in August to repurchase our AGS shares. In 2026, the company deployed 7.4 million U.S. dollars and repurchased approximately 15.4 million U.S. AGS so far. James will provide more details on the execution of digital access monetization and the back-back. James and I also continue to purchase the Cogniz ADS in the open market this quarter. We remain confident in Cogniz long-term development and the transformation anyway. And we hope these purchases further align measurement interest with those of our shareholders. Digital assets remain an important part of the company's asset allocation. We will continue to evaluate the risk and the rewards of holding digital assets, investing in mining and power infrastructure and repurchasing the company's shares. While meeting our operating and liquidity needs, we will choose the uses of capital that we believe can create the best long-term value per share. Finally, in this quarter, the company completed its transfer to NASDAQ capital market and and have been granted an additional 180 day grace period to regain compliance with the minimum bid price requirement. This is a deadline of January 11, 2027. We will continue to monitor the trading price of our ideas and take necessary actions to regain compliance and maintain the company's listing status. Despite the significant impact of industry volatility on our second quarter financial results, changes in the macro environment have actually strengthened our collection in Bitcoin as a decentralized financial asset. In response to market changes, we manage the inventory, expenses, and cash flow more strictly while continuing to organize our mining fleet, advanced fleet upper-grade at Project ABC, explore compute-to-heat applications, and prepare Avalon home products for mass production. Work on power resources also continued. In addition, we monetized a culture of our digital assets to fund share repurchases. We believe we have come through the most difficult period and were able to sell these digital assets at relatively favorable prices. Looking ahead to the third quarter, Although Bitcoin price recovered somewhat at the end of August, minor procurements remains cautious, and industry inventory still needs to be digested. Some competitors have adopted a more aggressive pricing strategy to speed up cash collectors, And we expect minor sales and average selling prices to remain under pressure in the third quarter. Therefore, we remain cautious about the near-term mining machine market. Based on the current market and operating conditions, we expect total revenues for the third quarter of 2026 to be between $11 million and $15 million. This outlook reflects measurements current judgment and the actual results may differ due to changes in macroeconomic conditions, policies, income prices and the industry That concludes my remarks. I will now turn the call over our CFO James.

Thank you NG. Hello everyone, this is James speaking to you from our Singapore headquarters. NG just walked you through the market environment and our business progress during the second quarter. To summarize, in the second half of the quarter, Bitcoin prices and hash price weakened again. miners became more cautious with equipment purchases, and the elevated industry inventory added further pressure on pricing. This pressure directly impacted our financial results. Computing power sold, average selling price, and the revenue all declined, while lower market prices also affected the value of our inventory and fixed assets. In this environment, we are not waiting for the market to turn. We are focusing on what we can control. From a financial perspective, we are focused on three things. First, managing cash and maintaining sufficient liquidity. Second, actively allocating capital, including repurchasing our shares when we believe they are significantly undervalued. And third, managing and optimizing our strategic assets so they can generate stronger cash returns over time. Let me go through each of these areas. First, the cash. At market conditions weakened, we tightened our expense and inventory management and placed even greater emphasis on cash flow. At the end of the second quarter, we had a $66 million in cash, up about $23 million from $43 million at the end of the first quarter. So, despite generating less revenue during the quarter, our cash position improved. During the quarter, we collected $54 million in cash from product sales. We also received $15 million from better-added tax refunds, cash distributions from equity investments, and Bitcoin-backed financing. On the cash outflow side, we used $35 million for operating expenses and working capital, and another $11 million for waiver purchases. We also continued to exercise discipline on expenses. Total operating expenses were $40 million in the second quarter, including $9.2 million of impairment charges on property, plant and equipment, and $2.7 million of credit losses. Excluding these items, offering expenses were $28.2 million down 9% sequentially and 14% year over year. This is consistent with the bill-to-order approach that NG discussed earlier, control new commitments, accelerate collection, manage inventory and working tax tools, and protect liquidity. In a down cycle, we believe financial resilience itself is a competitive advantage. Second, capital allocation. At the end of the second quarter, we held 1,915 Bitcoin and 3,952 Ether. Based on their carrying value as of June 30, our digital assets holdings were worth $112 million. Digital assets remain an important part of our asset base, but we do not believe they should simply be held passively. We continuously compare different uses of capital. holding digital assets, investing in mining and power infrastructure, and repurchasing our own shares. When our shares trade significantly below what we believe to be their long-term intrinsic value, we view share repurchases as an attractive use of capital. In late August, we were authorized by our board and sold all our Ethereum holdings and 54 bear coins, generating approximately $13.9 million in cash. We used a portion of this proceeds to repurchase our shares. In the first half of 2026, we repurchased 2.8 million ADSs for about $2 million. In late August, we repurchased an additional 13.6 million ADSs for $5.4 million. Year to date, we have repurchased 16.4 million ADSs for a total consideration of $7.4 million. Third, strategic assets, especially mining sites in the United States. NG discussed the operational recovery and the Bitcoin miner upgrade at Project ABC. Let me add a few points from a financial perspective. During the second quarter, we've been upgrading the mining fleet at Project ABC to improve efficiency. received $5.2 million in cash from Project ADC, including sales collections and cash distribution. As of August 31st, cumulative cash received had reached $8.4 million. We would like to thank our partner WindHQ for the top tier management and the result of Project ADC. Their long-term commitment and shared vision give us confidence in the future of ABC. As part of this process, the retirement of older mining machines and the related accounting treatment resulted in a one-time loss. As a result, we recognized approximately $4 million of equity investment losses for Project ABC in the second quarter. There is an important distinction here between short-term accounting results and the long-term cash generating ability of the assets. We are not trying to preserve the bulk value of older equipment. We are trying to improve assets quality and generate more computing power and better economics from the same energy resources. So for project ABC or other strategic assets, we look beyond the current period earnings. We are focused on the cash the assets can generate and the returns it can produce after optimization. This is also consistent with the broader transformation NG discussed earlier. Let me briefly add a few operating and financial metrics. Total revenue for the second quarter was approximately $32 million. Product revenue was approximately $14 million. We sold 2.5 extra hash per second of computing power at an average selling price of $5.5 per tera hash per second. Mining revenue was approximately $18 million with 243 digit coin mined during the quarter. Mining accounted for 55% of total revenue, excluding depreciation. The gross margin for the mining business was 20%. These numbers also showed that during a weak market for mining machines, our mining operation has become an important contributor to revenue. Over time, we want to build a business that combines technology and mining machines, Bitcoin mining, power resources, and infrastructure. Next, let me briefly discuss our income statement. Adjusted EBITDA was a loss of $74.9 million in the second quarter, broadly in line with the previous quarter. Our results included several significant non-cash accounting adjustments, primarily inventory write-downs, impairment of property, plant and equipment, and fair value losses on digital assets. These items reflect changes in the mining machine market and digital assets prices during the quarter, but they did not result in an equivalent amount of cash outflow. So, when we're looking at the quarter, I think it is useful to separate three things. First, the real operating impact of weaker demand and the lower pricing. Second, the accounting impact from inventory fixed assets, digital assets and investments, a significant portion of which was non-cash. And third, what we are particularly focused on today, cash flow, liquidity, capital allocation, efficiency, and the ability of our assets to generate cash returns. Finally, turning to the third quarter, as NG mentioned, although Bitcoin prices have recovered recently, miners remain cautious, industry industry still needs to be absorbed, and mining machine pricing remains under pressure. As a result, we remain cautious about the near-term market environment. Based on our current market and operating conditions, we expect the total revenue for the third quarter of 2026 to be between $11 million and $15 million. This outlook reflects our current assessment of market and operating conditions. Actual results may vary depending on changes in the macroeconomic environment, policy developments, bitcoin prices, and the industry demand. Let me close with three words that summarize our financial priorities today. Cash, value, and assets. First, manage cash, maintain financial discipline and liquidity so that we can navigate through the cycle. Second, manage value, continue to compare different capital allocation opportunities. While we believe our shares are significantly undervalued, we are prepared to repurchase them to create value for long-term shareholders. Third, manage assets, whether it is our digital assets or project ABC or the mining and energy infrastructures we are developing, our goal is not simply to own assets. Our goal is to make those assets more efficient, generate cash, and create long-term returns. We will not build our strategy around predicting short-term movements in the price of Bitcoin. What we can do is maintain financial discipline during the difficult market, improve tax allocation and continuously upgrade the quality of our assets. So when the next industry cycle comes, we want Kaylan to have stronger balance sheets, higher quality assets, stronger operating capabilities and greater strategic flexibility. Thank you. We will now open the call for questions.

Thank you management. We will now begin the question and answer session. To ask a question please press star 1 and 1 and follow up on your telephone and wait for a name to be announced. If you wish to cancel a request please press star 1 and 1 again. Please hold while we compile the Q&A roster. Question? The first questions will come from the line of Logan Hannon from Northland. Please go ahead. Your line is open.

Hey, morning guys. Thanks for taking our question. First one from us. Can you provide some additional color to help us understand how we should be thinking about this one gigawatt pipeline? For instance, should we expect a dual deployment strategy balancing Bitcoin mine and HPC? And if your team does pursue HPC, should we expect Kana to go with the co-location or the GPU cloud rental route? Any color here would be great.

Thank you. I will take this one. Yeah, we are currently advancing several power resources projects internally. However, you know, securing and developing power resources involve many steps and it it's become more and more complex. The market, and you know, the market attention and the competition are both very high now. Even for the project that are moving the fastest, currently there are still key matters that need to be completed. So as a management team of a public company, we need to be very, very careful about when we disclose project details. If we disclose too early, it may affect project execution. It may also cause the market to view an ongoing process as a confirmed outcome. So for the benefits for the company and our shareholders, We do not think this is appropriate at this stage to disclose the exact number and the location of the sites. The power capacity for each project or specific stage of each project. What we can say is our view from the 24-2024-5 earlier this year, based on the progress we have made so far, our confidence in securing gigawatt scale power resources by the end of this year remains unchanged. We will continue working with relevant parties and provide access to the market when we are are able to share more specific information. Yeah, and about the collocation or the GPU Cloud Rental, I think it's still too hard to decide whether we will focus on collocation or GPU Cloud Rental. You know, there's many, many steps between, even between we secure the power resources and the providing computing services. So for a project of meaningful scale, we normally need different parties to work together. Many different parties, including capital providers, engineering contractors, and other resources partners. Which part K&M will participate in and what type of partnership we will use, we will depend on the specific project. Our approach is to use the competitors and resources we already have, participate, where we can add value and work with partners that bring complementary strengths. we do not assume that we need to manage the entire channel from the power to computing services by ourselves. And we will not make investments beyond our capabilities for capital capacity to adjust to build an end-to-end model. So at this stage, our main focus is still on advancing in long term, cost, advance power resources. Yeah, as the projects become clear, we will evaluate the most suitable business model and level for participation. So for now, we do not think it's appropriate to make a firm choice between these two rules. Yeah, thank you.

Thank you. Yeah, we appreciate the color there. Can you kind of formally remind us, how is Kena strategically positioned versus peers to secure and develop power for HPC? And it seems like you guys would likely go more of the development partner route, but should we expect any upcoming hires to build a data time development team internally? Thank you.

Yeah, I think our advantage first comes from the practical experience we have built in Bitcoin mining over the past several years. Mining requires us to work with many types of power providers and to evaluate sites across different regions. The U.S. is a very large market and our local team has spent years visiting mining sites and advancing projects. Through this work we have developed a better understanding of how power infrastructure works, the power conditions in different regions and how to work with our local companies. We have also built relevant resources and relationships. So since late 2024, our strategy has gradually shifted from mainly adopting partnerships to increasing the amount of assets we own directly. We want to have more control over long-term power resources and the site operations. This direction has based on the needs of our own business and started before the market's broader focus on AI and HPC. So as the market attention has moved more towards AI and HPC, we see strong continuity with our existing direction of finding long-term stable cost-advanced and scalable power resources. Our past experience, resources, and local relationships can continue to support us and give us a good starting point that we expand into this area. Of course, HPC has higher infrastructure requirements, so each product still needs to be evaluated and developed based on its actual use cases. So changing the markets also affects competition for power resources and the project economics. We will also adapt our evaluation and execution approach as needed. We will continue to focus on long-term costs and investment returns. Thank you. That was very helpful. We'll ask the rest of the third quarter. thank you for the question one moment for our next question the next questions will come from the line of Kevin Cassidy from Rose and Black Securities your line is open thank you yes thank you for taking my question whether internal mining state improving energy efficiency can you tell us a percentage efficiency increase you should see by next year oh I think you asked about about the mining machine's efficiency, right? I think for the A15, all the machines, we are at like, for, I think it's 15.8, to like 17.8 choice per tera hash. And the next level is our A16, we have like 12.8 straws per 10 hash to 16.8, it's already our cost effective models, so there are a huge advantage for the system kind of machines. Yeah, for our mining fleet, we have plans to deploy at least a part of the A60 machines to our mining fleet next year. So currently our owing power cost was about 4.3 cents per hour, and still we have a positive cash contribution. For the next year, if you have reviewed the total network hash rate, I think it's declining for a few quarters already, so it's quite easy to calculate the income for mining process and we assume we will upgrade a significant percent of our machines from the old one to is more advanced and also cost effective models next year. Yeah, I hope I fell fresh. Thank you, yeah, that helps. Thank you, yeah, and then just on the power pipeline, are you still pursuing, looking for extended power around the world, or I guess if you could talk more about that development?

Yeah, I think, Kevin, And we are actively, we always actively exploring and evaluating strength of power, trying to seek for opportunities. But of course, you know, from different perspectives, so it takes quite a long time to evaluate the opportunities. And it's not easy to find the partners, like the Cyber Mining, Cyber Digital, or you know, Win HQ, those partners in Project ABC, they supported us, they do good deals with us in a transparent way, in a fair way. It's not easy every time we can find this kind of good partners. So what we do is we mainly look at the long-term power cost, site stability, expansion, potential, and the grid access and the local policies and the regulatory conditions. We will also try to evaluate the best use for each site including mining and where it is suitable potential HPC applications together with the additional equipment and the investments required. So currently, we stay open-minded while maintaining our capital discipline. No matter through acquisition, through JV, or joint development, we will only move forward when the risk and the return are attractive and the projects can improve the quality of our long-term assets and operating flexibility. So, I should say currently we haven't yet to deal another one just like project ABC, but we do have some projects under discussion. We continue the strategy of expanding in North America especially United States. I think that this strategy remains the same. We will do more, but we do it cautiously, slowly with all kinds of evaluations done, but not immediately jump to many deals. And I think the capital allocation is also in a kind of very cautious way. I don't know if I answered your question.

No, that's very clear. Thank you.

Thank you.

Just one moment for our next question. The next question will come from the line of Ben Somers from BTIG. The line is open. Please go ahead.

Hey, thank you guys for taking my questions and appreciate the commentary on the current state of the product market. So with Bitcoin prices up around 20% over the past month, I'm just curious if you've seen any positive implications for the global demand for mining machines?

Global demand, yeah. Yeah, global demands, to be frank, from this reason. Mining rig demand outside the U.S. is also very, very weak at the moment. We've heard mining economics, together with the policy developments, and the general or particular conditions in some regions have affected customers' willingness and the ability to invest. We have not yet seen a meaningful improvement in overall demand. One specific area of progress that we can share is ESG related applications, particularly computer heat. Our Nordic heating projects already have 2 megawatts of equipment in operation and the customer ordered another 6 megawatts in March this year. These projects combine mining with real heat in demand, so the same energy input produce both computing power and the useful heat, we will continue to develop this kind of applications. But the market is still at a small scale, so this does not yet indicate that broader recovery in demand outside of the US. Thank you.

Super helpful. I just wanted to touch a little bit on the Avalon Home Series. It seems like you guys are making some positive developments here, but can you just talk a little bit more about what you're seeing for those machines, and I think you guys mentioned and you know some product development there that can help you know potential with your seasonality so if you could just talk a little bit more about that.

Yeah, Avno Home is a consumer product line that we have a community to developing. In Q2 it generates approximately 1 million US dollar in revenue, so it is still relatively small. I think the long term value lies on serving household users by combining computing and heating which can fold our customer base and revenue resources over time. After the heating season ended, sales of our home products came down and you know at first I was a little disappointed but then we realized that this may actually show that consumers consumers are really using these products to heating other heating devices. After all, it's not very easy to sell heaters in summer. So it reminds us that we need to understand the use cases and the seasonality of this kind of business as a true consumer product business. So, we began preparing new products for this year, heating season in Q2 and in Q3. Currently, we are working on preparations for mass production with plans to launch new products and updates during the Christmas shopping season. So, most of our key product line will receive updates and we may also introduce additional products. So at the same time we focus on sales channels, sales service and the user community, continue to improve the noise levels, yeah, easy for use and many different kind of stuff related to the consumer products. So it's revenue and contribution to the company and it becomes a consumer business with that commodity. So I think it's just due to order to get a specific revenue needs target. It shares that total revenue will also depend on heating seasonality and changes in our other business. But for now, the priority is to get the product experience and the business fundamentals right. So, the goal is supported by real how to catch it.

Thank you for taking my questions. Thank you for the questions. As a reminder, to ask questions, please press star 1 and 1 and with friend name to be announced. The question comes from the line on Nick Giles of Be Rightly Securities. Your line is open. Please go ahead.

Thank you for taking my questions. This is Bill Chen for Nick Giles. First, I want to congrats on maintaining positive cash contribution from mining in this pressured pricing environment. I guess on the share repurchase program, with approximately $7.4 million deployed against I think the total of 30 million authorization. What's your expectation for the pace of repurchases between now and the program's expiration in mid-December? And I guess any color on how you're balancing the capital allocation strategy against liquidity preservation would be appreciated.

Thank you, Bill. I think you asked a very forward-looking question about the future stock repurchase. Currently, I think it's difficult to answer because in September, we will see a lot of activities in the United States, especially on September 15th, the senator will start to vote for Clarity Act. We don't know if it costs, then what will happen to our industry that could make the Bitcoin price jump very high and also our share price could fluctuate together with the Bitcoin price. So it's depending on what kind of a share price we will trade in the market and it depends on how we consider it's better to do from allocation to do stock repurchase. so it's difficult to predict the pace. But to be very honest, as CEO and I myself, we have already purchased to get more shares of the company. We do have strong confidence that in the second half our share price should come back again with some good trajectory. and even we are currently under the restriction of NASDAQ compliance requirements. So we're better to regain compliance very soon. So that's why we consider stock recurships is something we need to put a lot of efforts trying to make sure we do, and we allocate the funds to do. and that's why we discussed with our board and we got the authorization from them and say management can start to sell the digital assets to generate cash and to repurchase. I think our board understands the shareholder value quite well, they support us to do this and we are together with our shareholders and we are the shareholders. So we will do everything we can to do, but not within September the particular month, but through the whole second half year or even future. So I think that that's our commitment. That's my answer. Thank you, Bill.

Yeah, thanks so much for the answer. I guess maybe one more if I could, specifically on the Project ABC, we'd love to see all the progress and given now it has rich on 4.85 AXA hash, what's the next model store target for the project? And like if there's a rough timeline you can provide. Thanks so much.

Yeah, I think, yeah, we have been actually exploring and evaluating this type of opportunity. But you know, if the power cost, we need the power cost, stability and the grid access are suitable. We can use mining as a threshold load to prove the resources to work relatively quickly. So if the site conditions allow, we can also, we have the flexibility for other computing load in the future. So yeah, our approaches stay open-minded and while maintaining capsule baseline, whether We will only forward when the risk and returns are effective and the project can improve the quality of our long-term assets and the operating possibility. We have, we do have a very good machine, even maybe still at the wafer level but we can manufacture machines in a relatively strong time to deploy them into new sites. if we find somewhere it can fulfill our requirement. So, but you know, the company I think is still at some stage of the bear market. Yeah, it's not a bull market, right? So investment is very, very, we will have a very high cost in investments and consume our cash flow to do this kind of project. So currently we are still evaluating the resources and wait for the best timing to get the scale up of our money fees. include upgrade machines. Thank you. I hope I answered your question.

Yeah, yeah. Thanks for the Zika answer and continue. Best of luck.

Thank you for the question. We will now take the last question. One moment, please. Our next question comes from Michael Donovan of Compass Point. Your eyes open. Please go ahead.

Hello, this is Ian Generous, dialing in for Michael Donovan. Thank you for taking my questions. And firstly, on potential JV partners. What type of companies are you engaging with today? And are prospective AI customers already involved in these sites? Additionally, what requirements are they emphasizing, and what would you expect to secure, would you expect to secure a consumer commitment before making a significant development investment? We are open to our development partners, from securing power resources to building infrastructure, And finally, providing computer services. Different stages require different commodities. So for each project, we will choose a structure that allows all parties to contribute their Canada has always valued working with partners. Our past direct mining projects as well as product ABC with WindHQ have given us useful experience. At product ABC we combine our mining machine and the technology with our partner's cyber operations and power management experience. Together we are upgrading our facilities and improved projects. This experience can also support future partnerships. I think since late 2024, we have greatly increased the amount of assets. We own it directly, but this does not mean that we need to do everything by ourselves. So we want to have more control over core assets and the long term resources. While we're working with partners that can bring complimentary competitive tips and the resources. So for future products, we will not limit our sales to advance to a GV, current development or any other structure is acceptable. So we will focus on how investment and the responsibilities are shared. whether the risk can and takes, it matches by the return we can earn. Our final decision will always be based on the long-term shareholder's interest and the value per share. But constantly we do not have any specific partnership agreements that we can disclose. Thank you. That's great, Carlos. Thank you. And then lastly, if I may, most strategically, how should you think about the allocation of capital and management resources between pursuing the AI-powered land opportunities and then the core of Bitcoin mining business? I think for the fact in the Bitcoin mining machines, the core part of the WPPRS, we already have them in our inventory or our projects inventory. clear opportunities to deploy the mining machines to have good cash returns in the future, then we will do it. For the data center, as I just mentioned, we are very open to do any kind of partnerships with third parties, with any kind of companies can contribute their benefits to the projects. We are not, to be clear, we are not going to do the end-to-end projects by ourselves because I think to develop a meaningful scale of HPC, AI HPC data center needs a lot of capital, which may be out of our capital communities. So yeah, I think overall, first priority is to interest our shareholders, what kind of benefits we can get for every share is the most important part.

I would like to add some color in this, as NG mentioned, we do have the inventory of mining machines now, so when we do some new mining corporations, this can be injected through the project as a kind of capex investment, and without spending any cash. So for the new HPC data center, or this kind of power infrastructure things. Sometimes we have to use some cash as a deposit to secure some opportunities. That's something we do. We spend some of the money, we allocate some of the money as deposits to secure some of the opportunities. That's what we are doing now. I think from long term perspective, we will continue to balance between the different business and we will utilize our technology in mining machine side and the mining, do mining operations. And in the other side, I think step by step we start from initial capital in a kind of smaller scale, but in future with the hyperlines, with different projects on air. And we will see step-by-step we accumulate more and more assets. And with this asset, we can use this asset as collateral to leverage to get more funds to sponsor the business in the data center part. I think that that's something in future step-by-step we will reach there. But first of all, we should try to secure gigawatt level, you know, power. And with this on hand, and then we can start to talk about the next step. As NG mentioned, we do have the long term ambition, but in short term, we will not just immediately try to do everything in the ecosystem. We will do step by step. and gradually grow ourselves. Thank you.

Thank you for the insight and for taking my questions. And congratulations on the floor.

Thank you for your question. I would now like to turn the call back over to the company for any closing remarks.

Thank you, everyone, for joining us today. If you have any further questions, please feel free to reach out to us directly or to the contact information on our website. Thanks.

That concludes today's conference call. Thank you for your participation. You may now disconnect your mind.