Earnings Call Transcript - CAN Q4 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by and welcome to Canaan, Inc Fourth Quarter and Full-Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question-and-answer session. Please note, that this event is being recorded. Now, I would like to hand the conference over to your host today, Ms. G. Zhang, Investor Relations Manager of the company. Please go ahead, Ms. Zhang.

G. Zhang, Investor Relations Manager

Thank you, Operator. And hello, everyone. Welcome to our earnings conference call. The company's financial and operating results were released by our Newswire services earlier today and are currently available online. Joining us today are our Chairman and CEO, Mr. Nangeng Zhang; and our CFO, Mr. James Cheng. In addition, Mr. Jingjie Wu, our SVP; and Mr. Leo Wang, IR Senior Director, 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 and estimates projecting future results of operations or the performance of the company. These statements speak only as of the date hereon, 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. This statement will not guarantee future performance and is subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors in documents we file with the Securities and Exchange Commission, including our most recent annual report, our Form 20-F, where 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 our webcast, we will discuss both GAAP financial measures as certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures will be completed in addition to GAAP results.

Neshi Zhang, Translator

We will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe provide useful supplemental insights into the company's performance. These non-GAAP measures will be presented alongside the GAAP results.

G. Zhang, Investor Relations Manager

In the fourth quarter of 2021, we faced a wide range of challenges, including high volatility in Bitcoin prices which made our situation complex due to geopolitical factors and ongoing semiconductor supply shortages across different fabrication production lines. Despite these challenges, we see opportunities ahead. Our operations remained pragmatic yet steady, enabling us to progress on multiple fronts, as demonstrated by our strong financial performance in the fourth quarter, closing out the year 2021. During the fourth quarter, while continuing to expand in overseas markets, we maintained growth momentum in lower computing power sales, reaching a record high of 7.74 million Terahash per second. For the quarter, we achieved a 55.8% quarter-over-quarter increase in revenue to RMB2.18 billion, exceeding the upper range of our guidance. We recorded a net profit of RMB1.2 billion, another record high for our company. For the full year, we sold a total of 32.34 million Terahash per second in computing power, which is a 238.5% year-over-year increase. Total net revenues reached RMB4.99 billion, surpassing tenfold compared to 2020, generating a net profit of RMB2 billion for the year.

Nangeng Zhang, CEO

During the quarter, we achieved a 55.8% increase in revenue compared to the previous quarter, reaching RMB2.18 billion, which exceeded our guidance. We also recorded a net profit of RMB1.2 billion, marking another record high for our company. For the full year, we sold a total of 32.34 million Terahash per second in computing power, reflecting a 238.5% increase year-over-year. Our total net revenues reached RMB4.99 billion, which is more than ten times our revenue from 2020, generating a net profit of RMB2 billion for the year.

G. Zhang, Investor Relations Manager

Let's look at our detailed operations during the quarter. In terms of our mining machine sales, we realized a 15.5% quarter-over-quarter increase, delivering 7.74 million Terahash per second of computing powers for our clients, setting a new historical high for our quarterly sales performance. Market demand remained robust despite considerable volatility in Bitcoin prices during the fourth quarter. We increased the overall average selling price and drove revenue growth through various measures. These measures include enhancing production capacity, improving yield rates, acquiring new customers, leveraging flexible pricing strategies, maintaining stable supply, and adjusting the proportion of spot sales. We continued to diversify our computing power sales to more overseas markets, especially in Southeast Asia and South America. For the first time, we have customers from Malaysia, UAE, Argentina, Peru, and other emerging markets. Orders from new customers contributed a significant portion of our computing power sold, reaching 41%. Meanwhile, demand remained strong in traditional overseas markets like Central Asia, North America, and Europe, with orders from existing clients representing 59% of the total computing power sold. Our ability to expand our geographic coverage, nurture repeat purchases from past mining companies, and maintain a consistent and stable supply chain enables us to meet market demand efficiently.

Neshi Zhang, Translator

Orders from new customers contributed a significant portion of our computing power sold, reaching 41%. Meanwhile, demand remained strong in traditional overseas markets like Central Asia, North America, and Europe, with orders from existing clients representing 59% of the total computing power sold. Our ability to expand our geographic coverage, nurture repeat purchases from past mining companies, and maintain a consistent and stable supply chain enables us to meet market demand efficiently.

G. Zhang, Investor Relations Manager

We are very confident in our revenue for the quarters to come as we have recorded solid pre-sales performance and secured production capacity with our customers for this year. In addition to our production capacity allocation for spot sales in the mining business, we received advances of RMB1.34 billion from contract sales customers as of December 31, 2021, setting a new record. This demonstrates over 6 million Terahash per second to be delivered. The strong contract sales indicate potential cash inflow for our company and reflect strong demand from Bitcoin miners along with their recognition of our product quality and delivery capabilities.

Nangeng Zhang, CEO

We received advances of RMB1.34 billion from contract sales customers as of December 31, 2021, setting a new record. This demonstrates over 6 million Terahash per second to be delivered. The strong contract sales indicate potential cash inflow for our company and reflect strong demand from Bitcoin miners, along with their recognition of our product quality and delivery capabilities.

Neshi Zhang, Translator

Regarding our Bitcoin mining business, we still have overseas operations centers conducting mining and other Bitcoin-related activities. This quarter, our mining operations faced several challenges, including pandemic issues, logistical congestion, and winter power supply shortages, all of which negatively affected the online rate of our mining machines. We are closely monitoring the local energy supply situation. Our SOP15 team is working quickly and proactively with our partners to resolve these issues as soon as possible. We will also be cautious in executing additional deployments.

Nangeng Zhang, CEO

During this quarter, our mining operations faced several challenges, including pandemic-related issues, logistical congestion, and power supply shortages during the winter, which adversely affected the online rate of our mining machines. We are closely monitoring the local energy supply situation. Our SOP15 team is working quickly and actively engaging with our partners to resolve these issues as soon as possible. Additionally, we will be careful in implementing further deployments.

G. Zhang, Investor Relations Manager

It is important to highlight that while our mining business may encounter challenges in the short term, its development remains a key part of our long-term strategy. Based on our previous experiences, we are committed to executing this strategy effectively. We will continue to emphasize the benefits of our mining machine supply by increasing our presence through personnel and partnerships, as well as optimizing production capabilities between machine sales and mining. Our goal is to improve the overall economic advantages of our operations.

Nangeng Zhang, CEO

Our mining business may encounter challenges in the short term, but developing it continues to be one of our long-term strategies. Based on our previous experiences, we will effectively implement this strategy. We will keep emphasizing the benefits of our mining machines through a greater presence of personnel and partnerships, along with flexible allocation of production capabilities between machine sales and mining. We aim to improve the overall economic advantages of our operations.

Neshi Zhang, Translator

We are committed to advancing our AI business in the fourth quarter. The response has been positive so far, and we are witnessing strong customer interest in intelligent educational hardware and various application scenarios. Recently, we entered into a strategic cooperation agreement with an open-source operating system community and innovation platform, which helps promote localized open-source projects in the field of AI chip applications.

Nangeng Zhang, CEO

We remain steadfast in developing our AI business in the fourth quarter. Feedback has been positive thus far, and we continue to see customer interest in intelligent educational hardware and various other application scenarios. Recently, we reached a strategic cooperation agreement with an open-source operating system community and innovation platform, which assists in promoting localized open-source projects in the field of AI chip applications.

G. Zhang, Investor Relations Manager

Regarding our research and development, we are expanding our team and improving our design capabilities. We have successfully achieved the capacity to conduct front-end chip design and back-end physical designs independently for several advanced nodes, encompassing the full packaging and mass production processes. In the fourth quarter, our R&D staff increased by 99% compared to last year.

Neshi Zhang, Translator

Regarding our R&D, we continue to expand our R&D team and enhance our design capabilities. We have achieved the ability to independently implement front-end chip design as well as back-end physical designs for multiple advanced nodes, covering the entire packaging and mass production processes. In the fourth quarter, our total number of R&D staff increased by 99% year-over-year.

G. Zhang, Investor Relations Manager

We have developed a strong intellectual property system and have documented our R&D achievements. As of December 31, 2021, we have obtained 156 authorized patents, which include 70 layout designs and 105 software copyrights.

Neshi Zhang, Translator

We possess a comprehensive self-developed IP system and have carefully prepared the achievements of our R&D efforts. As of December 31st, 2021, we have accumulated 156 authorized patents, consisting of 70 layout designs and 105 software copyrights.

G. Zhang, Investor Relations Manager

We also continue to make steady progress on several R&D projects for new generations of our mining machines. We are dedicated to innovating in the industry and providing better products for mining. Going forward, we will disclose specific performance parameters of new generation mining machines only after we successfully ship and complete the production.

Neshi Zhang, Translator

G. Zhang, Investor Relations Manager

As we prepare to advance our business, we remain committed to providing value for our shareholders. As of today, we have completed a repurchase program approved in September 2021, representing approximately 3.6 million ADS purchased for a total of $20 million. The repurchase program has progressed smoothly, and we were able to complete it earlier than the expiration date. Subsequently, the Board of Directors will continue to evaluate new repurchase plans. We will keep you updated on any further progress.

Neshi Zhang, Translator

We remain committed to providing value for our shareholders. As of today, we have completed a repurchase program approved in September 2021, representing approximately 3.6 million ADS purchased for a total of $20 million. The repurchase program has progressed smoothly, and we were able to complete it earlier than the expiration date. Subsequently, the Board of Directors will continue to evaluate new repurchase plans. We will keep you updated on any further progress.

G. Zhang, Investor Relations Manager

In 2021, we experienced sustained growth and strong performance despite various uncertainties and market challenges, validating the effectiveness of our strategy and institutional capabilities. In 2022, we are dedicated to enhancing our R&D capabilities, delving deeper into chip design, and improving product performance. We also plan to boost our customer engagement as we shift our focus to international markets and broaden our global presence. Maintaining close communication and delivering top-notch services will be increasingly essential. To better serve our customers, we are investigating more client-focused approaches across product R&D, manufacturing, transportation, and after-sales services. Additionally, we will further utilize our practical, adaptable, and resilient operations while managing market uncertainties. We will continue to address the impacts of market changes and significant price fluctuations while ensuring a steady supply and secure production capacity, maximizing our profits through a strategic balance between our mining machine sales and mining business.

Nangeng Zhang, CEO

We are exploring more client-centric approaches across product research and development, manufacturing, transportation, and after-sales services. Additionally, we will further leverage our pragmatic, flexible, and resilient operations while navigating market uncertainties. We will continue to mitigate the impacts of market evolution and key price fluctuations while ensuring steady supply and secure production capacity as we maximize our profits through strategic balancing between our mining machine sales and mining business.

G. Zhang, Investor Relations Manager

We expect our total net revenue for the first quarter of 2022 to be between RMB1,500 million and RMB1,600 million, indicating a growth of 275% to 300% compared to the fourth quarter of 2021. Please keep in mind that this forecast reflects our current and initial assessment of the market and operational conditions, which may change.

Nangeng Zhang, CEO

We expect our total net revenue for the first quarter of 2022 to be in the range of RMB1,500 million to RMB1,600 million, representing an increase of 275% to 300% compared to the fourth quarter of 2021. Please note that this forecast reflects our current and preliminary view of the market and operational conditions, which are subject to change.

G. Zhang, Investor Relations Manager

This concludes my prepared remarks. I will now turn the call over to our CFO, James.

James Cheng, CFO

Thank you, Mr. Zhang, and hello, everyone. This is James speaking. Despite volatile market environments and various challenges, we achieved another robust quarter with solid financial results from top to bottom. In the fourth quarter, we delivered 7.7 million Terahash of computing power sold, representing a sequential growth of 15.5%. Our total net revenues reached RMB2,184.6 million, up 65.8% quarter-over-quarter, which was 15.8% higher than the upper limit of our previous forecast in November. For the full year of 2021, our total net revenue reached RMB4,986.7 million, up more than ten times year-over-year. The good results came from our record high computing power sold, responsive delivery, as well as our effective pricing strategy that has driven higher average selling prices. Additionally, our effective business development across continents helped us secure strong contract advances of RMB1,340.7 million as of the end of 2021, ensuring substantial cash inflow and steady revenue recognition for the quarters ahead. Our gross profit for the quarter increased to RMB1,486.9 million, with a gross margin rate of 68%, which is a standout in the past four quarters. The gross margin rate for the full year 2021 was 57.2%. Please note that due to coal mining machines delivered during the fourth quarter, we secured wafer costs several quarters earlier in anticipation of ongoing demand and supply imbalance in the semiconductor industry. Feedback from our foundry partners lead us to expect wafer costs to increase in 2022, which will impact our future gross margin rates. Regarding our Bitcoin mining business, as of December 31st, 2021, we have 1.13 million Terahash of computing power deployed at mining farms. By the end of 2021, we had mined and held 70.5 Bitcoins, with a carrying value of RMB20.3 million. Our AI business revenue achieved RMB5.5 million in the quarter, representing year-over-year growth of 150.3% and sequential growth of 20.9%. We are receiving positive feedback from customers in different industries and have newly cooperated with an ecosystem platform partner for further development. Research and development expenses reached RMB112.0 million, an increase of 179.6% year-over-year and 20.8% quarter-over-quarter. The increase is primarily attributed to rising R&D costs for new products and new hires in our R&D team. We will continue to invest in R&D to advance our technology capabilities. As a result of our strong revenue efficiency and expense management, we achieved a record high net profit of RMB1,196.5 million for Quarter 4, representing sequential growth of 114.6%. For the full year of 2021, the net profit reached RMB2,000.3 million. Non-GAAP adjusted net income was RMB1,250.7 million for Quarter 4, representing a sequential growth of 112.9%. For the full year, the non-GAAP adjusted net income reached RMB2,301.6 million. While we are very pleased with the performance achieved in Quarter 4 and the full year of 2021, we are fully aware that existing challenges may persist and new challenges may emerge. It is crucial now to think and plan for the new year in a prudent way. I would like to discuss some risk factors and how we tackle them. From the macroeconomic perspective, we are in a Federal interest rate hike cycle for the US dollar, and the pace of interest rate increases will continue to impact Bitcoin price fluctuations. Additionally, geopolitical conflicts and even military operations could introduce further uncertainties to Bitcoin price fluctuations. Since Bitcoin prices are closely linked to the demand for our mining machines, fluctuations in these prices always impact miners' willingness to expand their mining scale. In past quarters, we have continued to build capabilities for flexible allocation between contract sales, spot sales, and mining operations to seize opportunities during Bitcoin price fluctuations and to maximize overall value. On the supply front, given the ongoing demand and supply imbalance in the semiconductor industry and the ensuing price increases, we expect our production costs to rise, putting pressure on our gross margins. To sustain adequate wafer supply, we have been actively communicating with our foundry partners and securing production capacity through advanced payments. We will also support our R&D teams in improving products and better utilizing wafers, leading to higher efficiency at lower costs. In our Bitcoin mining business, we are managing to deploy our computing power as scheduled. However, we have encountered electricity shortages in both Quarter 4 of 2021 and Quarter 1 of 2022. We continue to closely monitor local conditions and remain cautious about deploying additional computing power. We are also actively evaluating target markets to diversify operational risk. We recognize the risks associated with being a U.S.-listed Chinese company; however, Canaan differs from other Chinese companies listed in the U.S. We are not under a VIE structure and operate predominantly as a B2B business, with our market and corporate customers primarily located outside of China. Our principal business activities do not involve large amounts of individual user data. Moreover, there remains a two-year window before the SEC reaches a final decision on regulations, and we hope that solutions will be developed in the interim, considering the SEC and CSRC are collaborating to find better solutions. As a listed company, Canaan remains committed to operational compliance and will optimize our management operations and corporate governance. It takes a good blacksmith to make steel. Despite the challenges ahead, we are confident in our effective strategies, solid execution, and our nine years of experience in the industry. We will focus on sharpening our R&D capabilities and proactively mitigate risks through our dynamic operations. Now, I would like to briefly walk you through our financial results for the quarter. Total net revenues in the fourth quarter were RMB2,184.6 million compared to RMB38.2 million in the same period of 2020 and RMB1,317.6 million in the third quarter of 2021, representing a sequential increase of 65.8%. Gross profit was RMB1,486.9 million compared to RMB9.1 million in the same period of 2020, representing a sequential increase of 100.5%. Total operating expenses in the fourth quarter of 2021 were RMB273.7 million compared to RMB80.1 million in the same period of 2020 and RMB278.4 million in the third quarter of 2021. Income from operations was RMB1,213.2 million, up 161.9% sequentially. Net income attributed to ordinary shareholders was RMB1,196.5 million, up 114.6% sequentially. Non-GAAP adjusted net income was RMB1,215.7 million, up 112.9% sequentially. Non-GAAP adjusted net income excludes share-based compensation expenses. Basic and diluted net earnings per ADS for the quarter were RMB690 and RMB681 respectively. As of December 31st 2021, the company had cash and cash equivalents of RMB2,684.2 million, up 586% compared to RMB391.3 million as of December 31st, 2020. This concludes our prepared remarks. We are now open for questions.

Operator, Operator

We will now begin the question-and-answer session. Our first question comes from Shuang Sun with Grow Shuang Securities. Your line is open.

Shuang Sun, Analyst

Hi. Can you hear me?

James Cheng, CFO

Yes.

Shuang Sun, Analyst

Hi there. I'm Shuang Sun from Grow Shuang Securities. In early 2022, we saw the Bitcoin price experience a dramatic drop. So, what was the impact on your sales? What control measures have you implemented to mitigate this impact?

Neshi Zhang, Translator

Nangeng Zhang, CEO

Our first question comes from Shuang Sun with Grow Shuang Securities. Your line is open. Shuang Sun, Analyst: Hi. Can you hear me? James Cheng, CFO: Yes. Shuang Sun, Analyst: Hi there. I'm Shuang Sun from Grow Shuang Securities. In early 2022, we saw the Bitcoin price experience a dramatic drop. So, what was the impact on your sales? What control measures have you implemented to mitigate this impact? Neshi Zhang, Translator:

Neshi Zhang, Translator

We are currently in the first quarter of 2022 and the price of Bitcoin continues to fluctuate. Therefore, we can only discuss our operations on a broad level. In the past, when Bitcoin's price dropped significantly, customers interested in our mining machines tended to adopt a wait-and-see approach, which led to a decrease in sales. Traditionally, the first quarter is also typically seen as the off-season for production and sales due to holidays such as Christmas, New Year, and Chinese New Year.

Nangeng Zhang, CEO

Let me translate. We are still in the first quarter of 2022 and the price of Bitcoin is still fluctuating. As such, we can only share our operations on a macro level. Previously, when the price of Bitcoin fell sharply, customers for our mining machines tended to adopt a wait-and-see attitude, resulting in a decline in sales. Historically, the first quarter is also typically the off-season for production and sales due to the holidays, including Christmas, New Year, and Chinese New Year.

Neshi Zhang, Translator

However, other factors were also at play during the fourth quarter. This includes the ongoing industry-wide supply constraints for chips and rising mining machine costs due to growing deployments last year. Clients tend to be highly institutionalized, and institutional clients have a long-term horizon in terms of financing and investment activities. Therefore, the price fluctuations of Bitcoin during this period have had little impact on our sales price and sales volume. Our guidance for the fourth quarter of 2022 reflects our forecast of performance.

Nangeng Zhang, CEO

This includes the ongoing industry-wide supply constraints for chips and rising mining machine costs due to growing deployments last year. Clients tend to be highly institutionalized, and institutional clients have a long-term horizon in terms of financing and investment activities. Therefore, the price fluctuations of Bitcoin during this period have had little impact on our sales price and sales volume. Our guidance for the fourth quarter of 2022 reflects our forecast of performance.

G. Zhang, Investor Relations Manager

Meanwhile, we are addressing the challenges posed by declining Bitcoin prices through several strategies. First, we are actively seeking new ways to connect with potential clients. Second, we are working on future contracts to ease inventory pressure, as demonstrated by our stable relationships with several large mining firms. Lastly, as Bitcoin prices keep falling, we will adjust the distribution of machines between inventory and mining operations based on market conditions to balance our long-term and short-term revenues.

Operator, Operator

Thank you. Our next question comes from Lewis Fan with Benchmark Company. Your line is open.

Lewis Fan, Analyst

Hi, thanks for taking my call. Congratulations on a very strong quarter. My first question is could you please elaborate on your progress and plan for your computing power deployment for the mining business? Hello, can you hear me?

G. Zhang, Investor Relations Manager

Hey Lewis, can you please translate your question into Chinese?

Lewis Fan, Analyst

Hey Lewis, can you please translate your question into Chinese?

Neshi Zhang, Translator

As of December 31st, 2021, we had 126 million Terahashes of mining computing power under deployment. As of February 28th, 2022, this rose to 2.38 million Terahashes of mining computing power under deployment. We are currently in the process of deploying more computing power while negotiating potential mining projects.

Nangeng Zhang, CEO

Neshi Zhang, Translator

In the future, we will continue to increase the deployment of computing power in our lines of business, but we do not view rapidly increasing our computing power as a priority. We will adjust the deployment phases to balance allocation between future sales, spot sales, and mining computing power. This approach enables us to maximize value while mitigating potential risks. Furthermore, all machines deployed in our mining business can also be repurposed for spot sales if needed.

Nangeng Zhang, CEO

In the future, we will continue to increase the deployment of computing power in our lines of business, but we do not consider rapidly increasing our computing power as a priority. We will adjust the deployment phases to balance allocation between future sales, spot sales, and mining computing power. This approach allows us to maximize value while avoiding potential risks. Additionally, all machines deployed in our mining business can also be reallocated to spot sales if necessary.

Lewis Fan, Analyst

Okay. Thank you for that information. I do have a couple of follow-up questions and I will go ahead and ask my questions in English first, then I will translate them into Chinese myself. My second question is in terms of computing power deployment, what is the management's opinion on the company's competitive advantages?

Nangeng Zhang, CEO

Thank you for that information. I have a couple of follow-up questions. I will ask my questions in English first, then I will translate them into Chinese myself. My second question is regarding computing power deployment. What is management's opinion on the company's competitive advantages?

Neshi Zhang, Translator

Across the broader blockchain industry, the competitive landscape has indeed stabilized over the year. This stability is due in part to the fact that recently, several large companies have started to enter the industry after considerable planning and preparation. However, based on our analysis of their products so far, they still need substantial improvement to be competitive in the market. In the niche markets of the industry, such as Bitcoin mining chips, our key competitive advantages include accumulated experience and technical expertise developed over many years. By leveraging this trend, we have advanced our product offerings to an industry-leading level, thus forming a strong technological moat.

Nangeng Zhang, CEO

Based on our analysis of their products so far, they still need substantial improvement to be competitive in the market. In the niche markets of the industry, such as Bitcoin mining chips, our key competitive advantages include accumulated experience and technical expertise developed over many years. By leveraging this trend, we have advanced our product offerings to an industry-leading level, thus forming a strong technological moat.

Neshi Zhang, Translator

Additionally, we have consistently strengthened and optimized our supply chain over the years. Our multi-foundry partnership strategy, along with our strong technology and cash management capabilities, has allowed us to collaborate with several competitive partners. These partnerships have helped us secure advanced production capacities with optimized supply chains. Our effective cash management also enables us to secure these capacities through timely advance payments. Furthermore, our Bitcoin mining business, which launched in 2021, will help reduce supply disruptions in the future.

Nangeng Zhang, CEO

Our partnership strategy, along with our strong technology and cash management skills, has helped us collaborate with several competitive partners. These collaborations have allowed us to secure advanced production capabilities with optimized supply chains. Additionally, our effective cash management enables us to secure these capacities through timely advance payments. Moreover, our Bitcoin mining operations, which started in 2021, will aid in reducing supply disruptions moving forward.

Neshi Zhang, Translator

As we aim to grow our business internationally, our customer and partner base has become more varied and established. As a result, our collaboration approach has shifted from just selling mining machines to engaging in joint mining projects, which are more mutually beneficial. Some of our major institutional mining enterprise customers continue to buy from us, which helps us build long-term and stable relationships. At the same time, we are continually seeking out new geographic markets and forming partnerships with new clients.

Nangeng Zhang, CEO

Our global customers and partners have become more diversified and institutionalized. As a result, our collaboration model has evolved from just selling mining machines to joint mining initiatives, creating deeper win-win propositions. Some of our large-scale institutional mining enterprise customers continue to repurchase from us, fostering long-term and stable relationships. At the same time, we consistently explore new geographic markets and establish partnerships with new customers.

Neshi Zhang, Translator

In summary, our business model that integrates chip design, core technology, mining machine operations, and the sale of AI chips supports each other. This synergy, along with our foundational technology, creates a self-reinforcing business model.

Nangeng Zhang, CEO

In summary, our business model combining chip design, core technology, mining machine operation, and selling AI chips complements one another. This synergy, along with our underlying technology, forms a continuous self-reinforcing business model.

Neshi Zhang, Translator

Additionally, we have gained significant operational experience and capabilities from enhancing our supply chain for declining markets. Throughout our nearly nine years of operation, we have managed considerable volatility in Bitcoin prices, enabling us to adapt swiftly to market changes and price variations through flexible operational adjustments. This strategic adaptability helps us reduce risks while capitalizing on opportunities.

Nangeng Zhang, CEO

Additionally, we have acquired extensive operational experience and capabilities from upgrading our supply chain for depreciated markets. Over our nearly nine years of operation, we have navigated significant volatility in Bitcoin prices, allowing us to respond quickly to market changes and price fluctuations through flexible operational adjustments. This strategic adaptability aids us in mitigating risks while seizing opportunities.

Neshi Zhang, Translator

Lastly, as a U.S.-listed company, we maintain a higher level of transparency and compliance regarding corporate operations, governance, and disclosures, which provides access to a broader range of financing options.

Nangeng Zhang, CEO

Lastly, as a U.S.-listed company, we maintain a higher level of transparency and compliance regarding corporate operations, governance, and disclosures, providing access to more financing options.

Neshi Zhang, Translator

So, to answer your question, these factors contribute to our multilayer competitive advantage. Hope I answered your questions.

Lewis Fan, Analyst

That's very helpful. Thank you. Just a couple of quick follow-up questions. First of all, could you please share some insights on your market share?

Nangeng Zhang, CEO

So, to answer your question, these factors contribute to our multilayer competitive advantage. Hope I answered your questions.

Neshi Zhang, Translator

Historically, we estimated our market share based on our computing power sold and the network hash rate during the corresponding period. However, in 2021, the fluctuations in the network hash rates complicated market scale estimations. Mining machines often went offline, transitioned through physical locations, and reconnected due to regulatory reasons. Nevertheless, in 2021, we achieved a total of 22.3 hash in computing power sold, compared to 6.6 hash in 2020, and our total revenue reached nearly RMB5,000 million compared to RMB400 million in 2020. Therefore, we believe we have gained market share.

Lewis Fan, Analyst

Okay. That's helpful. Thank you. Just one last question. I know you have discussed the share repurchase plan. Do you have any stock dividend program or plan in mind?

Nangeng Zhang, CEO

In 2021, we achieved a total of 22.3 hash in computing power sold, compared to 6.6 hash in 2020, and our total revenue reached nearly RMB5,000 million compared to RMB400 million in 2020. Therefore, we believe we have gained market share. Thank you for the information. Just one last question. I know you have discussed the share repurchase plan. Do you have any stock dividend program or plan in mind?

Neshi Zhang, Translator

In recognizing our execution of the recent share repurchase program, the early completion of our buyback plan demonstrates the long-term confidence of both our Board and management team. We are assessing the situation and will submit a new stock repurchase proposal to the Board accordingly and make a formal announcement once the proposal is approved.

Nangeng Zhang, CEO

Neshi Zhang, Translator

In 2021, our rapid growth enabled us to explore further developments. We anticipate continued growth and will invest further in R&D, enhance market development, expand our business, and optimize our services. We are dedicated to generating more long-term value for our clients and shareholders.

Lewis Fan, Analyst

Yes. Thank you very much. Congratulations again on a strong quarter.

Nangeng Zhang, CEO

Okay.

G. Zhang, Investor Relations Manager

Thank you. And that's all the time we have for questions. I would like to turn the call back over to management for closing remarks. Thank you once again for joining us today. If you have further questions, please feel free to reach us through the contact information provided on our website. Thank you.

Operator, Operator

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