Issue #21

From Rigs to AI Clouds — The New Face of Bitcoin Mining

The Bitcoin mining sector is evolving fast — from energy-hungry rigs to diversified digital infrastructure plays that combine crypto, AI, and green power. Two companies are standing out as innovators in this next phase of mining evolution:

Canaan Inc. (NASDAQ: CAN): A pioneer in ASIC miner manufacturing and one of the earliest “pick-and-shovel” plays in Bitcoin. With new large U.S. orders, record revenues, and expanding self-mining capacity, Canaan is leveraging both sides of the crypto infrastructure boom.

HIVE Digital Technologies (NASDAQ: HIVE): A green-energy miner turning its hydro-powered data centers into AI cloud hubs. Its rapid scale-up to 25 EH/s and partnership with Bell Canada for AI infrastructure position it as one of the most forward-thinking miners in the space.

Both companies are redefining what it means to be a Bitcoin miner—blending hardware innovation, sustainable power, and AI-driven growth.

Canaan Inc. (NASDAQ:CAN)

Canaan Inc. is a technology company with a primary focus on the Bitcoin and high-performance computing sectors. It is one of the original pioneers in the crypto mining space, having shipped the world's first batch of ASIC (Application-Specific Integrated Circuit) mining machines under the Avalon brand in 2013.

Business Model and Revenue Streams ⛏️

Canaan operates a dual-pronged business model centered on the design, manufacture, and deployment of specialized computing hardware and its own self-mining operations.

Revenue comes from two primary, and highly correlated, segments:

1. Product Sales (Mining Machine Sales): This is the company's largest and most traditional revenue stream. It involves the research, design, and sale of high-performance Bitcoin mining machines, such as the latest-generation Avalon A15 Pro series, to institutional and individual miners globally. Revenue in this segment is highly dependent on the demand for efficient mining hardware, which is driven by the price of Bitcoin and the complexity of the mining network.
2. Mining Revenue (Self-Mining Operations): Canaan also engages in self-mining Bitcoin across various global sites. This revenue is generated directly from the Bitcoin rewards earned for successfully mining new blocks. This segment relies on maintaining a high installed hash rate and securing low-cost, reliable electricity, with the cost of power being a critical determinant of profitability.

Macroeconomic Impact:

Canaan is extremely sensitive to the macroeconomic conditions of the cryptocurrency market.

• Bitcoin Price and Network Hash Rate: These are the most significant factors. A rising Bitcoin price increases the profitability of both the machines (boosting product sales demand) and the self-mining revenue. Conversely, a rapidly increasing network hash rate (mining difficulty) can compress profit margins for the self-mining segment and slow down hardware sales.
• Energy Costs: As power costs are a major component of mining expenses, global energy price volatility directly impacts the profitability of Canaan’s self-mining operations. Its strategy to secure low-cost power (e.g., in Africa or through partnerships like the one with Soluna for wind power in Texas) is an attempt to mitigate this risk.
• Geopolitical/Trade Policies: As a global technology manufacturer, Canaan is exposed to geopolitical pressures and tariff headwinds, which management has cited as a factor influencing its strategy to diversify its sales and mining footprint, particularly expanding in the U.S. market.

Recent Performance and Corporate Developments 📈

Canaan has shown strong revenue growth in recent quarters, driven by the rollout of its new, efficient A15 series machines and a resurgent Bitcoin market.

Q4 2024 Financial Highlights: 💰 (Unaudited, released in March 2025)

• Total Revenue: Reached $88.8 million, beating the company's guidance and representing an 80.9% year-over-year increase.
• Product Sales Revenue: Was $73.5 million, driven by record-high computing power sold of 9.1 million TH/s. The clearance of older inventory and the mass delivery of the high-performance A15 series were key drivers.
• Mining Revenue: Reached $15.3 million, surging 312.5% year-over-year, benefiting from a rising Bitcoin price and expanded operational hash rate.
• EBITDA: The company achieved its first positive EBITDA of $19.3 million since Q1 2023, indicating an improvement in operational efficiency and market conditions.

Q2 2025 Financial Highlights: 💰 (Unaudited, released in August 2025)

• Total Revenue: Reached $100.2 million, exceeding guidance and representing a 39.5% year-over-year increase.
• Mining Revenue: Posted a record quarterly result of $28.1 million, demonstrating the increasing scale and efficiency of the self-mining business, which reached 8.15 EH/s in installed capacity.

Strategic Initiatives and News: 🤝

• Landmark U.S. Order: On October 2, 2025, Canaan announced a major purchase order from a U.S.-based Bitcoin miner for more than 50,000 Avalon A15 Pro machines. This is the largest order in three years and signals a "robust resurgence of the U.S. market" for Canaan.
• North American Expansion: The company is aggressively expanding its self-mining operations in North America. This includes a strategic hosting agreement to deploy 20 MW of miners at Soluna's wind-powered data center in Texas, strengthening its access to reliable, low-cost, and sustainable energy.
• Financial Strengthening: Canaan secured $100 million in preferred share financing, with plans for an additional $100 million, to fund growth initiatives like R&D and production expansion.
• AI Pivot: The company is exploring the use of its high-performance computing (HPC) chips to serve the rapidly expanding Artificial Intelligence (AI) industry, creating an additional potential future revenue stream.

Path to Profitability and Analyst Estimates 🎯

Canaan has a clear, albeit volatile, path to sustained profitability, which is largely tied to its ability to scale high-margin product sales and optimize its self-mining costs.

Path to Profitability: The company demonstrated a positive EBITDA in Q4 2024, a significant milestone. Its path to sustained net income hinges on:

• High-Efficiency Hardware: The success of the latest-generation A15 series is critical for maintaining high product margins and customer demand in an increasingly competitive market.
• Scalable Self-Mining: Expanding installed hash rate in regions with low power costs (like Africa and North America wind-powered facilities, where management reports a competitive cost of ) is key to boosting mining gross margins.
• Revenue Guidance: Management provided an optimistic revenue forecast for the full year 2025, projecting between $900 million and $1.1 billion, including up to $200 million from self-mining operations.

Fair Value and Analyst Ratings:

• Valuation: Given its volatility and current unprofitability on a net income basis (Q4 2024 saw a net loss despite the revenue beat), traditional P/E ratios are not useful. The Price-to-Sales (P/S) ratio of roughly suggests it is "middle-of-the-road" compared to the median U.S. Tech industry P/S of about . Some fair value models suggest the stock is undervalued, with fair value estimates ranging from a low of $1.50 to a high of $4.00, reflecting wide uncertainty.
• Analyst Consensus Rating: The consensus rating from 6 analysts over the past three months is a "Buy" with five Buy ratings and one Hold rating. This points to a strong positive sentiment among analysts, particularly in the wake of the latest large U.S. order and improved financial outlook.
• Price Target: The average 12-month price target is approximately $2.475, with a range of $1.75 to $4.00. This suggests a substantial potential upside from recent trading prices.

Investor-Focused Takeaway: Is CAN Right for Your Portfolio?

Canaan offers leveraged exposure to the Bitcoin ecosystem through both the pick-and-shovel model (selling miners) and the mining model (self-mining). Recent large orders and Q2 2025's strong revenue performance validate the demand for its high-efficiency A15 Pro machines and the success of its self-mining scaling strategy. The analyst community is highly bullish, with a strong consensus Buy rating and a significant average price target upside, driven by high revenue growth forecasts.

What to Watch in the Near Term: 📈

• Execution of Large Orders: Timely delivery and performance of the massive 50,000-unit U.S. order is crucial.
• Profitability Track: The market will closely monitor the company's progress in turning positive EBITDA into sustained net profitability.
• Bitcoin Momentum: As with all mining stocks, continued upward pressure on Bitcoin’s price and relatively stable mining difficulty will be essential to realize high revenue and profit forecasts.

Recommendation:

CAN is viewed as a high-risk, high-reward investment in the Bitcoin infrastructure space. Its strong technical product, ambitious expansion plans, and overwhelmingly positive analyst sentiment make it an attractive consideration for investors with a high-risk tolerance who believe in the long-term growth of Bitcoin and the success of efficient mining infrastructure.

HIVE Digital Technologies (NASDAQ:HIVE)

HIVE Digital Technologies is a multinational digital infrastructure company that stands out in the crowded Bitcoin mining sector due to its dual business model and unwavering commitment to renewable energy. Founded in 2017, HIVE was one of the first publicly traded crypto miners and focuses on building and operating high-performance data centers.

Business Model and Revenue Streams ⚡

HIVE operates a diversified digital infrastructure platform with two core, complementary revenue engines:

1. Digital Currency Mining (Bitcoin): The primary revenue stream is derived from self-mining Bitcoin across its global data centers in Canada, Sweden, and Paraguay. HIVE’s strategy centers on maximizing production through operational efficiency and a low-cost, fixed-rate power structure. Crucially, all of HIVE's mining facilities are powered exclusively by clean, low-cost hydroelectric energy.
2. High-Performance Computing (HPC) & AI Cloud (BUZZ): This is the key differentiator. HIVE leverages its data centers, which host a fleet of NVIDIA GPUs, to provide high-performance computing services, often referred to as AI Cloud computing (under its brand BUZZ). This revenue stream allows HIVE to monetize its infrastructure beyond Bitcoin, tapping into the massive growth in demand for computing power for AI, machine learning, and data processing.

Macroeconomic Impact: HIVE’s financial performance is strongly linked to the macro environment but is partially de-risked by its unique operational structure.

• Bitcoin Price Volatility: As a pure-play miner, Bitcoin’s price is the single largest variable. Higher prices directly boost mining revenue and improve the mining margin on every Bitcoin produced.
• Power Cost Stability: By utilizing fixed-rate contracts for renewable hydroelectric energy in politically stable jurisdictions (Canada, Sweden, Paraguay), HIVE shields itself from the high operational costs and extreme volatility of power prices that plague fossil fuel-dependent miners. Management highlights a high mining margin of 55% after electricity costs, a direct benefit of its low-cost power strategy.
• AI/Technology Demand: The AI cloud computing division benefits from the massive global tailwinds in AI adoption, offering a form of revenue diversification that balances the cyclical nature of Bitcoin mining.

Recent Performance and Corporate Developments 📈

HIVE has been executing a rapid expansion strategy, successfully scaling its hash rate while delivering strong financial results, despite an increase in Bitcoin network difficulty.

Fiscal Q1 2026 Financial Highlights: 💰 (Quarter ended June 30, 2025)

• Total Revenue: Reached a record $45.6 million, reflecting strong contributions from both Bitcoin mining and HPC services.
• Digital Currency Mining Revenue: Was $40.8 million, up 44.9% sequentially due to a higher average hash rate and a slight increase in Bitcoin prices.
• Adjusted EBITDA: Hit an all-time high of $44.6 million, showcasing strong operational leverage and profitability improvement.
• Net Income (GAAP): Reported a positive $35.0 million, driven primarily by realized and unrealized gains on digital currencies.

Operational Highlights (Q3/Q4 2025 Updates):

• Hash Rate Growth: HIVE has rapidly expanded its global Bitcoin mining capacity, surpassing 21 Exahash per second (EH/s) as of early October 2025. This production growth of 138% year-over-year in September 2025 substantially outpaced the increase in network difficulty.
• 25 EH/s Target: The company remains firmly on track to scale to 25 EH/s by U.S. Thanksgiving, with aggressive deployment at its Phase 3 Valenzuela facility in Paraguay.
• AI Cloud Expansion & Mergers: HIVE's BUZZ HPC division is seeing rapid expansion. A key development was the acquisition of a 7.2-megawatt data center in Toronto aimed at AI workloads, alongside a strategic partnership with Bell Canada to offer robust AI infrastructure to enterprises. This move is projected to help HIVE achieve $100 million in annual recurring revenue from the AI Cloud business by 2026.

Path to Profitability and Analyst Estimates 🎯

HIVE’s clear path to profitability is driven by its focus on two secular growth trends—Bitcoin and AI—underpinned by highly efficient, low-cost energy.

Path to Profitability: While the company reported a net loss in the full fiscal year 2025, its Q1 FY2026 results demonstrated a sharp reversal to a positive Net Income and record Adjusted EBITDA. HIVE is targeting sustained profitability through:

• Scale and Efficiency: Reaching 25 EH/s by the end of 2025 is expected to boost annual Bitcoin revenue to over $400 million (based on current market conditions and assuming a $100k Bitcoin price). The company’s fleet efficiency target of 17.5 J/TH positions it as one of the most efficient miners globally.
• AI Revenue Growth: The expansion of the HPC/AI cloud division provides a crucial and growing non-Bitcoin revenue stream, improving diversification and overall company margins.
• Strong Balance Sheet: HIVE maintains a strong current ratio (3.42 to 10.41 in recent reports) and a low debt-to-equity ratio (0.06), providing a robust financial foundation for its aggressive expansion without heavy reliance on debt.

Fair Value and Analyst Ratings:

• Valuation: HIVE’s valuation metrics are mixed. Its Price-to-Sales (P/S) ratio of 4.4x to 8.0x suggests a premium compared to the broader tech sector, reflecting its high-growth crypto and AI exposure. However, some analysts view its relatively low Price-to-Earnings (P/E) ratio (20.5x) compared to the Software industry (55.1x) as a sign that the market may be underpricing its strong earnings momentum.
• Analyst Consensus Rating: The consensus rating from analysts is overwhelmingly "Buy" and "Outperform". Over the last 90 days, analysts have consistently maintained Buy ratings (e.g., from Roth Capital, Canaccord Genuity, and H.C. Wainwright & Co.).
• Price Target: The average 12-month price target is approximately $4.44, with a high estimate reaching $5.60 (and up to $7.50 based on some individual analyst calls following the Bell Canada deal). This implies significant upside potential from recent trading levels.

Investor-Focused Takeaway: Is HIVE Right for Your Portfolio?

HIVE Digital Technologies is well-positioned for investors seeking exposure not just to Bitcoin, but also to the explosive growth of the AI computing sector. Its competitive advantage lies in its commitment to 100% green energy, which ensures a highly predictable and low-cost structure, resulting in a sector-leading mining margin. Strong quarterly results, record-high hashrate growth, and strategic moves like the Bell Canada AI partnership make HIVE a compelling candidate.

What to Watch in the Near Term: 📈

• 25 EH/s Target: Monitor the successful deployment and stabilization of the full 25 EH/s capacity by late 2025.
• AI Revenue Contribution: Watch the financial reporting to track the growth of the high-performance computing revenue as a percentage of the total.
• Operational Efficiency (J/TH): Sustaining an efficiency below 18 J/TH is critical for maintaining its cost leadership position.

Recommendation:

HIVE is viewed as a high-growth, Buy-rated stock that offers a unique mix of cryptocurrency and cutting-edge high-performance computing exposure. Its strong financial health (high liquidity, low debt) and commitment to green energy make it a more resilient player in the volatile crypto mining industry.

A Final Word on Your Investment Decision

Canaan Inc. (CAN) and HIVE Digital Technologies (HIVE) represent two of the most forward-looking strategies in the evolving Bitcoin mining landscape. One is doubling down on next-gen hardware innovation and geographic expansion; the other is blending green-powered crypto mining with high-performance AI cloud infrastructure. Each company presents a unique risk/reward profile for investors who believe mining is no longer just about Bitcoin—but about powering the digital economy.

Canaan Inc. (CAN) – Bitcoin Infrastructure from Silicon to Self-Mining
✔ Dual business model (hardware + mining) captures both ends of the crypto value chain
✔ Landmark U.S. order for 50,000 Avalon A15 Pro units signals strong product demand
✔ Positive EBITDA and expanding North American operations position it for scalability
➤ Best for: High-risk investors seeking leveraged exposure to Bitcoin and the “pick-and-shovel” upside of crypto mining hardware

HIVE Digital Technologies (HIVE) – Green-Powered Mining Meets AI Cloud
✔ 100% renewable energy model enables high-margin, ESG-aligned mining
✔ On track to hit 25 EH/s with strong operational efficiency (~17.5 J/TH)
✔ AI cloud unit (BUZZ) and Bell Canada deal provide high-growth diversification beyond crypto
➤ Best for: Growth-oriented investors seeking long-term upside in both Bitcoin and enterprise AI infrastructure, with a lower energy-cost risk profile

Investor Insight:

⚙️ Want hardware leverage and high-beta upside with expanding mining exposure? → Canaan (CAN)
​ 🌱 Prefer a diversified miner with green energy and fast-growing AI cloud revenue? → HIVE Digital (HIVE)

Each stock represents a different side of the next-generation mining thesis—CAN as the silicon-scale infrastructure supplier, HIVE as the green-powered AI-enabled cloud miner. Both have analyst “Buy” ratings, strong catalysts ahead, and potential to outperform as digital infrastructure demand continues to grow.

We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.

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Happy Trading
​— Team Premium Stock Alerts