Canaan Inc., a prominent Bitcoin ASIC (Application-Specific Integrated Circuit) producer, is undergoing a significant strategic shift. The company is piloting production in the United States and exiting its AI semiconductor business to concentrate on its core crypto-related operations. This move reflects a commitment to streamlining operations, enhancing capital efficiency, and adapting to the evolving dynamics of the cryptocurrency market and global trade landscape.

Canaan's decision to discontinue its non-core AI semiconductor business unit comes after exploring strategic options since March 2022, including potential asset sales or orderly wind-downs. The AI unit, which focused on "ASICs for edge computing applications," generated approximately $0.9 million in revenue during fiscal year 2024 but accounted for around 15% of Canaan's total operating expenses. Nangeng Zhang, chairman and chief executive officer of Canaan Inc., stated that focusing resources and talent on areas of deep expertise and competitive advantage would drive sustainable growth. The discontinuation process is expected to conclude in the coming months, leading to a significant decline in operating expenses as resources are redirected toward crypto infrastructure and Bitcoin mining operations.

Several factors influenced Canaan's decision to exit the AI sector. The company's financial health score has been rated as "WEAK," with InvestingPro data indicating a concerning gross profit margin of -14.62%. By exiting the low-revenue AI chip business, Canaan aims to reduce costs and strengthen its focus on its core crypto operations. This strategic realignment represents a textbook case of resource reallocation, addressing the imbalance between the AI unit's revenue contribution and cost burden to improve profitability metrics.

Concurrently, Canaan is piloting Bitcoin mining ASIC production in the United States. This move is driven by increased tariffs on Chinese technology, recently reintroduced, making importing mining rigs more costly. By producing in the U.S., Canaan aims to reduce expenses and maintain competitiveness in the global market. This shift also reflects a broader trend among major Bitcoin mining hardware manufacturers, including Bitmain and MicroBT, to establish production facilities in the U.S. to mitigate the impact of tariffs and ensure a more stable supply chain.

The move to U.S. production has broader implications for the crypto industry. It signals a shift toward decentralization of production and addresses concerns among U.S. regulators and industry players about the national security risks posed by Chinese-made rigs. As crypto becomes more integrated into the energy grid and financial systems, having hardware made onshore becomes a strategic advantage. While local miners may face higher prices in the short term, localized assembly could lead to more secure and cost-effective operations in the long run.

Canaan's strategic realignment also involves strengthening its North American footprint through new hosting agreements. These agreements are expected to significantly boost the company's self-mining capacity, with projects in Pennsylvania and Texas steadily increasing installed and energized hashrate. As of April 2025, Canaan's total deployed hashrate reached 8.15 EH/s, with 6.20 EH/s in operation, while maintaining a competitive all-in power cost of US$0.044/kWh. These achievements underscore Canaan's strategic focus on geographic expansion and high-quality partnerships that create lasting value for the company and its shareholders.

In summary, Canaan's pilot production in the U.S. and exit from the AI business represent a strategic pivot to reinforce its position in the cryptocurrency mining sector. By prioritizing supply-chain flexibility and focusing on its core strengths, Canaan aims to navigate the evolving market environment and drive sustainable growth in the digital asset ecosystem.