Chinese bitcoin ASIC manufacturer Canaan has announced a landmark partnership with Genesis Digital Assets, involving an initial purchase of 20,000 mining rigs and an option for up to 180,000 more. The deal, disclosed on August 31, 2021, positions it as potentially the largest single transaction in the cryptocurrency mining hardware market, surpassing previous records set by Marathon and Riot Blockchain.
This is not the first collaboration between the two firms. In April, Genesis bought $93 million worth of ASICs from Canaan, and in mid-June it acquired another 10,000 units. The cumulative orders underscore the surging demand for next-generation bitcoin miners, which offer higher efficiency and hash rate.
Scaling Capacity with Green Energy
Abdumalik Mirakhmedov, co-founder and executive chairman of Genesis Digital Assets, said the newly acquired machines will be deployed primarily in North America and the Nordics, regions where the company focuses on renewable energy sources. “These new machines will dramatically increase our capacity as we work towards our goal to increase our capacity to 1.4 gigawatts by the end of 2023,” he stated. The expansion reflects a broader industry trend of miners seeking low-cost, clean electricity amid growing environmental scrutiny.
Market Reaction and Canaan's Stock Performance
Despite the positive news, Canaan's Nasdaq-listed shares (CAN) have declined approximately 74% from their March 2021 high of $36.40 to $9.24 at the time of the announcement. The drop mirrors fluctuations in bitcoin prices, global chip shortages, and an oversupply of mining hardware. However, the Genesis order signals that top-tier mining firms remain confident in long-term bitcoin economics, potentially supporting Canaan's revenues in the coming quarters.
Nangeng Zhang, Canaan's chairman and CEO, emphasized the company's commitment to helping clients scale: “This order with an option of future large purchases further solidifies our collaborations and reflects both parties’ confidence in the prospect of the cryptocurrency mining industry.”
The deal also has implications for the broader ecosystem. If Genesis exercises the full option for 180,000 additional units, the combined order would total 200,000 miners, worth hundreds of millions of dollars at current prices. This could trigger a competitive response from other mining giants, as they race to secure efficient hardware before the next Bitcoin halving in 2024, which will reduce block rewards and squeeze profitability for older machines.