Simply put
- Bitcoin hardware company Canaan is branching out its revenue sources.
- Analysts suggest that this move could lead to beneficial purchases for the company.
- The stock has a price target set at $3, which would be a significant increase from its current level.
On Tuesday, investment bank Benchmark raised its rating for Bitcoin hardware maker Canaan to “buy.”
Mark Palmer, a stock research analyst, noted that the company’s expansion into the North American market is likely to boost stock prices, with targets projected five times higher than where they stand now. Canaan is traded on Nasdaq.
Palmer remarked, “We feel the company’s ADR is undervalued,” emphasizing that banks can see value when a strategic plan is being put into action, along with potential benefits from Bitcoin’s rising price.
This rating comes amid lower asset prices, increased difficulties in mining new bitcoins, and reduced rewards, even as Bitcoin mining stocks are gaining popularity this year.
On Monday, Compass Point downgraded its rating for Marathon Holdings, which is the most significant publicly traded miner, pointing to a decrease in its hash rate as a troubling sign for profitability. Other mining companies are facing similar issues.
Last year, Bitcoin halving reduced the payout for confirming blockchain transactions from 6.25 BTC to 3.125 BTC. Though Bitcoin prices have seen an uptick since the halving, the number of active miners remains uncertain given the various challenges within the industry.
Last month, Canaan’s shares dipped 21%, closing at $0.60. The company, based in Singapore, produces ASIC chips for mining the leading cryptocurrency by market cap and is also expanding its recruitment efforts.
Palmer further pointed out that Canaan’s initiative to promote home mining rigs adds value. “By diversifying into the consumer market, we are broadening our revenue sources,” he noted.
Bitcoin mining generally requires running extensive and costly computing infrastructure to support a decentralized payment network, which is energy-intensive and pricey.
Businesses in this industry are actively seeking locations with affordable electricity to set up operations.
