Canaan Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Canaan's Inc. Second Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the management-prepared remarks, we will have a question-and-answer session. Please note that this event is being recorded. Now, I'd like to hand the conference over to your speaker today, Ms. Quinn Lauper, Investor Relations Director of the company. Please go ahead, Quinn.

Thank you, Operator. Hello, everyone, and welcome to our earnings conference call. Joining us today are Chairman and CEO, Nanjing Zheng, and our CFO, Jin James Cheng. Leo Wang, Vice President of Capital Markets and Corporate Development, and Xu Zheng, Senior IR Manager, will also be available during the question and answer session. Our CEO will start the call by providing an overview of the company and performance highlights for the quarter. Our CFO will then provide details on the company's operating and financial results for the period before we open up the call for your questions. Before I begin, I would like to refer you to our safe harbor statement and 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 that estimate project future operating results and the performance of the company. These statements speak only as of today, 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. These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions. please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent report on Form 20-S for 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, We will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website. And finally, please note that during the call, all dollar amounts refer to U.S. dollars. With that, I will now turn the call over to our chairman and CEO, N.G.

Jeng. Please go ahead.

Thank you. Hello, everyone.

This is N.G., CEO of Canon. Welcome to our earnings call. Together with our CFO James, we are in our Singapore headquarters to share our Q2 2025 business results and the latest updates with you. This past quarter marked the first anniversary since the most recent Bitcoin halving, and we are delighted to celebrate Bitcoin's all-time high price in recent days. We are pleased to report the strongest quarterly results in the current Bitcoin cycle and also the best quarter in the past 10 quarters since Q3 2022. Total revenue for Q2 reached USD 100.2 million up 40% year-over-year, breaking the USD 100 million mark. Gross profit rose to US$9.3 million, a significant increase from US$0.6 million in Q1. Operating loss narrowed to US$27.1 million. EBITDA turned profitable at US$1.68 million and adjusted EBITDA reached $25.3 million, both hitting record high since we began reporting this matrix in Q1 2024. We attribute our strong results this quarter to three main factors. The higher and stable Bitcoin price, our quick and effective response to the new tariff policy environment, and the rapid growth of our home-use Bitcoin mining product line. Throughout the quarter, Bitcoin remained strong, rising from around $75,000 at the start of the quarter to the peak of nearly $120,000 by late May, and then staying at a high level with some volatility. At the same time, Total network hashrate also stayed high, which kept mining margins under pressure. The hash price in Q2 moved up overall, from a low of about $48 per petahash per day to a peak of $58 per petahash per day in May. In addition, during this quarter, many countries were affected by the reciprocal tariff policy, which increased the import cost of equipment for U.S. mining customers and brought a lot of uncertainty to global trade. This led many U.S. customers to delay building mining sites or deploying upgrades. Facing these challenges, ourselves supply chain and compliance teams worked closely together and focused on markets outside the U.S., delivering strong performance that offset the negative impact from the U.S. market's weaker business environment. Our product sales reached approximately 72 million U.S. dollars, including six $65.9 million from Avalon Industrial Mining Solutions and $5.7 million from the Avalon Home Use Mining Series. In Q2, we delivered a total of 6.4 million terahashes per second of computing power with an average selling price of $11.1 per terahash. Our Avila Home Miner product line delivered strong performance this quarter, generating $5.7 million in revenue, a sharp increase of 359% from $1.3 million in the previous quarter, and maintained a gross margin of 39%, which is higher than that of our institutional mining machines. This segment now accounts for over 5% of our total revenue. What is more remarkable is that this growth was achieved despite the challenges of high summer temperatures and rising electricity costs. Looking ahead, we will continue to rapidly expand the home use manual market, especially in heating-related application scenarios, where energy that might otherwise be wasted can be turned into additional value. In Q2, our self-mining operations produced 284 Bitcoins, up about 9.4% from 269 Bitcoins in the previous quarter. Benefiting from the rise of Bitcoin prices during this period, our mining revenue reached a record 28.1 million U.S. dollars and the increase of over 15% from 24.3 million U.S. dollars in Q1. At the end of June, our total installed mining capacity worldwide reached 8.15 exahash per second with 6.57 exahash per second already in operation. Last week, we also released our July Bitcoin production and mining operations update, showing continuous progress in our mining business. By the end of July, our Bitcoin treasury had reached 1,511 Bitcoins. This brings us to our next topic, our Bitcoin treasury. Historically, we have increased our Bitcoin treasury in three ways. First, by accepting Bitcoin as payment for mining equipment. Second, by earning Bitcoins through our mining operations. And third, by directly purchasing Bitcoins in the open market. Looking back at this Bitcoin cycle, we have steadily accumulated Bitcoins at all stages. In recent quarters, our cash cost of mining has constantly been lower than the average market price of Bitcoin during the same period. While the cost of acquiring Bitcoins may fluctuate from quarter to quarter, its long-term value has continued to rise. This is why self-mining remains a profitable strategy for us even during bear markets. At Canaan, we are proud to be one of the few companies in the Bitcoin ecosystem that truly achieves vertical integration. Vertical integration is not just about mining bitcoins. We design and manufacture our own ASIC chips and mining machines. We operate our mining business together with partners around the world, and we follow a strategy to accumulate Bitcoins at attractive price levels. These three pillars work together to help us lower the cost of acquiring Bitcoins, reducing operational risks, and maintain strategic flexibility throughout the Bitcoin cycle, all while steadily building and enhancing our Bitcoin strategy. Since our founding, we have always believed that Bitcoin is both a global asset class and the foundation of the entire cryptocurrency ecosystem. Likewise, our business spans the globe and does not rely on any single country or customer group. Our ability to adapt flexibility across different markets and supply chains has helped us achieve steady improvements through market cycles and policy changes. We have built a strong reputation in many countries, especially in the United States, which has earned us repeat orders from some of the most respected mining companies in the industry. In R&D and supply chain, our A16 series is now in the chip packaging and testing stage and will soon move into full machine testing. We are making every effort to bring A16 series to market as quickly as possible. On the supply chain side, our manufacturing capability in US is now up and running. completely mentioning our existing capacity in Malaysia. This allows us to meet back delivery needs for US customers with only a modest cost increase. This includes fulfilling part of the order from the listed company, Cypher, in Q3. Recently, we also secured a follow-on order from CleanSpark for our A15 emerging cooling model, showing strong customer recognition of our products and services. As a US listed company committed to 100% compliance, our customers have a great confidence in the compliance of our offerings. In today's already volatile trade environment, reducing potential regulatory risks for our clients is more important than ever. Looking ahead, we will continue to follow our unique full-cycle strategy, our vertical integration, disciplined Bitcoin strategy management, and ability to flexibility shift between self-mining and Bitcoin purchase, when market conditions are right, giving a clear edge at every stage of the Bitcoin cycle. By designing and producing our own hardware, operating mining under the most favorable conditions, and steadily building our Bitcoin strategy, we have established a clear competitive advantage. ones that allow us to keep accumulating Bitcoins at a cost lower than the market price, even in challenging environments. Our ongoing commitment to build a company is both resilience and agility, leveraging the advantages of vertical integration to grow our Bitcoin assets, protect shareholder value, and seize every market opportunity. We believe this strategy will carry us through short-term volatility and deliver long-term stable and outstanding returns. It will also position Canon as the leading institution in both technology innovation and Bitcoin treasury management. We will continue to focus on North America as our core expansion region, strengthening project execution and customer service. while closely monitoring geo-protocol and policy changes to adjust our strategy, seize opportunities, and mitigate risks. In summary, based on the current situation, we remain cautiously optimistic for Q3 2025, with revenue expected to be in the range of $125 million to $145 million. This forecast is based on the present market and operational conditions, and actual results may vary given recent policy uncertainties and market fluctuations. This concludes my prepared remarks. Thank you, everyone. Now I will hand it over to our CFO, James.

Thank you, NG, and good day, everyone. This is James, CFO of Canaan. I'm very glad to share our Q2 financial results with you today. As NG stated at the start of the call, we are firmly committed to vertical integration in the Bitcoin ecosystem. Our vertically integrated model, encompassing the entire chain of R&D, manufacturing and sales of mining equipment, self-mining operations and cryptocurrency treasury management, positions us uniquely. With the cryptocurrency industry and Bitcoin ecosystem gaining increasing attention and support globally, We are confident that our forward-thinking strategic investment is demonstrating its sustained value potential. We are pleased to report record quarterly results with both the peak of the current Bitcoin cycle and the highest performance in the past 10 quarters following Q3 2022. Let me give a quick summary of our financial performance. First, we reported strong Q2 results with total revenue of $100.2 million, not only exceeding our guidance but also reaching the $100 million quarterly milestone and representing a 40% year-over-year increase. Our product sales delivered robust performance with revenue of $72 million, an increase of 23% quarter over quarter, and up 17% year over year. In Q2, we experienced a softening US demand under the pressure of tariff uncertainties. While continuously delivering some early booked contract sales orders from US customers, We were also working hard to expand our distribution channels in Asia. With all efforts, our average selling price, or ASP, increased to $11.1 per terahash per second, reaching a new quarterly high in the past two years. Turning to the revenue from our Avalon Home series, in Q2 we delivered approximately 13,000 units of our Avalon Home products, contributing revenue of approximately $5.7 million and reaching the gross profit margin of 39%. As of August 13, Unfulfilled orders and finished deliveries in Q3 totaled $9.5 million. Second, our mining business also recorded its best quarterly performance. Our mining revenue surged 202% year-over-year to $28 million. We mined 284 bitcoins in the quarter, up 101% year-over-year. Our deployed hash rate expanded 23% from 6.6 exahash per second at the end of quarter 1 to 8.15 exahash per second at the end of quarter 2. In quarter two, more than 10,000 mining rigs were newly deployed in our American projects, and the installed computing power in America reached 3.66 exahash per second at the end of quarter two. Next, driven by the strong results of machine sales and mining operations, our profitability sold both sequentially and year over year. Gross profit came in at $9.3 million, compared with $0.6 million in quarter one, also setting a record high for the first time since quarter three, 2022. Adjusted EBITDA achieved a gain of $25 million, a significant turnaround from the prior quarter's loss of $38 million. our basic and diluted net loss per ads narrowed to three cents us dollars representing the lowest loss in the past 10 quarters following quarter 3 2022 last but not least we maintained a solid balance sheet with over 1480 bitcoins with a market value of approximately $160 million at the end of Q2. We continued to manage our Bitcoin reserves to generate sustainable outperformance. Turning to the expenses, our operating expenses totaled approximately $36 million, remaining flat sequentially, As previously announced, we are steadily progressing with the exit of our AI business. Once completed, this is expected to significantly reduce operating costs. Although there will be a one-time expense related to organization optimization in the short term, the overall operating expense structure will become healthier. By the end of second quarter, The price of Bitcoin increased to around $107,000 versus around $83,000 at the end of the first quarter. The increased Bitcoin price on the last day of the quarter resulted in an aggregate unrealized fair value gain on crypto assets of $34 million. The non-cash accounting treatment for the fair value change of the preferred shares hit our Quarter 2 bottom line with $17 million, consisting of $8 million from the Series A1 preferred shares, converted during this quarter, and $9 million from the remaining unconverted Series A and Series A1 preferred shares at the quarter end. In order to represent our performance more accurately and more comparably, we have excluded the impact of this accounting treatment for our non-GAAP measures. Turning to our balance sheet and cash flow, in quarter two we paid $41 million to secure our wafer supply, $62 million for production and operation, and $5 million prepaid for our share repurchase program. The cash outflow aforementioned was offset by cash inflow of $66 million from sales, $7 million from export VAT refunds, and $4 million from ADI program reimbursement. Consequently, at the end of Q2, we held cash of $66 million on our balance sheet. Now turning to our Bitcoin assets. Bitcoins held as our own holding asset increased in the quarter, reaching a record high of 1,484 Bitcoins as of June 30. This is 76 more than 1,408 at the end of the first quarter. On June 30, 2025, the fair market value of our own Bitcoins totaled around $160 million, and our holdout gain was approximately $82 million higher than the original value of the Bitcoins that we gained from mining or other operations. As of July 31st, our total Bitcoin treasury increased to 1,511 as already disclosed. As announced recently, by the end of July 2025, all Series A1 preferred shares have been converted into ADSes and sold. As of the date of earnings, we have cumulatively repurchased approximately 3.6 million ADSs for approximately $2.4 million under the Share Repurchase Program. With rebounding customer demand and proven local manufacturing in North America, we will maintain our strategic focus on this core market. Concurrently, we will continue to be agile in response to geopolitical and policy shifts, seizing opportunities while mitigating risks. Given this development, we expect the revenue for the third quarter to be in the range of $125 million to $145 million. This concludes our prepared remarks. We are now open for questions.

Thank you. We will now begin the question and answer session. As a courtesy to other investors and analysts who may wish to ask a question, please limit yourself to one question and one follow-up. If you have any additional questions after the Q&A session, the investor relations team will be available after the call. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Your first question coming from the line of Mike Gondo with Northland Capital Markets. Your line is now open.

Hey guys, this is Logan on for Mike. Thanks for taking our question and congrats on the quarter. First, it was nice to see the 6.4 exit hash sold in ASP of $11.10. Is there anything to call out on current market dynamics, pricing strategy, and demand for A15s you guys saw in July and August? Thanks.

Hi, Mike. Yeah. In Q1 this year, first I give some quick answers about the numbers. Bitcoin price now rise to new heights and demand of A15 today looks somewhat different from when we issued our first year, first 2025 guidance in January. And in Q1, I think the ASP for our, the ASP for Q1 is $10.5 per terahash. And Q2's ASP has rise to 11.1 terahash. This is at ASP side. But you know, in Q2, there's, you know, because the tariff policy, which has increased the overall cost for our U.S. customers, and I think estimated impact is roughly from 15% to 25%, and it remains fluctuating. So as a result, many customers in the U.S. are still taking wait and see. But several U.S. orders were announced recently. especially from public listed miners, shows that through joint efforts, customers are gradually adapting the tariff changes and they are willing to purchase. It's coming back. Also, we have opened our production facilities in the U.S. Now we can deliver machines from U.S. and Malaysia to avoid tariffs, some of the tariffs, to improve the overall user experience, include service. I think in the last three quarters, our ASP is increasing. And also, ongoing demand outside, especially outside U.S., for high-performance vendors is also growing. And another thing is, because for A15s, the manufacturing process is improving. and the performance is increasing, and the cost is slightly lower and lower, so it supported our ESP and gross margin.

Thank you. Great. Thanks for the color there, and then one follow-up from us. Congrats on the CIFR and CleanSpark order during the quarter. Can you guys just provide an update now with the, I think you said the United States production facility. How is Canada viewing its strategy for penetrating the North American market? Is there any updates for how you guys see the growth market share there?

First, I will say something about the Cypher's Maybe James will add some color after that. I think we have always believed that actively expanding in North America market is the right decision, at least in mid and long terms, and fully in line of our long-term strategy. I think that the U.S. continues to send strong policy signals supporting the cryptocurrency industry. Also, America has the world's most mature crypto community and is home to the largest number of publicly listed mining companies. It also has abundant and diverse power resources, including wind and solar renewable energy that can support very large-scale deployments. Americans' culture of innovation and its capital markets ecosystem provide a very strong foundation for institutional For us, because the institutional miners always have set habits in site operations, equipment purchasing, so for us the key to gain more market share in the US is to get more customers to try our products first. So our machines must have very clear performance advantages. So customers have good reasons to test our new models. Second is our service quality must be the highest in the industry standard. I think in 2024, North America already contributed about 40% of our total mining machine sales revenue. On the mining side, we already have deployed 3.67 exahead per second of mining hash rate in this region. In Q2, our mining revenue in North America reached the record high of $28 million. And this year, as I mentioned, we also established manufacturing capacity in the U.S., This is all solid for long-term growth in North America. In short term, I think the changes in business environment and policies earlier this year slowed our expansion pace in the U.S. But we made adjustments, and I think the most challenging period is now behind us. key metrics are recurring and we remain confident in long-term potential of North American market. Thank you.

Yeah, I will add some color on this because U.S. market is so important for us in our annual report. We have mentioned like 40% of our revenue in 2024 has come from U.S. market. And recently we got orders from Cypher and CleanSpark. And in the Cypher order, it's the first time we start to use the manufacturing factory in the United States as a new alternative. Although the cost is a little bit higher, and I think it's beneficial to our customers, it's close to them and they recognize our product performance. So we would like to improve the delivery capability and overall cooperation experience for them. So I think that also showed our execution to the strategic thinking from CEO just to mention that we really value our customers in the United States. the U.S. strategy is one of the most important strategies in our whole integrated system. I think the new orders is mutually beneficial to both us and also Cypher, and we also have the immersed cooling orders from CleanSpark as well. So I think now is the better time compared to You know, in the early stage of the tariff come out after liberation days, U.S. customers tend to slow down their orders. But now we get back our customers and we start to have some orders. I believe we will have chance, have opportunity to have more. Thank you, Mike.

Thank you. Our next question coming from the line-up. Edward Engel with Compass Point Research. Your line is now open.

Hey, everyone. This is Abdullah Delover on for Ed. Can I just ask, have you seen any changes in customer ASAC demand since May? And has sentiment rebounded back towards our Q1 levels, for example?

Let me see. I think since July this year, we have indeed seen some positive changes in the market demand recently. We have announced several new orders from institutional customers in North America showing that local customers gradually adapting the new tariff environment and their willingness to purchase is returning. I think it's important to note that the direct impact of the tariff policy is concentrated mainly in the US. During Q2, we saw very active demand in Asia and other regions. where we secured a large number of orders. This quarter, the company delivered over $100 million in revenue, with more than 70 million US dollars for mining machine sales, and most of these orders did not come from the US. This shows that overall, global demand remains healthy and receded. Because in July, Bitcoin prices have also reached new all-time highs several times, which has been an important driver for miners to increase purchases. That said, because the US tariff policy is still not settled, uncertainty remains. I think the demand from U.S. customers has not fully returned to levels before the tariff was announced. And I think I need to talk about some indirect impacts because it's more complex. Restrictions are mining machines import into U.S., have a very rare situation in this industry, maybe in the past 10 years, where mining is still profitable, or very profitable, but due to supply-demand imbalances, machines originally intended for the US market had to be sold to other regions at discounted prices, This created the buyer's market during a full cycle. So something is not seen over a decade. So to address this, I think what we can do is we must continue to work on the ways to gather machines into the US at a lower cost. So I think our US manufacturer is already in operational. But, you know, while it's still very complex because complements entering the U.S. deal face tariffs. Overall, I think the setup helps us to lower the cost and the speed of the supply for U.S. market to solve the previous question. And, yeah, I think it will help us to gain more local orders. Thank you.

Great, thank you.

Thank you. Our next question, coming from the lineup, Kevin Cassidy with Rosenblatt Security. Your line is now open.

Yeah, congratulations on the great results, and thanks for taking my question. Can you describe the effect that Bitcoin miners, you know, with them pursuing the AI and HPC co-location hosting agreements? Is that... slowing the demand for the Bitcoin mining rigs?

Yes, good morning.

Yes, we have seen some miners in recent quarters. They are shifting a part of their power and the facilities to AIHPC co-location projects. and some have done so very successfully, often leveraging their experience in Bitcoin mining and access to energy resources. We see AIHPC and Bitcoin mining as complementary for two reasons. First is AIHPC projects typically have longer sales cycles and capital recovery period than Bitcoin mining. So when Bitcoin prices high and the network demand strong, mining continues to offer higher and more predictable returns, which is why many companies are pursuing both. Second, from an energy standpoint, there is no direct competition for resources. Bitcoin mining is an unusually flexible power consumer. Over the long term, it can quickly secure large volumes of energy at very low cost, enabling rapid scaling rather than waiting years for traditional products. Our structure frames down to a year or even days. Its load profile allows it to absorb intermediate renewable or surpass energy, helping stabilize supply for AI HPC workloads. So many large energy projects now plan for both mining and potential HPC customers together, improving overall energy utilization. Overall, our customers include large institutional miners, distribution partners, and home users around the world. product portfolio and global delivery competencies, I think we can meet a wide range of deployment needs. So we expect Bitcoin mining equipment to remain the core driver for our business. Thank you.

Okay. And maybe just as a follow-up, can you give us an update on the next-gen ASICs, the ASIC themes, and are you seeing a trend for more liquid-cooled and immersion systems than in the past?

First, I will answer the liquid-cooled and the air-cooled question. Yes, I think currently water-cooled systems have been growing steadily. But now AirFood models still account for most of our minor sales. I think the reason is because they have lower deployment requirements. It's more simpler to install and maintain and can be quickly rolled out across a wide range of global markets, especially for customers who have value flexibility and low operating costs. For water pool system, because it performs very well in high density computing environments, but require stricter standards for water quality and operations. They are mainly used by large mining farms with fixed infrastructure. Since July, we've seen growing demand in Asia from customers who want to use the heat output for water heating. Many of them start with small batches for around tens to several hundred machines while they prepare for larger deployments later in winter. Emergent cooling is growing very fast. particularly in North America and parts of the Middle East. Large institutional miners like CleanSpark are choosing Emergent for its strong performance, high density, low noise, and very stable. These projects often involve higher customization, long-term capital investment, which also strengthens customer retention. For the next generation, we will offer all three different cooling operations and we will optimize designs for different markets or even different customers for different energy conditions. For example, I think in higher temperature regions, water cooling may be more attractive, and some distributed sites, smaller sites, air cooling may be continuing to deliver strong cost effectiveness. I think because of the energy efficiency and the next-gen ASIC minus requirements and the larger and larger scale operators, emerging and the water-cooled models will become more and more common. Thank you. I think you asked about the ASIC team. The A16 now is at the stages for chip assembly and testing. It's only maybe one or two weeks before we have the full machine testing results. Yeah, so after that, we will have a product launch. When the full system test is complete, we will announce, officially introduce this A16 series to the market. Yeah, thank you.

Thank you. Our next question, coming from the lineup, John Todaro with Needham & Company. Your line is now open.

Hey, guys. Thanks for taking my question. two for you one um if we could just dig a little bit more into the bitcoin treasury strategy and kind of your thoughts on uh some of the the bitcoin treasury companies out there um is there a possibility you could start getting a premium into the stock uh similar to those type of companies and then as a follow-up um as you do think about your bitcoin stack um and apologies if i missed this but any ways to generate yield off it derivative strategies anything like that um like some of your peers where they're able to generate a yield on that Bitcoin holding?

Thank you, John. This is James speaking.

I would like to introduce a little bit. Although we are still in the early stage of doing Bitcoin treasury strategy, I think our approach to do this Bitcoin treasury management, the first thing is to build up a kind of conservative foundation with the goal to make sure our holdings is quite safe, and also we would like to increase the long-term value and the liquidity. I think that's the purpose of doing this. First of all, we have already demonstrated a way of doing this collateralized financing. In a kind of rising Bitcoin market, we can pledge part of our Bitcoin to access low-cost capital for high-return projects, such as miner production and also self-mining expansion for our operation. I think when the financing term ends, we usually can repay the principal. Also, we can generate additional financing. This can also improve the efficiency of our capital use. I think that's the first method. Secondly, I think we can also place some of the Bitcoin in short-term interest-bearing accounts. As you said, earning a modest yield also makes sure it's safe and compliant. In addition, we can also evaluate selective assets. strategies to manage price volatility or capture extra returns under certain market conditions. I think that's also important. Overall speaking, we have a kind of vertical integrated model. This model is quite interesting. We can grow our Bitcoin reserves through multiple channels. You know, for example, accepting Bitcoin as payment for miners. Also, we can mine coins at a kind of a cost below market average. And also we can directly buy Bitcoin in the secondary market when the prices are more attractive. So I think although we are still in the early stage, our Bitcoin treasury has already reached 1,511 coins. By the end of July, it's a new record. So over time, I believe the market will see us not only as a kind of hardware maker or mining machine provider or computing solutions. The whole market will also look at us as a capable Bitcoin treasury company. Thank you. Thank you, Joan.

Thank you. Our next question coming from the line of Kevin Dean with HCVN, right? Your line is now open.

Hi, Angie. Hi, James. I'm curious to dig in a little bit deeper following up on John's question. Would you consider Consider using the Bitcoin treasury to help fund operations. It wasn't really clear, James, you know, if that was part of the intention. I apologize if I messed that up.

Kevin, to find different operations like, you know, mining sites expansion and also in certain stage, we also order wafers by utilizing, you know, bitcoins to as a pledge to get loans. Does that answer your question, Kevin?

That helps very much. Appreciate it, James. Yes. So also curious about The geographies that you're finding the greatest demand for the Avalon home miners and how you intend to market that effort.

Oh, OK. Yeah. Yes, I think currently we sell the home series globally. There's many, many different countries. But I think the primary region is still the U.S. And I think we have, you know, The home miner, we have a very good matrix in quarter two. And in quarter three, it's only one month, a little more than one month, and we have much better performance than quarter two. I don't have the exact numbers, but roughly it's much better than quarter two. So the interesting thing is we are trying to sell more heaters in summer, and still it's got a very good result. So I think the homeowner is a very new production line for the whole industry. We are working and learning. This is what we are doing. From my personal view, I think the home miners today can get a good, it's already reached a good level for a product if the target customer is miners. But for traditional consumer markets, we still need to enhance everything, including the user experience, cost, and the quality, everything to reach the requirements for traditional consumer markets. So this is what we need to do next. And we are building a very special team to working on the product itself. So I hope this answers your question. Thank you.

Thank you. And given time constraint, we ask that you please, at this time, limit your question to one question only. Our next question coming from the line of Mark Palmer with the Benchmark Company. Yolanda Selfman.

Yes, good morning and congratulations on the resilience demonstrated during the quarter. I wanted to see if you could address the company's current capital deployment priorities. Given where the share price is, how inexpensive the stock certainly appears. It seems like buybacks would be very much in order. I know that there were some executed during the second quarter. How are you thinking about capital deployment writ large, where buybacks fit into the mix versus alternative uses of capital? Thank you.

Yeah, thank you, Mark. I think we have already completed the 100 million preferred shares financing in March. After that, we have not used our ATM program. We have paused the ATM program since February 20 to avoid putting additional pressure on the market, especially after our share price fell below $2, I think, in early February. Instead, in May, we have announced an up to 30 million share repurchase program, and in June, both CEO and myself personally purchased like 817,000 shares. I think in current stage, we believe our shares are significantly undervalued. So buying back stock at current level is a better use of capital than issuing equity. So far we have already purchased like 3.6 million ADSs. I think that's something we have already do. And also in using the fund, recently the demand in Asia remains strong, and I think the customers' interest on expanding their mining fleets from North American customers is steadily recovering. So it seems like the overall market demand is going up, and we got healthy orders and sales growth. Every quarter is better than the previous one quarter. So this allows us to prioritize using the capital from the operation to do the operation. Of course, we can also do some self-mining, although it's not as fast as previously, but still, we are growing our mining fleets. I think that's something we are trying to do. We will continuously maintain flexible in capital allocation. We can make all kinds of spending decisions based on the actual business needs. We should balance the allocation of minor inventory between sales and self-mining. Usually we follow a kind of strategy to build to order, keeping some delivery capacity in reserve. So I think for the capital use in the operation, we always do the allocation in between different business needs. So make sure we have the sufficient funds for future. But of course, we will also do some stock repurchase recently, and we will not start any kind of fundraising immediately. I think, I hope I answered your question, Mark.

Thank you. Our next question, coming from Delaina. Fedor Shebelin with B Reilly Securities. Yolanda is now open.

Thank you very much, operator. Hello, everyone. And G and James, maybe my question is a kind of summary and follow-up of what's been asked regarding your North America plans. So given that many, many miners kind of postponed the expansion plan due to HPC AI initiatives, How do you see the evolution of average selling price, let's say, by the end of 2025 and maybe going forward in 2026?

Thank you very much.

I think I just mentioned the global market is quite active currently. I mentioned a number which is the hash price for how many dollars per petahash per day. Now, today I think it's about $58 per petahash per day. There is an experience number. If this number is higher than 55, then it's a blue market for the miner market. But if it's lower than $65, it's maybe a bear market. So currently it's $58. So technically it's a bull market for the miner market. But still, because of unbalance, caused by the tariff policy fluctuations in North America. Currently, I think the ASP for the miners is lower than it should be. This is what we are facing today. We are talking higher ASP. The method for us is to reopen the channel to send more or manufacture or produce more miners in the U.S. Then the supply and demand could be solved. I think for the U.S. market, because the tariff stuff, the AISPs may be maybe higher than what we expected, but you know, because the cost is higher, so we need to sell the machines at a higher price. It's not a healthy SP growth, I think, but it will happen. And also, most of the orders, it happens outside US in Q2. In Q3, more and more, new customers coming, which is coming in Q1 and Q2, are making deals with us. So we are in, I think personally we are in a very cautious optimistic for the ASPs in late 2025. And because the machine's performance is higher, and we have a 16th following. So we have better machines, then the ASPs should also be higher. So this is my comment on the ASP session. Thank you.

Thank you. As there are no further questions in queue, now I'd like to turn the call back over to the company for any closing remarks.

Thank you, everyone, for joining us on the call today. If you have any further questions, feel free to reach us directly or through the contact information that you can find on our website.

Thanks. That concludes the conference call for today. Thank you, everyone, for attending, and you may now disconnect.