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What changed in Canaan Inc.'s 20-F — 2024 vs 2025

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Paragraph-level year-over-year comparison of Canaan Inc.'s 2024 and 2025 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+434 added−434 removedSource: 20-F (2026-04-15) vs 20-F (2025-04-18)

Top changes in Canaan Inc.'s 2025 20-F

434 paragraphs added · 434 removed · 343 edited across 4 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

159 edited+44 added−42 removed470 unchanged
Biggest changeIf we fail to continuously innovate and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing customers, and hence our business and results of operations may be adversely affected. ● We are subject to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could negatively affect our business, results of operations and financial position. ● Changes in the Bitcoin algorithm or the mining mechanism may materially and adversely affect our business and results of operations. ● We lack a significant operating history in the Bitcoin mining space, and our strategic focus on this relatively new business is subject to a number of significant risks and uncertainties that could affect our future viability. ● We may be unable to make the substantial research and development investments that are required to remain competitive in our business. ● Our Bitcoin mining machine business depends on supplies from limited numbers of third-party foundry partners, and any failure to obtain sufficient foundry capacity from these third-party foundry partners would significantly delay the shipment of our products. ● Failure to maintain inventory levels in line with the approximate level of demand for our products could cause us to lose sales, expose us to increased inventory risks and subject us to increases in holding costs, risk of inventory obsolescence, increases in markdown allowances and write-offs, any of which could have a material adverse effect on our business, financial condition and results of operations. ● Our limited operating history and rapid revenue growth may make it difficult for us to forecast our business and assess the seasonality and volatility in our business. 5 Table of Contents ● Our prepayments to suppliers may subject us to counterparty risk associated with such suppliers and negatively affect our liquidity and cash position. ● Failure at tape-out or failure to achieve the expected final test yields for our ASICs could negatively impact our operating results. ● The acceptance of Bitcoin network software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could result in a “fork” in the blockchain, resulting in the operation of two separate networks that cannot be merged.
Biggest changeThis development would negatively affect the economic returns of Bitcoin mining activities, which would decrease the demand for and/or pricing of our products. ● We may be unable to make the substantial research and development investments that are required to remain competitive in our business. 5 Table of Contents ● Our Bitcoin mining machine business depends on supplies from limited numbers of third-party foundry partners, and any failure to obtain sufficient foundry capacity from these third-party foundry partners would significantly delay the shipment of our products. ● Failure to maintain inventory levels in line with the approximate level of demand for our products could cause us to lose sales, expose us to increased inventory risks and subject us to increases in holding costs, risk of inventory obsolescence, increases in markdown allowances and write-offs, any of which could have a material adverse effect on our business, financial condition and results of operations. ● Our limited operating history and rapid revenue growth may make it difficult for us to forecast our business and assess the seasonality and volatility in our business. ● Our prepayments to suppliers may subject us to counterparty risk associated with such suppliers and negatively affect our liquidity and cash position. ● Failure at tape-out or failure to achieve the expected final test yields for our ASICs could negatively impact our operating results. ● The acceptance of Bitcoin network software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could result in a “fork” in the blockchain, resulting in the operation of two separate networks that cannot be merged.
The Revised Review Measures further stipulate that if a network platform operator has personal information of over one million users and intends to be listed in a foreign country, it must be subject to the cybersecurity review.
The Revised Review Measures further stipulate that if a network platform operator has personal information of over one million users and intends to be listed in a foreign country, it must be subject to the cybersecurity review.
As a stock enterprise ( 存量企 业 ), we shall file with the CSRC within 3 working days after the subsequent securities offering is completed. The CSRC shall order rectification, issue warnings and impose fines to the company fails to fulfill filing procedure as stipulated in Overseas Listing Trial Measures.
As a stock enterprise ( 存量企 业 ), we shall file with the CSRC within 3 working days after the subsequent securities offering is completed. The CSRC shall order rectification, issue warnings and impose fines to the company fails to fulfill filing procedure as stipulated in Overseas Listing Trial Measures.
In addition, the CSRC published the Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises ( 《关于加 强境 内企 业境外发行证券和上市相关保密和档案管理工作的规定》 ) on February 24, 2023, which became effective on March 31, 2023.
In addition, the CSRC published the Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises ( 《关于加 强境 内企 业境外发行证券和上市相关保密和档案管理工作的规定》 ) on February 24, 2023, which became effective on March 31, 2023.
The CSRC stipulates domestic enterprises, securities companies and securities service agencies which provide the corresponding services in the course of overseas issuance and listing of domestic enterprises, shall strengthen legal awareness of confidentiality of State secrets and archives administration, establish a sound system for confidentiality and archives work, adopt the requisite measures to perform the responsibilities of confidentiality and archives administration.
The CSRC stipulates domestic enterprises, securities companies and securities service agencies which provide the corresponding services in the course of overseas issuance and listing of domestic enterprises, shall strengthen legal awareness of confidentiality of State secrets and archives administration, establish a sound system for confidentiality and archives work, adopt the requisite measures to perform the responsibilities of confidentiality and archives administration.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The expansion exposes us to a number of risks, including: ● we have a limited customer base and limited sales and relationships with international customers; ● difficulty in managing multinational operations; ● we may face competitors in the overseas markets who are more dominant and have stronger ties with customers and greater financial and other resources; ● fluctuations in currency exchange rates; ● challenges in providing customer services and support in these markets; ● challenges in managing our international sales channels effectively; ● unexpected transportation delays or interruptions or increases in international transportation costs; ● difficulties in and costs of exporting products overseas while complying with the different commercial, legal and regulatory requirements of the overseas markets in which we offer our products; ● difficulty in ensuring that our customers comply with the sanctions imposed by the Office of Foreign Assets Control, or OFAC, on various foreign states, organizations and individuals; ● inability to obtain, maintain or enforce intellectual property rights; ● inability to effectively enforce contractual or legal rights or intellectual property rights in certain jurisdictions under which we operate, including contracts with our existing and future customers and partners; ● changes in a specific country or region’s political or economic conditions or policies; ● unanticipated changes in prevailing economic conditions and regulatory requirements; and 36 Table of Contents ● governmental policies favoring domestic companies in certain foreign markets or trade barriers including export requirements, tariffs, taxes and other restrictions and charges.
The expansion exposes us to a number of risks, including: ● we have a limited customer base and limited sales and relationships with international customers; ● difficulty in managing multinational operations; ● we may face competitors in the overseas markets who are more dominant and have stronger ties with customers and greater financial and other resources; ● fluctuations in currency exchange rates; 36 Table of Contents ● challenges in providing customer services and support in these markets; ● challenges in managing our international sales channels effectively; ● unexpected transportation delays or interruptions or increases in international transportation costs; ● difficulties in and costs of exporting products overseas while complying with the different commercial, legal and regulatory requirements of the overseas markets in which we offer our products; ● difficulty in ensuring that our customers comply with the sanctions imposed by the Office of Foreign Assets Control, or OFAC, on various foreign states, organizations and individuals; ● inability to obtain, maintain or enforce intellectual property rights; ● inability to effectively enforce contractual or legal rights or intellectual property rights in certain jurisdictions under which we operate, including contracts with our existing and future customers and partners; ● changes in a specific country or region’s political or economic conditions or policies; ● unanticipated changes in prevailing economic conditions and regulatory requirements; and ● governmental policies favoring domestic companies in certain foreign markets or trade barriers including export requirements, tariffs, taxes and other restrictions and charges.
For example, we face risks associated with regulatory approvals on offerings conducted overseas and foreign investment in issuers with a substantial level of China-based operations, anti-monopoly regulatory actions, regulatory actions for virtual currency-related business activities and mining activities and oversight on cybersecurity and data privacy, which may negatively impact our ability to conduct certain businesses, access foreign investments, or list on foreign stock exchange.
For example, we face risks associated with regulatory approvals on offerings conducted overseas and foreign investment in issuers with a substantial level of China-based operations, anti-monopoly regulatory actions, regulatory actions for virtual currency-related business activities and crypto mining activities and oversight on cybersecurity and data privacy, which may negatively impact our ability to conduct certain businesses, access foreign investments, or list on foreign stock exchange.
In general, we will be a PFIC for United States federal income tax purposes for any taxable year if, after applying the applicable look-through rules, either: ● at least 75% of our gross income is passive income; or ● at least 50% of the value of our assets (generally determined based on an average of the quarterly asset values for such year) is attributable to assets that produce or are held for the production of passive income. 44 Table of Contents The determination of whether we are a PFIC is made annually and involves extensive factual investigation, including ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income that we earn during the relevant taxable year, and is subject to uncertainty in several respects.
In general, we will be a PFIC for United States federal income tax purposes for any taxable year if, after applying the applicable look-through rules, either: ● at least 75% of our gross income is passive income; or ● at least 50% of the value of our assets (generally determined based on an average of the quarterly asset values for such year) is attributable to assets that produce or are held for the production of passive income. 45 Table of Contents The determination of whether we are a PFIC is made annually and involves extensive factual investigation, including ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income that we earn during the relevant taxable year, and is subject to uncertainty in several respects.
However, there is a significant risk that we will be unable to achieve the anticipated benefits from such strategic collaborations, which would damage our business and could lead to the loss of our investment in Bitcoin mining, for a variety of reasons, including, among others: ● Because of supply chain disruptions resulting from the COVID-19 pandemic or geopolitical crises, we could in the future encounter delivery delays or other difficulties with the installing and operating our mining machines at the facility of our partners; ● Due to the environmental-impact concerns related to the potential high demand for electricity to support bitcoin mining activity and political concerns, and for other reasons, our partners may be required to cease mining operations without any prior notice by a national or local government’s formal or informal requirement or because of the anticipation of an impending requirement; ● Bans from governments, together with pending legislation and other regulatory initiatives, may threaten the ability to use Bitcoin or cryptocurrencies as a medium of exchange; ● We may not be able to liquidate our holdings of Bitcoin at our desired prices if a precipitous decline in market prices occurs and this could negatively impact our future operations; and ● Our efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove more costly than expected, and we may be subject to the risks of adverse effects to our business, results of operations and liquidity if past and future undertakings and the associated changes to our business, do not prove to be cost effective or result in the cost savings and other benefits at the levels that we anticipate.
However, there is a significant risk that we will be unable to achieve the anticipated benefits from such strategic collaborations, which would damage our business and could lead to the loss of our investment in Bitcoin mining, for a variety of reasons, including, among others: ● Because of supply chain disruptions resulting from the geopolitical crises or other factors, we could in the future encounter delivery delays or other difficulties with the installing and operating our mining machines at the facility of our partners; ● Due to the environmental-impact concerns related to the potential high demand for electricity to support bitcoin mining activity and political concerns, and for other reasons, our partners may be required to cease mining operations without any prior notice by a national or local government’s formal or informal requirement or because of the anticipation of an impending requirement; ● Bans from governments, together with pending legislation and other regulatory initiatives, may threaten the ability to use Bitcoin or cryptocurrencies as a medium of exchange; ● We may not be able to liquidate our holdings of Bitcoin at our desired prices if a precipitous decline in market prices occurs and this could negatively impact our future operations; ● Our efforts may not provide the expected benefits in our anticipated time frame, if at all, and may prove more costly than expected, and we may be subject to the risks of adverse effects to our business, results of operations and liquidity if past and future undertakings and the associated changes to our business, do not prove to be cost effective or result in the cost savings and other benefits at the levels that we anticipate.
Political tensions between the United States and China have escalated in recent years due to, among other things, the trade war between the two countries since 2018, the COVID-19 outbreak, the PRC National People’s Congress’ passage of Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong Special Administrative Region by the U.S. government, and the imposition of sanctions on certain individuals from the U.S. by the PRC government, the implementation of regulations in the United States restricting the export of semiconductor and advanced computing products and technology to China, prohibitions on U.S. persons investing in the publicly-traded securities of certain Chinese companies, as well as the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by China’s Ministry of Commerce on January 9, 2021, which apply to Chinese individuals or entities that are purportedly barred by a foreign country’s law from dealing with nationals or entities of a third country.
Political tensions between the United States and China have escalated in recent years due to, among other things, the trade war between the two countries since 2018, the PRC National People’s Congress’ passage of Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong Special Administrative Region by the U.S. government, and the imposition of sanctions on certain individuals from the U.S. by the PRC government, the implementation of regulations in the United States restricting the export of semiconductor and advanced computing products and technology to China, prohibitions on U.S. persons investing in the publicly-traded securities of certain Chinese companies, as well as the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by China’s Ministry of Commerce on January 9, 2021, which apply to Chinese individuals or entities that are purportedly barred by a foreign country’s law from dealing with nationals or entities of a third country.
A strong growth in Bitcoin mining machines connected online can contribute to further growth in the total computing power in the network, thereby driving up the difficulty of Bitcoin mining and coupled with the decrease in Bitcoin reward per participated computing power unit, resulting in downward pressure on the expected economic return of Bitcoin mining and the demand for, and pricing of, our products, under the assumption that the price of Bitcoin does not increase enough. 11 Table of Contents We may be unable to make the substantial research and development investments that are required to remain competitive in our business.
A strong growth in Bitcoin mining machines connected online can contribute to further growth in the total computing power in the network, thereby driving up the difficulty of Bitcoin mining and coupled with the decrease in Bitcoin reward per participated computing power unit, resulting in downward pressure on the expected economic return of Bitcoin mining and the demand for, and pricing of, our products, under the assumption that the price of Bitcoin does not increase enough. 13 Table of Contents We may be unable to make the substantial research and development investments that are required to remain competitive in our business.
Also, PRC governmental authorities’ oversight and control over offerings conducted overseas by, and foreign investment in, issuers with a substantial level of China-based operations could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and result in a material adverse change in our operations and the value of our ADSs. ● Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions in a timely manner. ● The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections. 6 Table of Contents ● Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China.
Also, PRC governmental authorities’ oversight and control over offerings conducted overseas by, and foreign investment in, issuers with a substantial level of China-based operations could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and result in a material adverse change in our operations and the value of our ADSs. ● Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions in a timely manner. ● The PCAOB had historically been unable to inspect auditor located in China in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections. ● Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China.
Some of our operating subsidiaries were recently formed in recent years to explore the global markets for our products. Their limited operating history makes it difficult for us to evaluate their current business and future prospects.
Some of our operating subsidiaries were formed in recent years to explore the global markets for our products. Their limited operating history makes it difficult for us to evaluate their current business and future prospects.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on its financial statements filed with the SEC, we would be identified as a Commission - Identified Issuer following the filing of the annual report on Form 20 - F for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
This could in turn result in lost sales and have a material adverse effect on our relationships with our customers and on our business and financial condition. 12 Table of Contents In addition, we depend on our third-party foundry partners to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable final test yields and to deliver those products to us on a timely basis and at acceptable prices.
This could in turn result in lost sales and have a material adverse effect on our relationships with our customers and on our business and financial condition. 14 Table of Contents In addition, we depend on our third-party foundry partners to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable final test yields and to deliver those products to us on a timely basis and at acceptable prices.
Furthermore, excess inventories, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our Bitcoin mining machines could all have a material adverse impact on our business, financial condition and results of operations. 8 Table of Contents The industries in which we operate are characterized by constant changes.
Furthermore, excess inventories, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or pricing competition for our Bitcoin mining machines could all have a material adverse impact on our business, financial condition and results of operations. 9 Table of Contents The industries in which we operate are characterized by constant changes.
Risk Factors—Risks Relating to Doing Business in the PRC—Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions in a timely manner.” For the years ended December 31, 2022, 2023 and 2024, no dividends or distributions were made to Canaan Inc. by our PRC subsidiaries.
Risk Factors—Risks Relating to Doing Business in the PRC—Our corporate structure may restrict our ability to receive dividends from, and transfer funds to, our PRC subsidiaries, which could restrict our ability to act in response to changing market conditions in a timely manner.” For the years ended December 31, 2023, 2024 and 2025, no dividends or distributions were made to Canaan Inc. by our PRC subsidiaries.
In addition to market and industry factors, the price and trading volume of our ADSs may be highly volatile due to factors specific to our own operations, including the following: ● variations in our revenues, earnings and cash flow; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new offerings, solutions and expansions by us or our competitors; ● changes in financial estimates by securities analysts; ● detrimental adverse publicity about us, our products or our industry; ● additions or departures of key personnel; ● the release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and 37 Table of Contents ● potential litigation or regulatory investigations.
In addition to market and industry factors, the price and trading volume of our ADSs may be highly volatile due to factors specific to our own operations, including the following: ● variations in our revenues, earnings and cash flow; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new offerings, solutions and expansions by us or our competitors; ● changes in financial estimates by securities analysts; ● detrimental adverse publicity about us, our products or our industry; ● additions or departures of key personnel; ● the release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and ● potential litigation or regulatory investigations.
However, if any of these subsidiaries fails to pass the review by, and filing with, the relevant tax authorities to be qualified as a HNTE, such company will no longer enjoy the corresponding preferential tax treatment described above. We require various approvals, licenses, permits and certifications to operate our business in various countries across the globe.
However, if any of these subsidiaries fail to pass the review by, and filing with, the relevant tax authorities to be qualified as a HNTE, such company will no longer enjoy the corresponding preferential tax treatment described above. We require various approvals, licenses, permits and certifications to operate our business in various countries across the globe.
For this reason, we do not expect we will be identified as a Commission - Identified Issuer under the HFCAA after we file this annual report for the fiscal year ended December 31, 2024. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
For this reason, we do not expect we will be identified as a Commission - Identified Issuer under the HFCAA after we file this annual report for the fiscal year ended December 31, 2025. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Based upon the market price of our ADSs, the value of our assets and the nature and composition of our income and assets, we believe we were not a passive foreign investment company, or PFIC, for United Sates federal income tax purposes for our taxable year ended December 31, 2024, although there can be no assurance in this regard.
Based upon the market price of our ADSs, the value of our assets and the nature and composition of our income and assets, we believe we were not a passive foreign investment company, or PFIC, for United Sates federal income tax purposes for our taxable year ended December 31, 2025, although there can be no assurance in this regard.
We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations. We operate in highly competitive industries for Bitcoin mining machines and edge computing products, and we may look to enter into markets with very competitive landscapes.
We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations. We operate in highly competitive industries for Bitcoin mining machines, and we may look to enter into markets with very competitive landscapes.
While we have achieved multiple tape-out in the initial batch historically, we cannot assure you that we will be able to continue to have a high tape-out success rate in the future. 16 Table of Contents Once tape-out is successful, the ASIC design is sent for manufacturing, and the final test yield is a measurement of the production success rate.
While we have achieved multiple tape-out in the initial batch historically, we cannot assure you that we will be able to continue to have a high tape-out success rate in the future. 18 Table of Contents Once tape-out is successful, the ASIC design is sent for manufacturing, and the final test yield is a measurement of the production success rate.
If we were unable to conduct our business as it is currently conducted as a result of such regulatory changes, our business, results of operations and financial condition would be materially and adversely affected. We face risks related to natural disasters, health epidemics, such as COVID-19, and other catastrophes, which could significantly disrupt our operations.
If we were unable to conduct our business as it is currently conducted as a result of such regulatory changes, our business, results of operations and financial condition would be materially and adversely affected. We face risks related to natural disasters, health epidemics, and other catastrophes, which could significantly disrupt our operations.
Under PRC law, Canaan Inc. may provide funding to our PRC subsidiaries only through capital contributions or loans, subject to satisfaction of applicable government registration and approval requirements. For the years ended December 31, 2022, 2023 and 2024, Canaan Inc. did not provide loans to its PRC subsidiaries through its Hong Kong subsidiary.
Under PRC law, Canaan Inc. may provide funding to our PRC subsidiaries only through capital contributions or loans, subject to satisfaction of applicable government registration and approval requirements. For the years ended December 31, 2023, 2024 and 2025, Canaan Inc. did not provide loans to its PRC subsidiaries through its Hong Kong subsidiary.
We expect that competition in our markets will continue to be intense, as we compete not only with existing players that have been focusing on Bitcoin mining or edge computing, but also new entrants that include well-established players in the semiconductor industry, or players who have not been predisposed to this industry in the past.
We expect that competition in our markets will continue to be intense, as we compete not only with existing players that have been focusing on Bitcoin mining, but also new entrants that include well-established players in the semiconductor industry, or players who have not been predisposed to this industry in the past.
For all of these reasons, our plan to develop Bitcoin mining business may ultimately not be successful or will not achieve viable business scale or market acceptance. 19 Table of Contents As we enter into the Bitcoin mining business, we will be subject to risks associated with our need for significant electrical power.
For all of these reasons, our plan to develop Bitcoin mining business may ultimately not be successful or will not achieve viable business scale or market acceptance. 20 Table of Contents As we enter into the Bitcoin mining business, we will be subject to risks associated with our need for significant electrical power.
The effect of this discretionary proxy is that you cannot prevent the underlying ordinary shares represented by the ADSs from being voted, except under the circumstances described above. This may make it more difficult for holders to influence the management of the Company. Holders of ordinary shares are not subject to this discretionary proxy.
The effect of this discretionary proxy is that you cannot prevent the underlying Class A ordinary shares represented by the ADSs from being voted, except under the circumstances described above. This may make it more difficult for holders to influence the management of the Company. Holders of ordinary shares are not subject to this discretionary proxy.
As of December 31, 2024, our online discussion forum had far less than one million of registered users. As such, we are subject to various regulatory requirements relating to cyber-security and data privacy, including, without limitation the PRC Cybersecurity Law.
As of December 31, 2025, our online discussion forum had far less than one million of registered users. As such, we are subject to various regulatory requirements relating to cyber-security and data privacy, including, without limitation the PRC Cybersecurity Law.
For the years ended December 31, 2022, 2023 and 2024, no cash generated from one of our subsidiaries was used to fund another subsidiary’s operations. And we do not have any policy in place that dictate such funding.
For the years ended December 31, 2023, 2024 and 2025, no cash generated from one of our subsidiaries was used to fund another subsidiary’s operations. And we do not have any policy in place that dictate such funding.
Many companies have encountered substantial intellectual property infringement in countries where we sell or intend to sell our products. ​ 20 Table of Contents Monitoring unauthorized use of our IP is difficult and costly. Unauthorized use of our IP may have occurred or may occur without our knowledge.
Many companies have encountered substantial intellectual property infringement in countries where we sell or intend to sell our products. ​ 21 Table of Contents Monitoring unauthorized use of our IP is difficult and costly. Unauthorized use of our IP may have occurred or may occur without our knowledge.
Aggressive pricing strategies by our competitors and an abundant supply of Bitcoin mining machines or edge computing products in the market may cause us to reduce the prices of our products and also negatively affect the demand for our products or harm our profitability.
Aggressive pricing strategies by our competitors and an abundant supply of Bitcoin mining machines in the market may cause us to reduce the prices of our products and also negatively affect the demand for our products or harm our profitability.
The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.
The PCAOB had historically been unable to inspect auditor located in China in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.
Since our inception, the growth and expansion of our business operations have been dependent upon the business strategies and foresight of our senior management. Our future success depends, in large part, on the continued contributions of our senior management team, especially Mr. Nangeng Zhang.
Since our inception, the growth and expansion of our business operations have been dependent upon the business strategies and foresight of our senior management. Our future success depends, in large part, on the continued contributions of our senior management team, especially Mr.
These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations. 31 Table of Contents In 2021, the PRC government announced its plans to enhance its regulatory oversight of companies with a substantial level of China - based operations listing overseas.
These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business, financial condition and results of operations. In 2021, the PRC government announced its plans to enhance its regulatory oversight of companies with a substantial level of China - based operations listing overseas.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your ordinary shares.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 41 Table of Contents The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your ordinary shares.
The spin-offs of certain business units may cause the loss of some of our clients or users, or disruption in the provision of the services that are being carved out, and may require additional attention from our management. 22 Table of Contents Changes in international trade policies and international barriers to trade may have an adverse effect on our business and expansion plans.
The spin-offs of certain business units may cause the loss of some of our clients or users, or disruption in the provision of the services that are being carved out, and may require additional attention from our management. Changes in international trade policies and international barriers to trade may have an adverse effect on our business and expansion plans.
If we are unsuccessful in defending against such claims, we could be subject to significant monetary damages or injunctive relief, which could have a material adverse effect on our business, financial condition, and results of operations. Historically, a significant portion of our revenue was contributed by a limited number of clients.
If we are unsuccessful in defending against such claims, we could be subject to significant monetary damages or injunctive relief, which could have a material adverse effect on our business, financial condition, and results of operations. 27 Table of Contents Historically, a significant portion of our revenue was contributed by a limited number of clients.
These limitations on the free flow of funds between us and our PRC subsidiaries could restrict our ability to act in response to changing market conditions in a timely manner. 34 Table of Contents Dividends payable by us to our foreign investors and gains on the sale of the ADSs may become subject to withholding taxes under the PRC tax laws.
These limitations on the free flow of funds between us and our PRC subsidiaries could restrict our ability to act in response to changing market conditions in a timely manner. Dividends payable by us to our foreign investors and gains on the sale of the ADSs may become subject to withholding taxes under the PRC tax laws.
In addition, if the license terms for the open source software we utilize change, we may be forced to re-engineer or discontinue our solutions or incur additional costs. 18 Table of Contents If we are unable to maintain or enhance our brand recognition, our business, financial condition and results of operations may be materially and adversely affected.
In addition, if the license terms for the open source software we utilize change, we may be forced to re-engineer or discontinue our solutions or incur additional costs. If we are unable to maintain or enhance our brand recognition, our business, financial condition and results of operations may be materially and adversely affected.
Any such development in the jurisdictions where we sell our Bitcoin mining machines could have a material and adverse effect on our business, financial condition and results of operations. 29 Table of Contents We may be subject to fines and other administrative penalties resulting from the operation of our business, which could materially and adversely affect our business, financial condition and results of operation.
Any such development in the jurisdictions where we sell our Bitcoin mining machines could have a material and adverse effect on our business, financial condition and results of operations. We may be subject to fines and other administrative penalties resulting from the operation of our business, which could materially and adversely affect our business, financial condition and results of operation.
If we are unable to execute our growth strategies or manage our growth effectively, we may not be able to capture market opportunities or respond to competitive pressures, which may materially and adversely affect our business prospects and results of operations. 14 Table of Contents We rely on limited numbers of third parties to package and test our products.
If we are unable to execute our growth strategies or manage our growth effectively, we may not be able to capture market opportunities or respond to competitive pressures, which may materially and adversely affect our business prospects and results of operations. We rely on limited numbers of third parties to package and test our products.
Any failure to raise needed funds on terms favorable to us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
Any failure to raise needed funds on terms favorable to us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. 28 Table of Contents Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
Any of the foregoing results could have a material adverse effect on our business, financial condition and results of operations. 21 Table of Contents The loss of any member of our senior management team, or our failure to attract, train and retain qualified personnel, especially our design and technical personnel, could impair our ability to grow our business and effectively execute our business strategy.
Any of the foregoing results could have a material adverse effect on our business, financial condition and results of operations. The loss of any member of our senior management team, or our failure to attract, train and retain qualified personnel, especially our design and technical personnel, could impair our ability to grow our business and effectively execute our business strategy.
The amended Enterprise Income Tax Law and its implementation rules permit certain “high and new technology enterprises strongly supported by the state,” or HNTEs, which hold independent ownership of core intellectual property to enjoy a preferential enterprise income tax rate, or EIT rate, of 15% subject to certain qualification criteria.
The amended Enterprise Income Tax Law and its implementation rules permit certain “high and new technology enterprises strongly supported by the state”, or HNTEs, which hold independent ownership of core intellectual property to enjoy a preferential enterprise income tax rate, or EIT rate, of 15% subject to certain qualification criteria.
We are not aware of such breaches to date. Any of these developments could have a material adverse effect on our business, financial condition and results of operations. Our business is subject to various evolving PRC laws and regulations regarding data privacy and cyber-security.
We are not aware of such breaches to date. Any of these developments could have a material adverse effect on our business, financial condition and results of operations. 25 Table of Contents Our business is subject to various evolving PRC laws and regulations regarding data privacy and cyber-security.
This will have an impact on our effective tax rate, a material adverse effect on our net income and results of operations, and may require us to withhold tax on our non-PRC shareholders. 35 Table of Contents Government control of foreign currency conversion may affect the value of your investment.
This will have an impact on our effective tax rate, a material adverse effect on our net income and results of operations, and may require us to withhold tax on our non-PRC shareholders. Government control of foreign currency conversion may affect the value of your investment.
We may have trade receivables in the future and there can be no assurance that we will be able to collect our trade receivables on a timely basis, and our trade receivable turnover days may increase, which in turn could materially and adversely affect our liquidity, financial condition and results of operations.
There can be no assurance that we will be able to collect our trade receivables on a timely basis, and our trade receivable turnover days may increase, which in turn could materially and adversely affect our liquidity, financial condition and results of operations.
Legal protections available to you under the legal system of the PRC may be limited. ● PRC governmental authorities may influence or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs.
Legal protections available to you under the legal system of the PRC may be limited. 6 Table of Contents ● PRC governmental authorities may influence or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs.
We may be subject to product liability claims and litigation for compensation, which could result in substantial and unexpected expenditures and could materially and adversely affect our cash flow and operating results. Our Bitcoin mining machines use open source software and hardware as their basic controller system, which may subject us to certain risks.
We may be subject to product liability claims and litigation for compensation, which could result in substantial and unexpected expenditures and could materially and adversely affect our cash flow and operating results. 19 Table of Contents Our Bitcoin mining machines use open source software and hardware as their basic controller system, which may subject us to certain risks.
Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result. You may be subject to limitations on the transfer of your ADSs. Your ADSs are transferable on the books of the depositary.
Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result. 43 Table of Contents You may be subject to limitations on the transfer of your ADSs. Your ADSs are transferable on the books of the depositary.
Our ability to achieve profitability and positive cash flow from operating activities will depend on a mix of factors, some of which are beyond our control, including the price of Bitcoin, up-front investment for our mining business, our ability to grow our edge computing business and manage our product mix and our ability to secure favorable commercial terms from suppliers. 15 Table of Contents Shortages in, or increases in the prices of, the components of our products may adversely affect our business.
Our ability to achieve profitability and positive cash flow from operating activities will depend on a mix of factors, some of which are beyond our control, including the price of Bitcoin, up-front investment for our mining business, our ability to manage our product mix and our ability to secure favorable commercial terms from suppliers. 17 Table of Contents Shortages in, or increases in the prices of, the components of our products may adversely affect our business.
In all cases, our business, financial condition and results of operations could be materially and adversely affected. Risks Relating to the ADSs The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
In all cases, our business, financial condition and results of operations could be materially and adversely affected. 37 Table of Contents Risks Relating to the ADSs The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.
Our limited operating history and rapid revenue growth may make it difficult for us to forecast our business and assess the seasonality and volatility in our business. As the markets for Bitcoin mining machines and edge computing chip applications are relatively young and still developing, we cannot forecast longer-term demand or order patterns for our products.
Our limited operating history and rapid revenue growth may make it difficult for us to forecast our business and assess the seasonality and volatility in our business. As the markets for Bitcoin mining machines are relatively young and still developing, we cannot forecast longer-term demand or order patterns for our products.
As most of our expenses are fixed in the short-term or incurred in advance of anticipated total revenue, we may not be able to adjust our expenses in a timely manner in order to offset any shortfall in revenue. Our business is subject to the varying order patterns of the Bitcoin mining machine and edge computing products markets.
As most of our expenses are fixed in the short-term or incurred in advance of anticipated total revenue, we may not be able to adjust our expenses in a timely manner in order to offset any shortfall in revenue. Our business is subject to the varying order patterns of the Bitcoin mining machine markets.
Nangeng Zhang, our chairman and chief executive officer, beneficially own 100% of our Class B ordinary shares, representing approximately 46.2% of the aggregate voting power of our issued and outstanding share capital as of the date of this annual report. However, the interests of our chairman and chief executive officer may differ from the interests of other shareholders.
Nangeng Zhang, our chairman and chief executive officer, beneficially own 100% of our Class B ordinary shares, representing approximately 31.9% of the aggregate voting power of our issued and outstanding share capital as of the date of this annual report. However, the interests of our chairman and chief executive officer may differ from the interests of other shareholders.
Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024. See “Item 15.
Our management has concluded that our internal control over financial reporting was effective as of December 31, 2025. See “Item 15.
You may not realize a return on your investment in the ADSs, and you may even lose your entire investment in the ADSs. 38 Table of Contents The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.
You may not realize a return on your investment in the ADSs, and you may even lose your entire investment in the ADSs. The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.
We derive our revenues from the sale of products and are subject to counterparty risks such as our customer’s inability to pay. As of December 31, 2022, 2023 and 2024, our trade receivables amounted to nil, US$3.0 million and US$1.5 million, respectively.
We derive our revenues from the sale of products and are subject to counterparty risks such as our customer’s inability to pay. As of December 31, 2023, 2024 and 2025, our trade receivables amounted to US$3.0 million, US$1.5 million and US$19.3 million, respectively.
HNTEs status is subject to review and renewal every three years. Currently, we have two PRC subsidiaries that are recognized as HNTE and are thus eligible for the favorable 15% enterprise income tax rate from 2022 to 2024.
HNTEs status is subject to review and renewal every three years. Currently, we have two PRC subsidiaries that are recognized as HNTE and are thus eligible for the favorable 15% enterprise income tax rate from 2023 to 2025.
As of December 31, 2022, 2023 and 2024, the outstanding balance of prepayments we made to our third-party foundry partners amounted to US$150.6 million US$37.7 million and US$10.3 million, respectively. The amount of our prepayments can significantly increase at the beginning of our launch of advanced products in the future. We are subject to counterparty risk exposure to our suppliers.
As of December 31, 2023, 2024 and 2025, the outstanding balance of prepayments we made to our third-party foundry partners amounted to US$37.7 million, US$10.3 million and US$27.8 million, respectively. The amount of our prepayments can significantly increase at the beginning of our launch of advanced products in the future. We are subject to counterparty risk exposure to our suppliers.
In addition, our future success depends on our ability to retain, attract and incentivize qualified personnel, including our management, sales, marketing, finance and especially research and development personnel. As the driver of our technological and product innovations, our research and development personnel represent a very significant asset of ours.
Nangeng Zhang. 22 Table of Contents In addition, our future success depends on our ability to retain, attract and incentivize qualified personnel, including our management, sales, marketing, finance and especially research and development personnel. As the driver of our technological and product innovations, our research and development personnel represent a very significant asset of ours.
The Overseas Listing Trial Measures provide that if the issuer both meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by the issuer’s domestic companies; and (ii) the issuer’s business activities are substantially conducted in mainland China, or its principal place of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
The Overseas Listing Trial Measures regulate both direct and indirect overseas offering and listing by PRC domestic companies by adopting a filing-based regulatory regime. 1 Table of Contents The Overseas Listing Trial Measures provide that if the issuer both meets the following criteria, the overseas securities offering and listing conducted by such issuer will be deemed as indirect overseas offering subject to the filing procedure set forth under the Overseas Listing Trial Measures: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal year is accounted for by the issuer’s domestic companies; and (ii) the issuer’s business activities are substantially conducted in mainland China, or its principal place of business are located in mainland China, or the senior managers in charge of its business operations and management are mostly Chinese citizens or domiciled in mainland China.
The carrying value of our inventories was US$211.6 million, US$142.3 million and US$94.6 million as of December 31, 2022, 2023 and 2024, respectively. 13 Table of Contents The average selling prices of our products may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases, which may in turn adversely affect our profitability.
The carrying value of our inventories was US$142.3 million, US$94.6 million and US$180.8 million as of December 31, 2023, 2024 and 2025, respectively. 15 Table of Contents The average selling prices of our products may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases, which may in turn adversely affect our profitability.
If the market for Bitcoin mining machines ceases to exist or diminishes significantly, our business and results of operations would be materially harmed. Historically, we generated substantially all of our revenues from the sales of our Bitcoin mining machines that incorporate our proprietary ASICs.
If the market for Bitcoin mining machines ceases to exist or diminishes significantly, our business and results of operations would be materially harmed. Historically, we generated a significant portion of our revenues from the sales of our Bitcoin mining machines that incorporate our proprietary ASICs.
Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by economic, political and social conditions in China generally.
A significant portion of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by economic, political and social conditions in China generally.
As a fabless IC design company, we do not own any IC fabrication facilities and outsource the fabrication process of our ICs to third-party foundry partners. In 2022, the value of the wafers we purchased from the three major third-party foundry partners accounted for 76.2% of our total procurement of the year ended December 31, 2022.
As a fabless IC design company, we do not own any IC fabrication facilities and outsource the fabrication process of our ICs to third-party foundry partners. In 2023, the value of the wafers we purchased from one major third-party foundry partner accounted for 55.2% of our total procurement of the year ended December 31, 2023.
In 2022, 2023 and 2024, sales of our Bitcoin mining machines and related parts and accessories accounted for 94.8%, 83.1% and 82.6% of our revenues, respectively. We may continue to generate a significant portion of our revenue from the sales of Bitcoin mining machines in the foreseeable future.
In 2023, 2024 and 2025, sales of our Bitcoin mining machines and related parts and accessories accounted for 83.1%, 82.6% and 77.9% of our revenues, respectively. We may continue to generate a significant portion of our revenue from the sales of Bitcoin mining machines in the foreseeable future.
Reliance on these third parties for the testing and packaging of our ASICs presents significant risks to us, including the following: ● limited control over delivery schedules, quality assurance, final test yields and production costs; ● potential failure to obtain, or delay in obtaining, key process technologies; ● failure by us to find an alternative supplier in response to evolving international trade rules or export restrictions; ● capacity shortages during periods of high demand; ● shortages of materials; ● unauthorized use of our IP; ● limited warranties on ICs or products supplied to us; and The ability and willingness of our production partners to adequately and timely perform is largely beyond our control.
Reliance on these third parties for the testing and packaging of our ASICs presents significant risks to us, including the following: ● limited control over delivery schedules, quality assurance, final test yields and production costs; 16 Table of Contents ● potential failure to obtain, or delay in obtaining, key process technologies; ● failure by us to find an alternative supplier in response to evolving international trade rules or export restrictions; ● capacity shortages during periods of high demand; ● shortages of materials; ● unauthorized use of our IP; and ● limited warranties on ICs or products supplied to us.
If we cannot maintain the scale and profitability of our Bitcoin mining machines or successfully expand our business in the edge computing chip market, our business, results of operations and ability to continue to grow will suffer.
If we cannot maintain the scale and profitability of our Bitcoin mining machines or successfully expand our business in the Bitcoin mining operation, our business, results of operations and ability to continue to grow will suffer.
Failure of cyber-security and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.” It is uncertain whether or how these new laws, rules and regulations and the interpretation and implementation thereof may affect us, but among other things, our ability and the ability of our PRC subsidiaries to obtain external financing through the issuance of equity securities overseas could be negatively affected. ​ 32 Table of Contents You may experience difficulties enforcing judgments against us and our management in the PRC.
Failure of cyber-security and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.” It is uncertain whether or how these new laws, rules and regulations and the interpretation and implementation thereof may affect us, but among other things, our ability and the ability of our PRC subsidiaries to obtain external financing through the issuance of equity securities overseas could be negatively affected.
The Revised Review Measures and the Draft Regulations remain unclear on whether the relevant requirements will be applicable to companies, which have been listed in the United States, such as us. They also remain uncertain whether the future regulatory changes would impose additional restrictions on companies like us.
The Revised Review Measures remains unclear on whether the relevant requirements will be applicable to companies, which have been listed in the United States, such as us. It also remains uncertain whether the future regulatory changes would impose additional restrictions on companies like us.
We cannot predict the impact of the Revised Review Measures and the Draft Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. ​ 3 Table of Contents The Holding Foreign Companies Accountable Act Our auditor, KPMG Huazhen LLP is independent registered public accounting firms that issue the audit reports included elsewhere in this annual report.
We cannot predict the impact of the Revised Review Measures, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. 3 Table of Contents The Holding Foreign Companies Accountable Act Our auditor, KPMG Huazhen LLP is the independent registered public accounting firm that issues the audit report included elsewhere in this annual report and is located in mainland China.
For the year ended December 31, 2024, our top three customers account for 11%, 11% and 6% of total revenue from us, respectively. We may continue to generate a significant portion of our revenue from a limited number of clients in the future.
For the year ended December 31, 2025, our top three customers account for 20%, 13% and 4% of total revenue from us, respectively. We may continue to generate a significant portion of our revenue from a limited number of clients in the future.
Advances in edge computing technology, Bitcoin mining technology and the semiconductor industry have led to increased demand for ICs of higher speed and power efficiency for solving computational problems of increasing complexity. In 2022, 2023 and 2024, we incurred research and development expense of US$81.8 million, US$64.8 million and US$61.3 million, respectively.
Advances in Bitcoin mining technology and the semiconductor industry have led to increased demand for ICs of higher speed and power efficiency for solving computational problems of increasing complexity. In 2023, 2024 and 2025, we incurred research and development expense of US$64.9 million, US$61.3 million and US$63.1 million, respectively.
If one or more of these production partners fails to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.
The ability and willingness of our production partners to adequately and timely perform is largely beyond our control. If one or more of these production partners fails to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.
Department of the Treasury issued a final rule to implement President Biden’s August 2023 Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.
On October 28, 2024, the Office of Investment Security of the U.S. Department of the Treasury issued a final rule to implement President Biden’s August 2023 Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.
In 2024, a certain portion of our revenue was generated in the U.S. market, primarily through exports from our Malaysian operations. As of the date of this annual report, certain products we sell from Malaysia to the United States are subject to a 10% tariff pursuant to the tariff policy announced by Trump administration on April 9, 2025.
In 2025, a certain portion of our revenue was generated in the U.S. market, primarily through exports from our Southeast Asia operations. As of the date of this annual report, certain products we sell from Malaysia to the United States are subject to a 12.6% tariff pursuant to the tariff policy announced by Trump administration.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

81 edited+22 added−23 removed220 unchanged
Biggest changeAccording to the Arrangement, 5% withholding tax rate shall apply to the dividends paid by a PRC company to a Hong Kong resident, provided that such Hong Kong resident directly holds at least 25% of the equity interests in the PRC company, and 10% of withholding tax rate shall apply if the Hong Kong resident holds less than 25% of the equity interests in the PRC company. 66 Table of Contents Pursuant to the Circular on Relevant Issues Concerning the Implementation of Dividend Clauses in Tax Treaties (《 关于 执行税收协定股息条款有关问题的通知 》), which was promulgated by the State Administration of Taxation, or SAT, and became effective on February 20, 2009, all of the following requirements shall be satisfied where a fiscal resident of the other party to a tax agreement needs to be entitled to such tax agreement treatment as being taxed at a tax rate specified in the tax agreement for the dividends paid to it by a PRC resident company: (i) such a fiscal resident who obtains dividends shall be a company as provided in the tax agreement; (ii) owner’s equity interests and voting shares of the PRC resident company directly owned by such a fiscal resident reaches a specified percentage; and (iii) the equity interests of the PRC resident company directly owned by such a fiscal resident, at any time during the 12 months prior to obtaining the dividends, reach a percentage specified in the tax agreement.
Biggest changePursuant to the Circular on Relevant Issues Concerning the Implementation of Dividend Clauses in Tax Treaties ( 《关于 执行税收协定股息条款有关问题的通知》 ), which was promulgated by the State Administration of Taxation, or SAT, and became effective on February 20, 2009, all of the following requirements shall be satisfied where a fiscal resident of the other party to a tax agreement needs to be entitled to such tax agreement treatment as being taxed at a tax rate specified in the tax agreement for the dividends paid to it by a PRC resident company: (i) such a fiscal resident who obtains dividends shall be a company as provided in the tax agreement; (ii) owner’s equity interests and voting shares of the PRC resident company directly owned by such a fiscal resident reaches a specified percentage; and (iii) the equity interests of the PRC resident company directly owned by such a fiscal resident, at any time during the 12 months prior to obtaining the dividends, reach a percentage specified in the tax agreement. 66 Table of Contents According to the Tentative Administrative Measures on Tax Convention Treatment for Non-Residents ( 《非居民享受税收 协定待遇管理办法（试行）》 ), which was promulgated by the SAT on August 24, 2009 and became effective on October 1, 2009, where a non-resident enterprise that receives dividends from a PRC resident enterprise wishes to enjoy the favorable tax benefits under the tax arrangements, it shall submit an application for approval to the competent tax authority.
On November 25, 2024, we closed the Series A-1 preferred shares financing, raising total gross proceeds of US$30 million. All aforementioned Series A-1 Preferred Shares have been converted into Class A ordinary shares.
On November 25, 2024, we closed the 2024 Series A-1 preferred shares financing, raising total gross proceeds of US$30 million. All aforementioned 2024 Series A-1 Preferred Shares have been converted into Class A ordinary shares.
We filed a new prospectus supplement dated December 23, 2024, setting up the new at-the-market equity offering program (the “ATM Program”), under which we may sell up to an aggregate of US$270 million of the ADSs, each representing fifteen Class A ordinary shares of the Company, through or to the sales agents.
We filed a new prospectus supplement dated December 23, 2024, setting up the new at-the-market equity offering program (the “ATM Program”), under which we may sell up to an aggregate of US$270.0 million of the ADSs, each representing fifteen Class A ordinary shares of the Company, through or to the sales agents.
The United States Commodity Futures Trading Commission, or CFTC, has taken the position that crypto currencies, such as Bitcoin, are “commodities” covered by the Commodity Exchange Act and subject to regulation by the CFTC. In March 2018, a United States federal court affirmed the CFTC’s authority to regulate cryptocurrencies.
The United States Commodity Futures Trading Commission, or CFTC, has taken the position that crypto currencies, such as Bitcoin, are “commodities” covered by the Commodity Exchange Act and subject to regulation by the CFTC. In March 2018, a United States federal court affirmed the CFTC’s authority to regulate cryptocurrencies as commodities.
Considering the chip capacity shortage and supply chain restrictions that the semiconductor market has encountered, our operating subsidiaries maintain our cooperation with more than one production partners and suppliers in order to diversify our supply base and reduce supplier centralization risk.
Considering the chip capacity shortage and supply chain restrictions that the semiconductor market had encountered, our operating subsidiaries maintain our cooperation with more than one production partners and suppliers in order to diversify our supply base and reduce supplier centralization risk.
Nonetheless, in the United States, both the federal government and individual states have regulations in place that govern the offer, sale, and transmission of various types of cryptocurrency, including but not limited to Bitcoin, and the legal status of Bitcoin and other cryptocurrencies continues to evolve.
Nonetheless, in the United States, both the federal government and individual states have laws and regulations in place that govern the offer, sale, and transmission of various types of cryptocurrencies, including but not limited to Bitcoin, and the legal status of Bitcoin and other cryptocurrencies continues to evolve.
The Avalon Home series represent our first step into the consumer mining market, blending reliable hash rate output with user-friendly interfaces, low noise operation, and streamlined connectivity. These products are ideal for individual enthusiasts and early adopters seeking to participate in the Bitcoin ecosystem without the complexity of industrial setups.
The Avalon Home series represents our first step into the home-use consumer mining market, blending reliable hash rate output with user-friendly interfaces, low noise operation, and streamlined connectivity. These products are ideal for individual enthusiasts and early adopters seeking to participate in the Bitcoin ecosystem without the complexity of industrial setups.
We believe our extensive experience and expertise in ASIC applications position us well in our future endeavors. Leveraging our deep understanding of the cryptocurrency industry and strong technology as applied to ASIC chip design, we intend to capture the growth opportunity along the value chain of the cryptocurrency industry to enhance our offerings and achieve more stable financial performance.
We believe our extensive experience and expertise in ASIC applications position us well in our future endeavors. 48 Table of Contents Leveraging our deep understanding of the cryptocurrency industry and strong technology as applied to ASIC chip design, we intend to capture the growth opportunity along the value chain of the cryptocurrency industry to enhance our offerings and achieve more stable financial performance.
On December 23, 2024, we entered into a sales agreement (the “ATM Agreement”) with Macquarie Capital Limited, Keefe, Bruyette & Woods, Inc., China Renaissance Securities (Hong Kong) Limited, Compass Point Research & Trading, LLC, Craig-Hallum Capital Group LLC, Northland Securities, Inc., Rosenblatt Securities Inc., The Benchmark Company, LLC, and B. Riley Securities Inc. as sales agents.
On December 23, 2024, we entered into a sales agreement (the “2024 ATM Agreement”) with Macquarie Capital Limited, Keefe, Bruyette & Woods, Inc., China Renaissance Securities (Hong Kong) Limited, Compass Point Research & Trading, LLC, Craig-Hallum Capital Group LLC, Northland Securities, Inc., Rosenblatt Securities Inc., The Benchmark Company, LLC, and B. Riley Securities Inc. as sales agents.
The wafers are delivered in an average of four to six months from the time when an order is placed. Packaging and Testing We, through our operating subsidiaries, work with leading packaging and testing partners. According to our agreements, we provide rolling forecasts and firm orders for our packaging and testing partners to purchase necessary materials.
The wafers are delivered in an average of four to six months from the time when an order is placed. 52 Table of Contents Packaging and Testing We, through our operating subsidiaries, work with leading packaging and testing partners. According to our agreements, we provide rolling forecasts and firm orders for our packaging and testing partners to purchase necessary materials.
By the end of year 2024, we have expanded our service capabilities with over 20 aftersales service stations worldwide. We, through our operating subsidiaries, collect and record customer feedback and complaints from different channels and make timely responses in order to achieve customer satisfaction. We, through our operating subsidiaries, accept exchanges of our Bitcoin mining machines only for major defects.
By the end of year 2025, we have expanded our service capabilities with over 27 aftersales service stations worldwide. We, through our operating subsidiaries, collect and record customer feedback and complaints from different channels and make timely responses in order to achieve customer satisfaction. We, through our operating subsidiaries, accept exchanges of our Bitcoin mining machines only for major defects.
Unless stated otherwise, the rate of value-added tax is 17%. Pursuant to the Circular of Value-added Tax Policies of Software Products (《 关于 软件产品增值税政策的通知 》), a general taxpayer who sells its self-develop software products and borne a VAT more than 3%, could enjoy a levy-refund policy on VAT after being taxed at the fixed rate of 17%.
Pursuant to the Circular of Value-added Tax Policies of Software Products ( 《关于 软件产品增值税政策的通知》 ), a general taxpayer who sells its self-develop software products and borne a VAT more than 3%, could enjoy a levy-refund policy on VAT after being taxed at the fixed rate of 17%.
As of December 31, 2024, we and our operating subsidiaries occupied a total of 11 properties with an aggregate gross floor area of approximately 18,200 square meters. Environmental Matters Our operating subsidiaries are subject to environmental laws and regulations in the jurisdictions where they operate.
As of December 31, 2025, we and our operating subsidiaries occupied a total of 11 properties with an aggregate gross floor area of approximately 18,540 square meters. Environmental Matters Our operating subsidiaries are subject to environmental laws and regulations in the jurisdictions where they operate.
We have started with the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and aim to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our bitcoin mining machines sales. We also intend to engage in Bitcoin mining through self-owned facilities.
We have started with the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and energy providers, aiming to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our bitcoin mining machines sales. We also intend to engage in Bitcoin mining through self-owned facilities.
Set forth below are certain specifications of our selected AvalonMiner products. ​ ​ ​ ​ ​ ​ ​ ​ ​ Computing Power ​ ​ ​ ​ Power ​ Consumption Bitcoin Mining Machine ​ Release Year ​ (TH/s) ​ (J/THs) A8 Series ​ 2018 ​ 13-15 ​ 109.0 A9 Series ​ 2019 ​ 20 ​ 72.5 A10 Series 2019 50 65.0 A11 Series 2019 68-81 42.0-47.0 A12 Series 2020 90 38.0 A13 Series 2022 110-130 25.0-30.0 A14 Series 2023 150 21.5 A15 Series 2024 218-261 16.8-19 ​ 48 Table of Contents Our immersion-cooled mining machines are specifically designed to be deployed in quiet immersion-cooled environments, featuring relatively higher hash rate, better overclocking capability, more efficient heat dissipation, and reduced wear-and-tear compared to traditional air-cooled mining machines.
Set forth below are certain specifications of our selected AvalonMiner products. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Computing ​ ​ ​ Power ​ ​ ​ ​ Power ​ Consumption Bitcoin Mining Machine ​ Release Year ​ (TH/s) ​ (J/THs) A8 Series ​ 2018 ​ 13-15 ​ 109.0 A9 Series ​ 2019 ​ 20 ​ 72.5 A10 Series 2019 50 65.0 A11 Series 2019 68-81 42.0-47.0 A12 Series 2020 90 38.0 A13 Series 2022 110-130 25.0-30.0 A14 Series 2023 150 21.5 A15 Series 2024 218-261 16.8-19 A16 Series ​ 2025 ​ 286-300 ​ 12.8-13.8 ​ Our immersion-cooled and hydro-cooled mining machines are specifically designed to be deployed in featuring relatively higher hash rate, better overclocking capability, more efficient heat dissipation, and reduced wear-and-tear compared to traditional air-cooled mining machines.
From time to time, we, through our operating subsidiaries, maintain a presence on social media in order to raise awareness of our brand. In the first half of 2022, we, through our operating subsidiaries, launched an online store mainly targeting retail customers from overseas markets. In 2024, our online stores and channels have reached 80 countries and regions.
From time to time, we, through our operating subsidiaries, maintain a presence on social media in order to raise awareness of our brand. In the first half of 2022, we, through our operating subsidiaries, launched an online store mainly targeting retail customers from overseas markets. In 2025, our online stores and channels have reached nearly 100 countries and regions.
Our Avalon Home series currently encompass the Avalon Nano 3/3S, a desktop mining heater; the Avalon Mini 3, a quiet home heater with integrated mining capabilities; and the Avalon Q, our first low-noise home mining device that supports 110V, and are compatible with major global voltage standards.
Our Avalon Home series currently encompasses the Avalon Nano 3/3S, a desktop mining heater; the Avalon Mini 3, a quiet home heater with integrated mining capabilities; and the Avalon Q, our first low-noise home mining device that supports 110V, and is compatible with major global voltage standards.
Our operating subsidiaries typically settle with our packaging and testing partners on a monthly basis and are required to pay them within 30 days upon receipt of invoices. 52 Table of Contents Assembly Plant We have in-house capabilities to produce our products at our assembly plant located in the PRC with a total gross floor area of 7,465.5 square meters.
Our operating subsidiaries typically settle with our packaging and testing partners on a monthly basis and are required to pay them within 30 days upon receipt of invoices. Assembly Plant We have in-house capabilities to produce our products at our assembly plant located in the PRC with a total gross floor area of 7,378.0 square meters.
To align with the geographical evolvement of our clients’ locations, we have expanded into global markets and the revenue contribution from customers outside the PRC, such as customers in North America, West Asia, Southeast Asia, Europe and Africa, accounted for 69.7% of our total revenues generated from sales of Bitcoin mining machines and related parts and accessories in 2024.
To align with the geographical evolvement of our clients’ locations, we have expanded into global markets and the revenue contribution from customers outside the PRC, such as customers in North America, Africa, Southeast Asia and Europe, accounted for 58.9% of our total revenues generated from sales of Bitcoin mining machines and related parts and accessories in 2025.
Moreover, we have established in-house production capabilities to assemble both Bitcoin mining machines and edge computing chips. We primarily assemble our Bitcoin mining machines at our assembly plant in the PRC and through collaborations with selected assembly partners in Southeast Asia, by integrating our self-designed ICs with other sourced components.
Moreover, we have established in-house production capabilities to assemble Bitcoin mining machines. We primarily assemble our Bitcoin mining machines at our assembly plant in the PRC and through collaborations with selected assembly partners in Southeast Asia and the United States, by integrating our self-designed ICs with other sourced components.
We endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business. For the years ended December 31, 2022, 2023 and 2024, we generated revenue of US$32.5 million, US$34.0 million and US$44.0 million from the Bitcoin mining business, respectively.
We endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business. For the years ended December 31, 2023, 2024 and 2025, we generated revenue of US$34.0 million, US$44.0 million and US$113.2 million from the Bitcoin mining business, respectively.
On March 12, 2022, the National Development and Reform Commission of the PRC published the Market Access Negative List (2022 Edition) (《 市 场准入负面清单 (2022 年版 )》), which lists the virtual currency mining activities as the “backward production processes and equipment” under the eliminated item in the Catalogue for Guiding Industrial Restructuring (《 产业结构调整指导目录 》).
On April 16, 2025, the National Development and Reform Commission of the PRC published the Market Access Negative List (2025 Edition) ( 《市 场准入负面清单 (2025 年版 ) 》 ), which lists the virtual currency mining activities as the “backward production processes and equipment” under the eliminated item in the Catalogue for Guiding Industrial Restructuring ( 《产业结构调整指导目录》 ).
We have developed competitive advantages in our business and technological capabilities, including the following: ● Our expertise in the development, designing and production of Bitcoin mining machines; ● Our mastery of the whole IC design process; ● Our years of accumulated engineering experience in applying theoretical research to the mass production of new products; ● Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives; ● Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for ASICs for blockchain; ● Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our long-term ASIC design experience; 47 Table of Contents ● Our long-term partnerships with leading global suppliers, which have enabled us to achieve high-quality, high yield rate and stable production; ● Our penetration into the Bitcoin mining business by leveraging our experience in Bitcoin mining machines production and sales, as well as our relationship with global mining farms; and Our Business Model We are a fabless IC designer engaged in the front-end and back-end of IC design, which are the major components of the IC product development chain.
We have developed competitive advantages in our business and technological capabilities, including the following: ● Our expertise in the development, designing and production of Bitcoin mining machines; ● Our mastery of the whole IC design process; ● Our years of accumulated engineering experience in applying theoretical research to the mass production of new products; ● Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives; ● Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for ASICs for blockchain; ● Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our long-term ASIC design experience; ● Our long-term partnerships with leading global suppliers, which have enabled us to achieve high-quality, high yield rate and stable production; ● Our continued development of the penetration into the Bitcoin mining business by leveraging our experience in Bitcoin mining machines production and sales, as well as our relationship with global mining farms; and ● Our ability to provide customized solutions to our customers, including tailored mining solutions, energy infrastructure stabilizer solutions, algorithm development and optimization, hardware module, end-product and software services.
This outcome would again potentially reduce the viability of our product sales and could also subject us to liability. Any of these developments could limit the future development of our business. See “Item 3. Key Information—D.
Such an outcome would potentially reduce the viability of our product sales and could also expose us to liability. Any of these developments could materially limit the future development of our business. See “Item 3. Key Information—D.
Pursuant to the Interim Regulations on Levying Social Insurance Premiums ( 《社会保 险费征缴暂行条例》 ) promulgated on January 22, 1999 and revised on March 24, 2019, Decisions of the State Council on Modifying the Basic Endowment Insurance System for Enterprise Employees ( 《国 务院关于完善企业职工基本养老保险制度的决定》 ) promulgated on December 3, 2005, the Decision of the State Council on Establishment of Basic Medical Insurance System for Urban Employee ( 《国 务院关于建立城镇职工基本医疗保险制度的决定》 ) issued by State Council with effect from December 14, 1998, the Regulations on Unemployment Insurance ( 《失 业保险条例》 ) effective from January 22, 1999, Regulations on Work-Related Injury Insurance ( 《工 伤保险条例》 ) promulgated on April 27, 2003 with effect from January 1, 2004, and as amended on December 20, 2010 and effective from January 1, 2011, and the Interim Measures concerning the Maternity Insurance for Enterprise Employees ( 《企 业职工生育保险试行办法》 ) promulgated on December 14, 1994 with effect from January 1, 1995, employers are required to register with the competent social insurance authorities and provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance and medical insurance. 67 Table of Contents Pursuant to the Social Insurance Law of the PRC (《 中 华人民共和国社会保险法 》), which became effective on July 1, 2011 with last amendment on December 29, 2018, all employees are required to participate in basic pension insurance, basic medical insurance schemes and unemployment insurance, which must be contributed by both the employers and the employees.
Pursuant to the Interim Regulations on Levying Social Insurance Premiums ( 《社会保 险费征缴暂行条例》 ) promulgated on January 22, 1999 and revised on March 24, 2019, Decisions of the State Council on Modifying the Basic Endowment Insurance System for Enterprise Employees ( 《国 务院关于完善企业职工基本养老保险制度的决定》 ) promulgated on December 3, 2005, the Decision of the State Council on Establishment of Basic Medical Insurance System for Urban Employee ( 《国 务院关于建立城镇职工基本医疗保险制度的决定》 ) issued by State Council with effect from December 14, 1998, the Regulations on Unemployment Insurance ( 《失 业保险条例》 ) effective from January 22, 1999, Regulations on Work-Related Injury Insurance ( 《工 伤保险条例》 ) promulgated on April 27, 2003 with effect from January 1, 2004, and as amended on December 20, 2010 and effective from January 1, 2011, and the Interim Measures concerning the Maternity Insurance for Enterprise Employees ( 《企 业职工生育保险试行办法》 ) promulgated on December 14, 1994 with effect from January 1, 1995, employers are required to register with the competent social insurance authorities and provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, work-related injury insurance and medical insurance.
PRC Policies and Regulations relating to the IC Industries Investments in the PRC conducted by foreign investors and foreign-owned enterprises shall comply with the Catalog of Industries for Encouraged Foreign Investment (2022 Edition) ( 《鼓励外商投 资产业目录 (2022 修 订 ) 》 ), or the Foreign Investment Catalog, which was jointly promulgated by the Ministry of Commerce of the PRC, or MOFCOM, and the NDRC, on October 26, 2022 and became effective on January 1, 2023.
PRC Policies and Regulations relating to the IC Industries Investments in the PRC conducted by foreign investors and foreign-owned enterprises shall comply with the Catalog of Industries for Encouraged Foreign Investment (2025 Edition) ( 《鼓励外商投 资产业目录 (2025 修 订 ) 》 ), or the Foreign Investment Catalog, which was jointly promulgated by the Ministry of Commerce of the PRC, or MOFCOM, and the NDRC, on December 15, 2025 and became effective on February 1, 2026.
Additionally, on February 20, 2025, the SEC announced the creation of the Cyber and Emerging Technologies Unit, which consists of approximately 30 fraud specialists and attorneys, focusing on combating cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space. Cryptocurrency mining remains largely unregulated at the federal and state levels.
Additionally, on February 20, 2025, the SEC announced the creation of the Cyber and Emerging Technologies Unit, which consists of approximately 30 fraud specialists and attorneys, focusing on combating cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space.
We currently dedicate our technology and expertise in ASIC chip design to Bitcoin mining machines and edge computing chips. We, through our operating subsidiaries, independently design and develop our products in-house, including the design of proprietary ASIC chips for our Bitcoin mining machines. Front-end IC design and back-end IC design are the key parts of the IC design process.
We, through our operating subsidiaries, independently design and develop our products in-house, including the design of proprietary ASIC chips for our Bitcoin mining machines. Front-end IC design and back-end IC design are the key parts of the IC design process.
Any uninsured occurrence of business disruption, litigation or natural disaster, or significant damages to our uninsured equipment or facilities could have a material adverse effect on our results of operations. 54 Table of Contents Employees As of December 31, 2024, we and our operating subsidiaries employed a total of 463 employees that are classified as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ Number of ​ Total Number Function Employees of Employees Management 34 7.3 % Sales and marketing 38 8.2 % Research and development 263 56.8 % Others 128 27.7 % Total 463 100.0 % ​ We operate in a highly competitive and fast-growing industry in which recruiting and retaining talent is crucial to our continued growth and profitability.
Any uninsured occurrence of business disruption, litigation or natural disaster, or significant damages to our uninsured equipment or facilities could have a material adverse effect on our results of operations. 54 Table of Contents Employees As of December 31, 2025, we and our operating subsidiaries employed a total of 399 employees that are classified as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ Number of ​ Total Number Function ​ ​ ​ Employees ​ ​ ​ of Employees Management 34 8.5 % Sales and marketing 40 10.0 % Research and development 189 47.4 % Others 136 34.1 % Total 399 100.0 % ​ We operate in a highly competitive and fast-growing industry in which recruiting and retaining talent is crucial to our continued growth and profitability.
Our operating subsidiaries generally do not enter into long-term agreements with our mining machine customers. Sales are typically made on one-off sales contract or purchase order bases. Our mining machines are primarily distributed through direct sales, but we also sell through distributors. In certain regions, such as Southeast Asian countries, sales through distributors can be very significant.
Sales are typically made on one-off sales contract or purchase order bases. Our mining machines are primarily distributed through direct sales, but we also sell through distributors. In certain regions, such as Southeast Asian countries, sales through distributors can be very significant. Nevertheless, our operating subsidiaries do not restrict resales of our mining machine products by our customers.
Nevertheless, our operating subsidiaries do not restrict resales of our mining machine products by our customers. Except for situations where our Bitcoin mining machines have major defects upon delivery, our customers cannot return or exchange their purchases for upgrades, even in the event that their old Bitcoin mining machines may no longer be economical for Bitcoin mining purposes.
Except for situations where our Bitcoin mining machines have major defects upon delivery, our customers cannot return or exchange their purchases for upgrades, even in the event that their old Bitcoin mining machines may no longer be economical for Bitcoin mining purposes.
The total of 488 patents includes 138 invention patents, 147 utility model patents, and 203 exterior design patents. We have also, through our PRC subsidiaries, registered 127 software copyrights and 82 IC layout-design rights in the PRC, as of December 31, 2024.
The total of 622 patents includes 185 invention patents, 174 utility model patents, and 263 exterior design patents. We have also, through our PRC subsidiaries, registered 127 software copyrights and 82 IC layout-design rights in the PRC, as of December 31, 2025.
We are not aware of any law that currently makes it per se illegal for a natural person or entity simply to possess, sell, or trade Bitcoin on its own behalf in connection with lawful transactions in the United States, provided that any transaction complies generally with applicable law.
To our knowledge, there is no comprehensive federal law that currently makes it per se illegal for a natural person or entity simply to possess, sell, or trade Bitcoin on its own behalf in connection with lawful transactions in the United States, provided that any transaction complies with applicable law.
Along with the deployment of our Bitcoin mining machines into our Bitcoin mining business, as of December 31, 2024, the net carrying value of mining equipment located in Ethiopia and North America was US$17.6 million and US$3.0 million, respectively.
Along with the deployment of our Bitcoin mining machines into our Bitcoin mining business, as of December 31, 2025, the net carrying value of mining equipment located in North America and Ethiopia was US$26.7 million and US$4.5 million, respectively.
Further, even if a cryptocurrency that is considered to be a security is legally distributed under the US securities laws, the miners of that cryptocurrency could be viewed as statutory underwriters or as “brokers” subject to regulation under the Exchange Act because they are effecting transactions in those securities for a fee (i.e., mining rewards).
Further, even if a cryptocurrency classified as a security were legally distributed under the U.S. federal securities laws, miners of such cryptocurrency could be viewed as statutory underwriters or as “brokers” subject to regulation under the Exchange Act on the basis that they are effecting transactions in those securities for compensation (i.e., mining rewards).
We aspire to develop advanced IC designs for high performance computing hardware and innovative applications. We follow a market-oriented research and development approach, and we focus on research and development projects that have a relatively clear path toward market acceptance and commercialization opportunities. Production Our Fabless Model We do not directly manufacture ICs used for our products.
We follow a market-oriented research and development approach, and we focus on research and development projects that have a relatively clear path toward market acceptance and commercialization opportunities. Production Our Fabless Model We do not directly manufacture ICs used for our products.
The Foreign Investment Catalog contains specific provisions guiding market access of foreign capital, stipulating in detail different areas of entry, which include encouraged foreign-invested industries. Our business falls within the category of encouraged foreign-invested industries, according to catalogs 330, 331, 335, 336, 339 and 340 of encouraged foreign invested industries listed in the Foreign Investment Catalog.
The Foreign Investment Catalog contains specific provisions guiding market access of foreign capital, stipulating in detail different areas of entry, which include encouraged foreign-invested industries. Our business falls within the category of encouraged foreign-invested industries, according to catalogs 392, 393, 397, 398, 401 and 402 of encouraged foreign invested industries listed in the Foreign Investment Catalog.
Our most advanced immersion-cooled mining machine model is Avalon A1566I with a designed hash rate of 261TH/s.
Our most advanced hydro-cooled mining machine model is Avalon A1566HA with a designed hash rate of 480TH/s.
The first tranche closing under the Preferred Shares Financing was completed on March 10, 2025, where an initial US$100 million has been received. We also delivered 7,000,000 ADSs as pre-delivery shares.
The first tranche closing of 2025 Series A-1 Preferred Shares was completed on March 10, 2025, where an initial US$100 million had been received and 100,000 Series A-1 Preferred Shares were issued. We also delivered 7,000,000 ADSs as pre-delivery shares.
Avalon Home: Consumer-Level Bitcoin Mining Devices To further democratize access to bitcoin mining, we launched the Avalon Home series in 2024, a new line of compact, energy-efficient mining devices crafted for individual users and home environments.
In addition, to further diversify our product offering and democratize access to bitcoin mining, we launched the Avalon Home series in 2024 and formally commercialized it in 2025, a new line of compact, energy-efficient mining devices crafted for individual users and home environments.
Typically, offerings and distributions of securities in the United States are required to register with the SEC under the Securities Act and, in compliance with state law, with applicable state regulators.
Offerings and distributions of securities in the United States are generally required to be registered with the SEC under the Securities Act and, in compliance with applicable state laws, with the relevant state regulators.
The most common employer CPF contribution rate is 17% of the employee’s wages (currently subject to a monthly wage ceiling of S$6,800) where the employee is 55 years old and below.
The most common employer CPF contribution rate is 17% of the employee’s wages (currently subject to a monthly wage ceiling of S$8,000) where the employee is 55 years old and below. The monthly wage ceiling is a cap on the employee’s wages that the employer will need to pay CPF contributions on.
Shanghai, China 100 % Research and development of ICs ​ ​ ​ ​ ​ ​ ​ Canaan U.S. Inc. ​ United States ​ 100 % International distribution of mining equipment and spare parts, mining business ​ ​ ​ ​ ​ ​ ​ Canaan Creative International PTE. Ltd.
Inc. ​ United States ​ 100 % International distribution of mining equipment and spare parts, mining business ​ ​ ​ ​ ​ ​ ​ Canaan Creative International PTE. Ltd.
As of December 31, 2024, we, through our subsidiaries, have registered 298 patents in the PRC, 32 patents in Hong Kong, three patents in Taiwan, 16 patents in Singapore, 30 patents in Australia, 15 patents in the United Kingdom, 20 patents in the United States, 13 patents in the Eurasian Patent Organization, 10 patents in Canada, 46 patents in the European Union Intellectual Property Office, one patent in the European Patent Office, three patents in Japan, and one patent in Korea.
As of December 31, 2025, we, through our subsidiaries, have registered 372 patents in the PRC, 35 patents in Hong Kong, four patents in Taiwan, 17 patents in the Singapore, 30 patents in Australia, 25 patents in the United Kingdom, 35 patents in the United States, 13 patents in the Eurasian Patent Organization, 20 patents in the Canada, 60 patents in the European Union Intellectual Property Office, three patent in the European Patent Office, five patents in the Japan, and three patent in the Korea.
In January 2025, the SEC launched a crypto task force, led by Commissioner Hester Peirce, dedicated to developing a comprehensive and clear regulatory framework for crypto assets.
In February 2023, bipartisan leadership of the Senate Banking Committee announced a similar goal. In January 2025, the SEC launched a crypto task force, led by Commissioner Hester Peirce, dedicated to developing a comprehensive and clear regulatory framework for crypto assets.
As of December 31, 2024, we, through our subsidiaries, have registered 298 patents in the PRC, 32 patents in Hong Kong, 3 patents in Taiwan, 16 patents in the Singapore, 30 patents in Australia, 15 patents in the United Kingdom, 20 patents in the United States, 13 patents in the Eurasian Patent Organization, 10 patents in the Canada, 46 patents in the European Union Intellectual Property Office, one patent in the European Patent Office, three patents in the Japan, and one patent in the Korea.
As of December 31, 2025, we, through our subsidiaries, have registered 372 patents in the PRC, 35 patents in Hong Kong, four patents in Taiwan, 17 patents in Singapore, 30 patents in Australia, 25 patents in the United Kingdom, 35 patents in the United States, 13 patents in the Eurasian Patent Organization, 20 patents in Canada, 60 patents in the European Union Intellectual Property Office, three patent in the European Patent Office, five patents in Japan, and three patent in Korea.
Because of the adverse changes in the PRC regulatory environment, we have expanded into global markets and began to generate considerable sales from customers outside the PRC.
Our Customer Base Historically, a substantial portion of our revenues were generated from the sales to customers located in the PRC. Because of the adverse changes in the PRC regulatory environment, we have expanded into global markets and began to generate considerable sales from customers outside the PRC.
On November 19, 2024, the Company entered into a securities purchase agreement with the Buyer, pursuant to which the Company agreed to issue and sell to the Buyer 30,000 Series A-1 Convertible Preferred Shares (the “Series A-1 Preferred Shares”) at the price of US$1,000.00 for each Series A-1 Preferred Share.
As of the date of this annual report, all aforementioned Series A Preferred Shares have been converted into Class A ordinary shares. 47 Table of Contents On November 19, 2024, the Company entered into a securities purchase agreement with the Buyer, pursuant to which the Company agreed to issue and sell to the Buyer 30,000 Series A-1 Convertible Preferred Shares (the “2024 Series A-1 Preferred Shares”) at the price of US$1,000.00 for each Series A-1 Preferred Share.
As we endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business, we believe that such business will play a more significant role in supplementing our Bitcoin mining machines sales, mitigating our inventory risks and contributing to our financial and operating results.
As we endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business, we believe that such business will play an increasingly important role alongside our Bitcoin mining machines business, mitigating our inventory risks, strengthening our overall business model, enhancing operational flexibility, and contributing to our financial and operating results.
We have strong ASIC chip design capability underpinned by over ten years of industry experience and the expertise of our founders and management team. We are one of the few fabless IC design companies with the advanced technology to independently design ASIC, established access to leading wafer foundry capacity and proven in-house capability to produce Bitcoin mining machines.
We are one of the few fabless IC design companies with the advanced technology to independently design ASIC, established access to leading wafer foundry capacity and proven in-house capability to produce Bitcoin mining machines.
As of December 31, 2024, our research and development team is comprised of 263 members, representing approximately 56.8% of our total employees. Our research and development team includes 155 members with a master’s degree or above. In addition, Mr. Zhang, as our chairman and chief executive officer, leads our research and development efforts and has extensive experience in the industry.
Our research and development team includes 94 members with a master’s degree or above. In addition, Mr. Zhang, as our chairman and chief executive officer, leads our research and development efforts and has extensive experience in the industry.
We did not utilize the ATM after February 19, 2025 as of the filing date of the 2024 annual report. 46 Table of Contents On March 6, 2025, we entered into a Securities Purchase Agreement with an institutional investor, relating to the purchase of up to 200,000 Series A-1 Preferred Shares at US$1,000.00 for each Series A-1 Preferred Share, providing with total gross proceeds of up to US$200 million (the “Preferred Shares Financing”).
On March 6, 2025, we entered into a Securities Purchase Agreement with an institutional investor, relating to the purchase of up to 200,000 Series A-1 Preferred Shares (the “2025 Series A-1 Preferred Shares”) at US$1,000.00 for each Series A-1 Preferred Share, providing with total gross proceeds of up to US$200 million.
As of December 31, 2024, we, through our operating subsidiaries, had registered had registered 602 trademarks, including 99 in the PRC, 58 in Hong Kong, 41 in Republic of Singapore, 31 in European Union, 35 in Kazakhstan, 30in the United Kingdom, 29 in Malaysia, 28 in Russia, 27 in Commonwealth of Australia, 20 in Japan, 18 in Republic of Korea, 18 in the Kingdom of Norway, 18 in Indonesia, 17 in the United States, 17 in Iceland, 17 in the United Arab, Emirates, 16 in Taiwan, 15 in Kingdom of Thailand, 14 in Republic of Turkey, nine in Argentina, eight in Canada, 8in Uruguay, eight in Republic of the Philippines, six in United Mexican States, six in Republic of Peru, four in Grenada, three in India, and two in Malaysia.
As of December 31, 2025, we, through our operating subsidiaries, had registered had registered 734 trademarks, including 120 in the PRC, 60 in Hong Kong, 41 in Republic of Singapore, 33 in European Union, 36 in Kazakhstan, 30 in the United Kingdom, 42 in Malaysia, 28 in Russia, 27 in Commonwealth of Australia, 22 in Japan, 18 in Republic of Korea, 20 in the Kingdom of Norway, 18 in Indonesia, 24 in the United States, 17 in Iceland, 17 in the United Arab, Emirates, 16 in Taiwan, 16 in Kingdom of Thailand, 14 in Republic of Turkey, 15 in Argentina, 19 in Canada, eight in Uruguay, eight in Republic of the Philippines, 14 in United Mexican States, six in Republic of Peru, four in Grenada, three in India, eight in Albania, eight in Oman, seven in Egypt, six in Ethiopia, three in Paraguay, eight in Brazil, six in Serbia, five in Tajikistan, one in Zambia, and six in Chile.
From December 23, 2024, to March 26, 2025, the date of our earnings release for the fourth quarter of 2024, we utilized the ATM Program for fundraising and sold 21,088,579 ADSs with net proceeds of approximately US$42.5 million at an average price of US$2.08 per ADS.
In 2024, no ADS was utilized under the 2024 ATM Agreement. From January 1, 2025 to February 20, 2025, we utilized the 2024 ATM Program for fundraising and sold 21,088,579 ADSs with net proceeds of approximately US$42.5 million at an average price of US$2.08 per ADS.
Since our IPO, as part of our efforts to expand our business globally, we have gradually established our subsidiaries in Hong Kong and moved our headquarters to Singapore. ​ 45 Table of Contents On April 29, 2021, we entered into a securities purchase agreement with certain institutional investors for a registered direct placement of approximately $170.0 million of our ADS, each ADS representing 15 Class A ordinary shares of us, par value US$0.00000005 per share, or US$12.60 per ADS.
On April 29, 2021, we entered into a securities purchase agreement with certain institutional investors for a registered direct placement of approximately $170.0 million of our ADS, each ADS representing 15 Class A ordinary shares of us, par value US$0.00000005 per share, or US$12.60 per ADS.
For example, we can adjust the assembly worker’s shifts in response to the purchase orders we receive. Quality Control We emphasize quality control in all aspects of our operations.
Subject to the amount of ICs obtained from our production partners, we have the flexibility to adjust the production capacity of our Bitcoin mining machines. For example, we can adjust the assembly worker’s shifts in response to the purchase orders we receive. Quality Control We emphasize quality control in all aspects of our operations.
To implement our research and development roadmap and our plan to diversify our product offering, members of our research and development team are primarily organized under two focus groups, including (i) a high power-efficiency computing group consisting of 151 team members, which is responsible for chip design and optimization and (ii) an edge computing chip products group consisting of 112 team members, which are responsible for the design of our Kendryte series including algorithm optimization and end application, both as of December 31, 2024.
To implement our research and development roadmap and our plan to diversify our product offering, members of our research and development team are primarily organized under two focus groups, including (i) a high power-efficiency computing group consisting of 111 team members, which is responsible for chip design and optimization and (ii) an advanced technology research group consisting of 78 team members, which are responsible for the research and development of advanced computing architecture, both as of December 31, 2025. 51 Table of Contents As of December 31, 2025, our research and development team is comprised of 189 members, representing approximately 47.4% of our total employees.
Following a lawsuit, the U.S. Department of Energy suspended the survey and ordered destruction of previously collected data. Although the EIA indicated in July 2024 that it intended to restart the survey, no formal restart has occurred as of the date of this filing.
Although the EIA indicated in July 2024 that it intended to restart the survey, no formal restart has occurred as of the date of this filing.
With the growth of our business and in order to facilitate international capital investment in us, we underwent an offshore reorganization in the first quarter of 2018. In February 2018, Canaan Cayman Holdings Ltd. was incorporated under the laws of the Cayman Islands as an exempted company with limited liability. It was later renamed Canaan Inc. in April 2018.
In February 2018, Canaan Cayman Holdings Ltd. was incorporated under the laws of the Cayman Islands as an exempted company with limited liability. It was later renamed Canaan Inc. in April 2018.
Pursuant to the Administrative Regulations on the Housing Provident Fund (《 住房公积金管理条例 》) effective from April 3, 1999, amended on March 24, 2002 and March 24, 2019, enterprises are required to register with the competent administrative centers of housing provident fund and open bank accounts for housing provident funds for their employees.
If such employer fails to make the overdue contributions within such time limit, the relevant administrative department may impose a fine equivalent to 1—3 times the overdue amount. 67 Table of Contents Pursuant to the Administrative Regulations on the Housing Provident Fund ( 《住房公积金管理条例》 ) effective from April 3, 1999, amended on March 24, 2002 and March 24, 2019, enterprises are required to register with the competent administrative centers of housing provident fund and open bank accounts for housing provident funds for their employees.
If the offering of a cryptocurrency that can be mined using our Bitcoin mining machines is deemed a security, miners may be required to cease mining that cryptocurrency, which would negatively affect our business.
If the offering of a cryptocurrency that can be mined using our Bitcoin mining machines were deemed a security, miners may be required to cease mining that cryptocurrency, which would negatively affect our business. In addition, if we were viewed as facilitating an unlawful distribution of a cryptocurrency, we could be subject to liability in connection with our product sales.
Empowered by the academic training and technical expertise of our co-founders, we have focused on the design of high performance, repeated computing ICs since our inception. As we further developed, Hangzhou Canaan went through a series of capital injections and became a holding company for our PRC subsidiaries.
Empowered by the academic training and technical expertise of our co-founders, we have focused on the design of high performance, repeated computing ICs since our inception.
Also, leveraging our Singapore headquarters, we have diversified our supply chain by adding production and logistic resources in Southeast Asia in the second quarter of 2022. Subject to the amount of ICs obtained from our production partners, we have the flexibility to adjust the production capacity of our Bitcoin mining machines.
Also, leveraging our Singapore headquarters, we have diversified our supply chain by adding production and logistic resources in Southeast Asia in the second quarter of 2022 and in the United States in the first quarter of 2025.
Some of our research and development results are protected by copyrights and patents while the rest are part of our proprietary trade secrets.
Research and Development Achievements Our research and development efforts have yielded significant results that enable us to establish our brand recognition and our competitive position. Some of our research and development results are protected by copyrights and patents, while the rest are part of our proprietary trade secrets.
Circular 7 also provides that an indirect transfer of PRC Taxable Properties, which satisfies one of the following conditions, will not be subject to the aforesaid provisions: ● A non-resident enterprise buys and sells the shares of one same overseas listed company in a public stock exchange; and ● If the non-resident enterprise directly held and transferred PRC Taxable Properties, the proceeds derived thereof would be exempt from EIT under the applicable tax treaty or arrangement. 65 Table of Contents Value-added Tax Pursuant to the Interim Regulations on Value-Added Tax of the PRC ( 《中 华人民共和国增值税暂行条例》 ) promulgated by the Stated Council on December 13, 1993 with the latest amended version effective from November 19, 2017, and its implementing rules ( 《中 华人民共和国增值税暂行条例实施细则》 ) promulgated by MOF on December 25, 1993 and revised on December 15, 2008 and October 28, 2011, respectively, tax payers engaging in sale of goods, provision of processing services, repairs and replacement services or importation of goods within the territory of the PRC shall pay value-added tax, or the VAT.
Circular 7 also provides that an indirect transfer of PRC Taxable Properties, which satisfies one of the following conditions, will not be subject to the aforesaid provisions: ● A non-resident enterprise buys and sells the shares of one same overseas listed company in a public stock exchange; and ● If the non-resident enterprise directly held and transferred PRC Taxable Properties, the proceeds derived thereof would be exempt from EIT under the applicable tax treaty or arrangement. 65 Table of Contents Value-added Tax Pursuant to the Value-added Tax Law of the PRC ( 《中 华人民共和国增值税法》 ) promulgated on December 25, 2024, and implemented on January 1, 2026, as well as the Implementation Regulations for the Value-Added Tax Law of the PRC ( 《中 华人民共和国增值税法实施条例》 ) promulgated on December 25, 2025 and implemented on January 1, 2026, entities and individuals that sell goods, services, intangible assets, or immovables, or import goods in the PRC are taxpayers of value-added tax, and shall pay value-added tax according to law.
As it requires a substantial amount of time and production engineering experience to integrate the results of research and development and master the core technologies in the ASICs field, we have created high barriers to entry against our competitors. 51 Table of Contents Research and Development Achievements Our research and development efforts have yielded significant results that enable us to establish our brand recognition and our competitive position.
We, through our operating subsidiaries, are devoted to in-house research and development of core advanced technologies, such as energy-efficient computing. As it requires a substantial amount of time and production engineering experience to integrate the results of research and development and master the core technologies in the ASICs field, we have created high barriers to entry against our competitors.
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find such information on our website https://investor.canaan-creative.com. B. Business Overview We primarily focus on providing crypto mining solutions through our proprietary ASICs.
Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above. SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find such information on our website https://investor.canaan-creative.com. B.
Our registered office in the Cayman Islands is located at P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above.
The principal executive offices of our main operations are located at 28 Ayer Rajah Crescent #06-08, S139959, Singapore. Our telephone number at this address is +65 6305 6618. Our registered office in the Cayman Islands is located at P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands.
We generated 97.2%, 34.3% and 69.7% of our total revenues generated from sales of Bitcoin mining machines and related parts and accessories from sales to customers outside the PRC, in 2022, 2023 and 2024, respectively. 50 Table of Contents Bitcoin Mining Machines We, though our operating subsidiaries, generally sell our Bitcoin mining machines and related parts and accessories to individual or corporate customers on a first-pay-first-serve basis, though we prioritize certain customers that we believe have stronger potential for a longer-term relationship.
Bitcoin Mining Machines We, though our operating subsidiaries, generally sell our Bitcoin mining machines and related parts and accessories to individual or corporate customers on a first-pay-first-serve basis, though we prioritize certain customers that we believe have stronger potential for a longer-term relationship. Our operating subsidiaries generally do not enter into long-term agreements with our mining machine customers.
In January 2024, the SEC approved a series of spot Bitcoin exchange-traded funds (ETFs), which have since attracted substantial investment. In February 2024, the U.S. Energy Information Administration (EIA) initiated a six-month survey to collect data on electricity usage within the cryptocurrency mining sector. The stated aim was to assess geographic growth trends and energy sourcing.
In February 2024, the U.S. Energy Information Administration (EIA) initiated a six-month survey to collect data on electricity usage within the cryptocurrency mining sector, with the stated aim of assessing geographic growth trends and energy sourcing. Following a legal challenge, the U.S. Department of Energy suspended the survey and ordered the destruction of previously collected data.
Nangeng Zhang, our chairman and chief executive officer. Mr. Zhang and his team invented one of the first cryptocurrency mining machines incorporating ASIC technology.
Research and Development We became a global pioneer in offering ASIC solutions for blockchain computation purposes as a result of the work done by our research and development team led by Mr. Nangeng Zhang, our chairman and chief executive officer. Mr. Zhang and his team invented one of the first cryptocurrency mining machines incorporating ASIC technology.
Risk Factors—Risks Relating to Our Business and Industry—We are subject to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could negatively affect our business, results of operations and financial position.” Further, the Department of the Treasury’s Financial Crimes Enforcement Network, or FinCEN, regulates “money transmitters,” including certain administrators and exchangers of cryptocurrencies, and state laws also regulate money transmission; more generally, cryptocurrency transactions may implicate a variety of federal and state laws designed to counter money laundering.
Risk Factors—Risks Relating to Our Business and Industry—We are subject to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could negatively affect our business, results of operations and financial position.” Further, the U.S.
Hangzhou, China 100 % Distribution of mining equipment and spare parts ​ ​ ​ ​ ​ ​ ​ Canaan Bright Sight Co., Ltd. Beijing, China 100 % International distribution of edge computing chip products ​ ​ ​ ​ ​ ​ ​ Canaan Creative (SH) Co., Ltd.
Hangzhou, China 100 % Distribution of mining equipment and spare parts ​ ​ ​ ​ ​ ​ ​ Canaan Creative (SH) Co., Ltd. Shanghai, China 100 % Research and development of ICs ​ ​ ​ ​ ​ ​ ​ Canaan U.S.
W. J. Howey Co. (the “ Howey test”) to cryptocurrencies. It is similarly likely that these other cryptocurrencies will be treated as securities under the laws of the individual states. The status of additional cryptocurrencies as securities could impose significant restrictions on us or our customers with operations that are located in the United States or involve United States residents.
It is similarly possible that such other cryptocurrencies would be treated as securities under the laws of the individual states, though state regulators are also reassessing their approaches in light of the evolving federal regulatory landscape. 70 Table of Contents The classification of additional cryptocurrencies as securities could impose significant restrictions on us or our customers with operations in the United States or involving United States residents.
The total of 488patents include 138 inventions, 147 utility model patents and 203exterior design patents. We have also, through our PRC subsidiaries, registered 127software copyrights and 82 IC layout-design rights in the PRC, as of December 31, 2024. Research and Development Roadmap The core strength of our capabilities consists of designing products with high computing power and high energy efficiency.
The total of 622 patents include 185 inventions, 174 utility model patents and 263 exterior design patents. We have also, through our PRC subsidiaries, registered 127 software copyrights and 82 IC layout-design rights in the PRC, as of December 31, 2025.
This means that the CFTC has jurisdiction over any futures, options or derivatives contracts involving cryptocurrencies as well as any fraud or manipulation involving cryptocurrencies in the spot market. Our Bitcoin mining machines are not intended to be used either for any futures, options or derivatives trading or to enable fraud or manipulation.
Since that decision, the CFTC has continued to assert and exercise this authority through rulemakings, guidance and enforcement actions. Our Bitcoin mining machines are not designed to be used for any futures, options or derivatives trading or to enable fraud or manipulation.
We primarily dedicated technology and expertise in ASIC applications to Bitcoin mining machines and are a leading producer of Bitcoin mining machines in the global market. In addition, with our technology expertise and know-how in ASIC chip design, our operating subsidiaries have delivered Risc-V architecture-based edge computing chips applicable to smart digital devices.
We primarily dedicated technology and expertise in ASIC applications to industrial Bitcoin mining machines and are a leading producer of Bitcoin mining machines in the global market.
In addition, we have started with the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and aim to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our Bitcoin mining machines sales. We also intend to engage in Bitcoin mining through self-owned facilities.
We believe our outstanding technical expertise and production experience in IC development enable us to continuously introduce ICs with higher performance and power efficiency for application in the fields. 49 Table of Contents In addition, we have continued to develop the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and aim to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our Bitcoin mining machines sales.
However, to the extent that any mining activity using our products were to be deemed a form of fraud or manipulation, or our products were otherwise used for fraud or manipulation, we could potentially be subject to regulatory or private actions related to those uses. ​ 70 Table of Contents In addition, while the SEC has taken the position that Bitcoin, Ether, and certain cryptocurrencies subject to significant operational restrictions are not “securities” regulated by the federal securities laws, it is likely that the SEC will view almost all other cryptocurrencies other than Bitcoin and Ether that can be mined to be “securities,” based on their status as “investment contracts” under the guidance provided by the SEC “Framework for ‘Investment Contract’ Analysis of Digital Assets,” and the application of the test under SEC v.
In addition, while the SEC has taken the position that Bitcoin, Ether, and certain cryptocurrencies subject to significant operational restrictions are not “securities” regulated by the federal securities laws, the SEC may view other cryptocurrencies that can be mined — other than Bitcoin and Ether — as “securities on the basis that they constitute “investment contracts” within the meaning of the SEC’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” and as determined under the test set forth in SEC v.
Leveraging our design and manufacturing expertise, the Avalon Box strengthens our commitment to delivering holistic, infrastructure-ready mining systems that address the evolving needs of global mining enterprises.
Leveraging our design and manufacturing expertise, the Avalon Box strengthens our commitment to delivering holistic, infrastructure-ready mining systems that address the evolving needs of global mining enterprises. 50 Table of Contents Avalon Home: Consumer-Level Bitcoin Mining Devices To further democratize access to bitcoin mining, we launched the Avalon Home series in 2024 and formally commercialized it in 2025, a new line of compact, energy-efficient mining devices crafted for individual users and home environments.

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Biggest changeThe operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ US$ US$ ​ ​ ​ ​ (in millions) ​ ​ Revenues: Products revenue 618.9 176.9 223.2 Mining revenue 32.5 34.0 44.0 Other revenues 0.1 0.6 2.1 Total revenues 651.5 211.5 269.3 Products cost ​ (366.5) ​ (368.1) ​ (301.3) Mining cost ​ (54.5) ​ (81.8) ​ (51.5) Other cost ​ (0.2) ​ (2.4) ​ (0.8) Cost of revenues (421.2) (452.3) (353.6) Gross profit (loss) 230.3 (240.8) (84.3) Operating expenses: Research and development expenses (81.8) (64.9) (61.3) Sales and marketing expenses (9.4) (8.2) (5.7) General and administrative expenses (88.3) (71.2) (71.7) Impairment on property, equipment and software ​ — ​ (21.1) ​ (11.3) Impairment on cryptocurrency ​ (7.9) ​ (4.7) ​ — Gain on disposal of property, equipment and software ​ — ​ — ​ 7.2 Total operating expenses (187.4) (170.1) (142.8) Income (loss) from operations: 42.9 (410.9) (227.1) Interest income 2.4 1.0 0.5 Interest expense ​ — ​ — ​ (0.5) Change in fair value of cryptocurrency ​ — ​ — ​ 42.4 Change in fair value of financial instruments other than derivatives 3.8 (10.9) 20.6 Change in fair value of financial derivatives ​ — ​ — ​ 17.6 Excess of fair value of Convertible Preferred Shares ​ — ​ (59.2) ​ (50.7) Foreign exchange gains, net 35.9 12.3 14.1 Other income, net 3.3 2.2 10.8 Income (loss) before income tax expense 88.3 (465.5) (172.3) Income tax (expense) benefit (18.4) 51.3 (77.5) Net income (loss) 69.9 (414.2) (249.8) Foreign currency translation adjustment, net of nil tax (36.3) (6.9) (13.5) Total comprehensive income(loss) 33.6 (421.1) (263.3) ​ Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue.
Biggest changeThe operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ US$ ​ ​ ​ US$ ​ ​ ​ US$ ​ ​ ​ ​ (in millions) ​ ​ Revenues ​ ​ ​ Products revenue 176.9 223.2 413.8 Mining revenue 34.0 44.0 113.2 Other revenues 0.6 2.1 2.7 Total revenues 211.5 269.3 529.7 Products cost ​ (368.1) ​ (301.3) ​ (360.2) Mining cost ​ (81.8) ​ (51.5) ​ (126.0) Other cost ​ (2.4) ​ (0.8) ​ (2.3) Cost of revenues (452.3) (353.6) (488.5) Gross (loss) profit (240.8) (84.3) 41.2 Operating expenses ​ ​ ​ Research and development expenses (64.9) (61.3) (63.1) Sales and marketing expenses (8.2) (5.7) (13.6) General and administrative expenses (71.2) (71.7) (68.1) Impairment on property, equipment and software ​ (21.1) ​ (11.3) ​ (10.2) Impairment on cryptocurrency ​ (4.7) ​ — ​ — Gain on disposal of property, equipment and software ​ — ​ 7.2 ​ 1.6 Total operating expenses (170.1) (142.8) (153.4) Loss from operations (410.9) (227.1) (112.2) Interest income 1.0 0.5 0.3 Interest expense ​ — ​ (0.5) ​ (2.0) Change in fair value of cryptocurrency ​ — ​ 42.4 ​ (11.4) Change in fair value of financial instruments other than derivatives (10.9) 20.6 (46.6) Change in fair value of financial derivatives ​ — ​ 17.6 ​ (9.5) Excess of fair value of convertible preferred shares ​ (59.2) ​ (50.7) ​ (28.2) Foreign exchange gains (losses), net 12.3 14.1 (3.5) Other income, net 2.2 10.8 5.6 Loss before income tax expense (465.5) (172.3) (207.5) Income tax benefit (expense) 51.3 (77.5) (2.8) Net loss (414.2) (249.8) (210.3) Foreign currency translation adjustment, net of nil tax (6.9) (13.5) 0.8 Total comprehensive loss (421.1) (263.3) (209.5) ​ Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Revenue.
Historically, we have invested substantially in research and development to build and enhance our competitive edge, and we need to continue to devote resources to research and development activities in order to (i) design and develop new or enhanced ASICs for Bitcoin mining applications, (ii) design and develop new or enhanced ASICs for edge computing applications, and (iii) expand our product offering and penetrate into new application markets, particularly into markets for ASIC applications that require high performance and strong computing power.
Historically, we have invested substantially in research and development to build and enhance our competitive edge, and we need to continue to devote resources to research and development activities in order to (i) design and develop new or enhanced ASICs for Bitcoin mining applications, and (ii) expand our product offering and penetrate into new application markets, particularly into markets for ASIC applications that require high performance and strong computing power.
Key Factors Affecting Our Results of Operations Our results of operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following: ● expected economic returns on Bitcoin mining activities, in particular, fluctuation of the Bitcoin price; ● acceptance and development of blockchain technology applications, especially Bitcoin; ● development of edge computing technologies; ● the performance and cost of our products; ● production capacity; ● investment in research and development; and ● the regulatory environment. 74 Table of Contents Expected economic returns on Bitcoin mining activities, in particular, the fluctuations of Bitcoin price Our revenues are primarily derived from the sales of Bitcoin mining machines and related parts and accessories, which are, in general, determined by the demand and pricing of our Bitcoin mining machines.
Key Factors Affecting Our Results of Operations Our results of operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following: ● expected economic returns on Bitcoin mining activities, in particular, fluctuation of the Bitcoin price; ● acceptance and development of blockchain technology applications, especially Bitcoin; ● the performance and cost of our products; ● production capacity; ● investment in research and development; and ● the regulatory environment. 74 Table of Contents Expected economic returns on Bitcoin mining activities, in particular, the fluctuations of Bitcoin price Our revenues are primarily derived from the sales of Bitcoin mining machines and related parts and accessories, which are, in general, determined by the demand and pricing of our Bitcoin mining machines.
The increase was primarily due to a decrease of US$9.4 million in the gain from sale of cryptocurrency and an increase of US$3.0 million in professional service fees, partially offset by a decrease of US$9.4 million in share-based compensation due to the declinced share incentive grants and fully vested restricted share units, as well as a decrease of US$3.5 million in staff costs.
The increase was primarily due to a decrease of US$9.4 million in the gain from sale of cryptocurrency and an increase of US$3.0 million in professional service fees, partially offset by a decrease of US$9.4 million in share-based compensation due to the declined share incentive grants and fully vested restricted share units, as well as a decrease of US$3.5 million in staff costs.
Our ability to design and develop new or enhanced ASICs for Bitcoin mining and edge computing applications and ASICs for other applications with market potential as well as maintain a high tape-out rate will have a material effect on our business, results of operations, financial condition and profitability.
Our ability to design and develop new or enhanced ASICs for Bitcoin mining and ASICs for other applications with market potential as well as maintain a high tape-out rate will have a material effect on our business, results of operations, financial condition and profitability.
We believe that our existing cash and anticipated cash flows from operating activities and fund raising from the capital market will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
We believe that our existing cash and anticipated cash flows from operating activities, fund raising from the capital market and sales of cryptocurrency will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
We have developed competitive advantages in our business and technological capabilities, including the following: ● Our expertise in the development, designing and production of Bitcoin mining machines; ● Our mastery of the whole IC design process; ● Our years of accumulated engineering experience in applying theoretical research to the mass production of new products; ● Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives; ● Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for ASICs for blockchain and edge computing solutions; ● Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our long-term ASIC design experience; ● Our long-term partnerships with leading global suppliers, which have enabled us to achieve high-quality, high yield rate and stable production; ● Our penetration into the Bitcoin mining business by leveraging our experience in Bitcoin mining machines production and sales; and ● Our ability to provide customized solutions to our customers, including tailored mining solutions, edge computing chips, algorithm development and optimization, hardware module, end-product and software services.
We have developed competitive advantages in our business and technological capabilities, including the following: ● Our expertise in the development, designing and production of Bitcoin mining machines; ● Our mastery of the whole IC design process; ● Our years of accumulated engineering experience in applying theoretical research to the mass production of new products; ● Our ability to achieve a fast time-to-market with our products and our successful early monetization of the ASIC design in blockchain applications have provided us with an early advantage with respect to both technology and capital reserve to pursue our strategic initiatives; ● Our breakthroughs in various technological fields to improve ASIC performance, such as low voltage and high power efficiency operations and high computing density, all of which are crucial features for ASICs for blockchain solutions; ● Our ownership of most of the intellectual property we employ, and our accumulation of valuable know-how and multiple generations of proprietary silicon data through our long-term ASIC design experience; ● Our long-term partnerships with leading global suppliers, which have enabled us to achieve high-quality, high yield rate and stable production; ● Our continued development of the Bitcoin mining business by leveraging our experience in Bitcoin mining machines production and sales; and ● Our ability to provide customized solutions to our customers, including tailored mining solutions, energy infrastructure stabilizer solutions, algorithm development and optimization, hardware module, end-product and software services.
Net cash provided by investing activities was US$39.6 million in 2023, which was primarily attributable to proceeds from disposal of cryptocurrency of US$40.6 million, partially offset by purchase of property, equipment and software of US$3.3 million.
Net cash provided by investing activities was US$39.6 million in 2023, which was primarily attributable to proceeds from sale of cryptocurrency of US$40.6 million, partially offset by purchase of property, equipment and software of US$3.3 million.
If we determine that our cash requirements exceed the amount of cash we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. 86 Table of Contents Our ability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial condition and results of operations.
If we determine that our cash requirements exceed the amount of cash we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. Our ability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial condition and results of operations.
We believe our extensive experience and expertise in ASIC applications position us well in our future endeavors. Leveraging our deep understanding of the cryptocurrency industry and strong technology as applied to ASIC chip design, we intend to capture the growth opportunity along the value chain of the cryptocurrency industry to enhance our offerings and achieve more stable financial performance.
We believe our extensive experience and expertise in ASIC applications position us well in our future endeavors. 73 Table of Contents Leveraging our deep understanding of the cryptocurrency industry and strong technology as applied to ASIC chip design, we intend to capture the growth opportunity along the value chain of the cryptocurrency industry to enhance our offerings and achieve more stable financial performance.
We cannot assure you that we can continue to have a high successful tape-out rate. Unsuccessful tape-outs will significantly increase our research and development expenses.
We cannot assure you that we can continue to have a highly successful tape-out rate. Unsuccessful tape-outs will significantly increase our research and development expenses.
As a result of the foregoing, we recorded a gross loss of US$84.3 million in 2024, compared to a gross loss of US$240.8 million in 2023. 83 Table of Contents Operating expenses. Our total operating expenses decreased by 16.0% to US$142.8 million in 2024 from US$170.1 million in 2023. Research and development expenses.
As a result of the foregoing, we recorded a gross loss of US$84.3 million in 2024, compared to a gross loss of US$240.8 million in 2023. Operating expenses. Our total operating expenses decreased by 16.0% to US$142.8 million in 2024 from US$170.1 million in 2023. Research and development expenses.
Performance and Cost of Our Products The pricing of and demand for our Bitcoin mining machines and our edge computing chips are closely related to their performance. In general, more advanced process technologies can accommodate designs that produce ASICs with higher power efficiency.
Performance and Cost of Our Products The pricing of and demand for our Bitcoin mining machines are closely related to their performance. In general, more advanced process technologies can accommodate designs that produce ASICs with higher power efficiency.
In 2023 and 2024, our gross loss was US$240.8 million and US$84.3 million, respectively. As the Bitcoin price dropped again in the second half of 2022, we experienced a decrease in demand and average selling price of our Bitcoin mining machines, thereby leading to lower Bitcoin mining machines revenue in 2023.
In 2023 and 2024, our gross loss was US$240.8 million and US$84.3 million, respectively. In 2025, our gross profit was US$41.2 million. As the Bitcoin price dropped again in the second half of 2022, we experienced a decrease in demand and average selling price of our Bitcoin mining machines, thereby leading to lower Bitcoin mining machines revenue in 2023.
Additionally, we recorded an inventories write-down, prepayment write-down and provision for inventory purchase commitments of US$190.2 million in 2023 and US$100.6 million in 2024, respectively. 79 Table of Contents Operating expenses Our operating expenses include research and development expenses, sales and marketing expenses and general and administrative expenses.
We recorded inventories write-down, prepayment write-down and provision for inventory purchase commitments of US$190.2 million in 2023, US$100.6 million in 2024 and US$18.6 million in 2025, respectively. 79 Table of Contents Operating expenses Our operating expenses include research and development expenses, sales and marketing expenses and general and administrative expenses.
Although we have not been materially affected by inflation in the past, we may be adversely affected in the future by inflationary pressures. ​ 88 Table of Contents C. Research and Development, Patents and Licenses, etc. Technology and Product Offering Development See “Item 4. Information on the Company—B. Business Overview.” Intellectual Property See “Item 4. Information on the Company—B.
Although we have not been materially affected by inflation in the past, we may be adversely affected in the future by inflationary pressures. C. Research and Development, Patents and Licenses, etc. Technology and Product Offering Development See “Item 4. Information on the Company—B. Business Overview.” Intellectual Property See “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
Summary of Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ US$ US$ ​ ​ (in millions) Net cash used in operating activities (182.6) (123.6) (199.3) Net cash (used in)/provided by investing activities (8.1) 39.6 61.0 Net cash (used in)/provided by financing activities (56.2) 90.0 139.7 Net (decrease)/increase in cash (246.9) 6.0 1.4 Effect of exchange rate changes on cash (80.0) (11.4) (1.1) Cash and restricted cash at the beginning of year 428.5 101.6 96.2 Cash at the end of year 101.6 96.2 96.5 ​ Operating Activities Net cash used in operating activities in 2024 was US$199.3 million.
Summary of Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31 ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ US$ ​ ​ ​ US$ ​ ​ ​ US$ ​ ​ (in millions) Net cash used in operating activities (123.6) (199.3) (261.1) Net cash provided by investing activities 39.6 61.0 56.7 Net cash provided by financing activities 90.0 139.7 197.9 Net increase/(decrease) in cash 6.0 1.4 (6.5) Effect of exchange rate changes on cash (11.4) (1.1) (9.2) Cash at the beginning of year 101.6 96.2 96.5 Cash at the end of year 96.2 96.5 80.8 ​ Operating Activities Net cash used in operating activities in 2025 was US$261.1 million.
We have started with the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and aim to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our bitcoin mining machines sales.
We have started with the Bitcoin mining business through our strategic collaboration with certain cryptocurrency mining farms and energy providers, aiming to develop the Bitcoin mining business as the second engine to capitalize on the Bitcoin ecosystem and synergize with our bitcoin mining machines sales.
(2) Mainly includes our A1326 and A1346 Bitcoin mining machines. (3) Mainly includes our A1446 and A1466 Bitcoin mining machines. (4) Mainly includes our A1566 Bitcoin mining machines.
(2) Mainly includes our A1326 and A1346 Bitcoin mining machines. (3) Mainly includes our A1446 and A1466 Bitcoin mining machines.
The following table sets forth components of our operating expenses, both in absolute amount and as a percentage of our total revenue, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ % US$ % US$ % Research and development expenses 81.8 12.5 64.9 30.7 61.3 22.8 -Share-based compensation expense included in research and development expenses 10.2 1.6 9.1 4.3 7.3 2.7 Sales and marketing expenses 9.4 1.4 8.2 3.9 5.7 2.1 -Share-based compensation expense included in sales and marketing expenses 2.5 0.4 0.2 0.1 0.2 0.1 General and administrative expenses 88.3 13.7 71.2 33.6 71.7 26.6 -Share-based compensation expense included in general and administrative expenses 50.1 7.7 32.5 15.4 23.2 8.6 Impairment on property, equipment and software ​ — ​ — ​ 21.1 ​ 10.0 ​ 11.3 ​ 4.2 Impairment on cryptocurrency ​ 7.9 ​ 1.2 ​ 4.7 ​ 2.2 ​ — ​ — Gain on disposal of property, equipment and software ​ — ​ — ​ — ​ — ​ 7.2 ​ (2.7) Total 187.4 28.8 170.1 80.4 142.8 53.0 ​ Research and development expenses.
The following table sets forth components of our operating expenses, both in absolute amount and as a percentage of our total revenue, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % Research and development expenses 64.9 30.7 61.3 22.8 63.1 11.9 -Share-based compensation expense included in research and development expenses 9.1 4.3 7.3 2.7 4.7 0.9 Sales and marketing expenses 8.2 3.9 5.7 2.1 13.6 2.6 -Share-based compensation expense included in sales and marketing expenses 0.2 0.1 0.2 0.1 0.2 0.0 General and administrative expenses 71.2 33.6 71.7 26.6 68.1 12.9 -Share-based compensation expense included in general and administrative expenses 32.5 15.4 23.2 8.6 17.6 3.3 Impairment on property, equipment and software ​ 21.1 ​ 10.0 ​ 11.3 ​ 4.2 ​ 10.2 ​ 1.9 Impairment on cryptocurrency ​ 4.7 ​ 2.2 ​ — ​ — ​ — ​ — Gain on disposal of property, equipment and software ​ — ​ — ​ 7.2 ​ (2.7) ​ 1.6 ​ (0.3) Total 170.1 80.4 142.8 53.0 153.4 29.0 ​ Research and development expenses.
Changes in fair value of our cryptocurrency are recorded in change in fair value of cryptocurrency, and changes in fair value of our cryptocurrency receivables are recorded in change in fair value of financial derivative.
Changes in fair value of our cryptocurrency are recorded in change in fair value of cryptocurrency, and changes in fair value of our cryptocurrency receivables are recorded in change in fair value of financial derivatives.
As of December 31, 2024, the aggregated amount of accumulated deficits of our entities located in the PRC were US$77,054. We plan to indefinitely reinvested undistributed earnings earned from such subsidiaries in their operations in the PRC. Therefore, no withholding income tax for undistributed earnings of such subsidiaries were provided as of December 31, 2024.
As of December 31, 2025, the aggregated amount of accumulated deficits of our entities located in the PRC were US$156,037. We plan to indefinitely reinvested undistributed earnings earned from such subsidiaries in their operations in the PRC. Therefore, no withholding income tax for undistributed earnings of such subsidiaries were provided as of December 31, 2025.
Because of the adverse changes in the regulatory environment in the PRC, we have expanded into global markets and our revenues generated from sales to customers outside China, such as customers in North America, West Asia, Southeast Asia, Europe and Africa, represented 69.7% of our total revenues generated from sales of Bitcoin mining machines and related parts and accessories in 2024.
Because of the adverse changes in the regulatory environment in the PRC, we have expanded into global markets and our revenues generated from sales to customers outside China, such as customers in North America, Africa, Southeast Asia and Europe, represented 58.9% of our total revenues generated from sales of Bitcoin mining machines and related parts and accessories in 2025.
We did not remit cash to our PRC subsidiaries through our Hong Kong subsidiary in 2022, 2023 and 2024. Inflation We incur some of our revenues and expenses in other currencies, mainly including Renminbi, Singaporean Dollars, Kazakhstani Tenge and Malaysian Ringgit, among other currencies. Our consolidated financial statements are presented in U.S. Dollar.
We did not remit cash to our PRC subsidiaries through our Hong Kong subsidiary in 2023, 2024 and 2025. 88 Table of Contents Inflation We incur some of our revenues and expenses in other currencies, mainly including Renminbi, Singaporean Dollars and Malaysian Ringgit, among other currencies. Our consolidated financial statements are presented in U.S. Dollar.
Business Overview—Intellectual Property.” D. Trend Information Please refer to “—A. Results of Operations” for a discussion of the most recent trends in our products and sales by the end of 2024. In addition, please refer to discussions included in such Item and “Item 3. Key Information—D.
Trend Information Please refer to “—A. Results of Operations” for a discussion of the most recent trends in our products and sales by the end of 2025. In addition, please refer to discussions included in such Item and “Item 3. Key Information—D.
Gross profit (loss) and gross profit (loss) margin Our gross profit (loss) and gross profit (loss) margin are primarily affected by Bitcoin prices, which have a significant effect on the average selling price of our products, and, to a lesser extent, the average per unit production costs of our Bitcoin mining machines. In 2022, our gross profit was US$230.3 million.
Gross profit (loss) and gross profit (loss) margin Our gross profit (loss) and gross profit (loss) margin are primarily affected by Bitcoin prices, which have a significant effect on the average selling price of our products, and, to a lesser extent, the average per unit production costs of our Bitcoin mining machines.
Impairment on cryptocurrency to be recognized is measured by the amount by which the carrying amount of cryptocurrencies exceeds the fair value of the cryptocurrencies. The recoverable amount of cryptocurrencies is based on the fair value less costs of disposal.
Prior to the adoption of ASU 2023-08, impairment on cryptocurrency to be recognized is measured by the amount by which the carrying amount of cryptocurrencies exceeds the fair value of the cryptocurrencies. The recoverable amount of cryptocurrencies is based on the fair value less costs of disposal.
We work closely with a limited number of such production partners. For example, in 2024, we mainly relied on one third-party foundry partner for our Bitcoin mining machine business, and we cannot guarantee that it will be able to meet our manufacturing requirements or capacity or that it will not raise its prices.
We work closely with a limited number of such production partners. For example, in 2025, we mainly relied on two third-party foundry partners for our Bitcoin mining machine business, and we cannot guarantee that they will be able to meet our manufacturing requirements or capacity or that they will not raise their prices.
We recorded US$6.9 million and US$36.3 million of negative foreign currency translation adjustment, net of nil tax in 2023 and 2022, respectively, primarily due to the fluctuation of exchange rates. B.
We recorded US$13.5 million and US$6.9 million of negative foreign currency translation adjustment, net of nil tax in 2024 and 2023, respectively, primarily due to the fluctuation of exchange rates. B.
In June and August 2024, we entered into three secured loan agreements through our wholly-owned subsidiaries with unrelated third-party lenders, receiving total gross loan proceeds of approximately US$24.4 million. The loans bear interest rates ranging from 2.75% to 6.75% per annum, with terms of 18 months.
In 2024 and 2025, we entered into six secured loan agreements through our wholly-owned subsidiaries with unrelated third-party lenders, receiving total gross loan proceeds of approximately US$69.8 million. The loans bear interest rates ranging from 2.5% to 6.75% per annum, with terms of 18 months.
The following table sets forth a breakdown of our cost of revenues, expressed as an absolute amount and as a percentage of our total cost of revenues, for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ % US$ % US$ % ​ ​ (in millions, except for percentages) Product cost 366.5 87.0 368.1 81.4 301.3 85.2 Product cost excluding the impact of write-down ​ 278.7 ​ 66.2 ​ 305.1 ​ 67.4 ​ 369.8 ​ 104.6 Inventories write-down, prepayment write-down and provision for inventory purchase commitments 93.6 22.2 190.2 42.1 100.6 28.5 Transfer of inventories write-down and prepayment write-down (5.8) (1.4) (127.2) (28.1) (169.1) (47.8) Mining cost ​ 54.5 ​ 12.9 ​ 81.8 ​ 18.1 ​ 51.5 ​ 14.6 Direct cost of mining ​ 23.6 ​ 5.6 ​ 28.4 ​ 6.3 ​ 29.0 ​ 8.2 Depreciation ​ 30.9 ​ 7.3 ​ 53.4 ​ 11.8 ​ 22.5 ​ 6.4 Other cost ​ 0.2 ​ 0.0 ​ 2.4 ​ 0.5 ​ 0.8 ​ 0.2 Total cost of revenues 421.2 100.0 452.3 100.0 353.6 100.0 ​ 78 Table of Contents Historically, the relative weight of the components of our product cost remained relatively stable without taking into consideration the inventories write-down, prepayment write-down and provision for inventory purchase commitments.
The following table sets forth a breakdown of our cost of revenues, expressed as an absolute amount and as a percentage of our total cost of revenues, for the years indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % ​ ​ (in millions, except for percentages) Product cost 368.1 81.4 301.3 85.2 360.2 73.7 Product cost excluding the impact of write-down ​ 305.1 ​ 67.4 ​ 369.8 ​ 104.6 ​ 365.7 ​ 74.9 Inventories write-down, prepayment write-down and provision for inventory purchase commitments 190.2 42.1 100.6 28.5 18.6 3.8 Transfer of inventories write-down and prepayment write-down (127.2) (28.1) (169.1) (47.8) (24.1) (4.9) Mining cost ​ 81.8 ​ 18.1 ​ 51.5 ​ 14.6 ​ 126.0 ​ 25.8 Direct cost of mining ​ 28.4 ​ 6.3 ​ 29.0 ​ 8.2 ​ 85.4 ​ 17.5 Depreciation ​ 53.4 ​ 11.8 ​ 22.5 ​ 6.4 ​ 40.6 ​ 8.3 Other cost ​ 2.4 ​ 0.5 ​ 0.8 ​ 0.2 ​ 2.3 ​ 0.5 Total cost of revenues 452.3 100.0 353.6 100.0 488.5 100.0 ​ Historically, the relative weight of the components of our product cost remained relatively stable without taking into consideration the inventories write-down, prepayment write-down and provision for inventory purchase commitments.
Our interest income decreased by 50.0% to US$0.5 million in 2024 from US$1.0 million in 2023, primarily due to a decrease of deposit principal and a reduction of interest rate. Interest expense. Our interest expense increased to US$0.5 million in 2024 from nil in 2023, primarily due to an increase of secured term loans.
Our interest income decreased by 50.0% to US$0.5 million in 2024 from US$1.0 million in 2023, primarily due to a decrease of deposit principal and a reduction of interest rate. Interest expense.
The average selling price of our Bitcoin mining machines changes from period to period and is primarily affected by the supply and demand of Bitcoin mining machines, Bitcoin price and expected economic returns on Bitcoin mining activities, and the performance of the mining machines.
Our revenue is primary affected by the total computing power sold and their average selling price. The average selling price of our Bitcoin mining machines changes from period to period and is primarily affected by the supply and demand of Bitcoin mining machines, Bitcoin price and expected economic returns on Bitcoin mining activities, and the performance of the mining machines.
Our revenues derived from sales of Bitcoin mining machines and related parts and accessories were US$617.5 million in 2022, US$175.9 million in 2023 and US$222.3 million in 2024, respectively. For the years ended December 31, 2022, 2023 and 2024, we generated revenue ofUS$32.5 million, US$34.0 million and US$44.0 million from the Bitcoin mining business, respectively.
Our revenues derived from sales of Bitcoin mining machines and related parts and accessories were US$175.9 million in 2023, US$222.3 million in 2024, US$412.6 million in 2025, respectively. For the years ended December 31, 2023, 2024 and 2025, we generated revenue of US$34.0 million, US$44.0 million and US$113.2 million, from the Bitcoin mining business, respectively.
Cost of revenues Our cost of revenues consists of product costs, including costs of raw materials, costs of contractual manufacturers for production, labor costs, shipping and handling costs, manufacturing and tooling equipment depreciation, warehousing costs as well as inventories write-down, prepayment write-down and provision for inventory purchase commitments and tax surcharges.
(4) Mainly includes our A1566 Bitcoin mining machines. 77 Table of Contents Cost of revenues Our cost of revenues consists of product costs, including costs of raw materials, costs of contractual manufacturers for production, labor costs, shipping and handling costs, manufacturing and tooling equipment depreciation, warehousing costs as well as inventories write-down, prepayment write-down and provision for inventory purchase commitments and tax surcharges.
The following table sets forth the total computing power sold and average selling prices of our Bitcoin mining machines expressed in terms of computing power for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ ​ Power ​ ASP per ​ ​ ​ Power ​ ASP per ​ ​ ​ Power ​ ASP per ​ Revenue Sold Thash Revenue Sold Thash Revenue Sold Thash ​ US$ in Thash/s US$ ​ US$ in ​ Thash/s ​ US$ ​ US$ in ​ Thash/s ​ US$ ​ ​ millions ​ ​ ​ ​ ​ millions ​ ​ ​ ​ ​ millions ​ ​ ​ ​ A12 series (1) 616.0 15,102,553 40.8 65.0 9,395,024 6.9 6.6 2,150,639 ​ 3.1 A13 series (2) ​ 0.1 ​ 6,201 ​ 17.3 ​ 108.7 ​ 10,191,183 ​ 10.7 ​ 49.7 ​ 9,055,356 ​ 5.5 A14 series (3) ​ — ​ — ​ — ​ — ​ — ​ — ​ 108.6 ​ 10,769,013 ​ 10.1 A15 series (4) ​ — ​ — ​ — ​ — ​ — ​ — ​ 47.3 ​ 3,911,913 ​ 12.1 Total ​ 616.1 ​ 15,108,754 ​ 40.8 ​ 173.7 ​ 19,586,207 ​ 8.9 ​ 212.2 ​ 25,886,921 ​ 8.2 Notes: (1) Mainly includes our A1246 and A1266 Bitcoin mining machines.
The following table sets forth the total computing power sold and average selling prices of our Bitcoin mining machines expressed in terms of computing power for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ Computing ​ ​ ​ ​ ​ ​ Power ​ ASP per ​ ​ ​ Power ​ ASP per ​ ​ ​ Power ​ ASP per ​ ​ ​ ​ Revenue ​ ​ ​ Sold ​ ​ ​ Thash ​ ​ ​ Revenue ​ ​ ​ Sold ​ ​ ​ Thash ​ ​ ​ Revenue ​ ​ ​ Sold ​ ​ ​ Thash ​ US$ in Thash/s US$ ​ US$ in ​ Thash/s ​ US$ ​ US$ in ​ Thash/s ​ US$ ​ ​ millions ​ ​ ​ ​ ​ millions ​ ​ ​ ​ ​ millions ​ ​ ​ ​ A12 series (1) 65.0 9,395,024 6.9 6.6 2,150,639 ​ 3.1 0.1 38,759 ​ 3.5 A13 series (2) ​ 108.7 ​ 10,191,183 ​ 10.7 ​ 49.7 ​ 9,055,356 ​ 5.5 ​ 5.3 ​ 1,319,833 ​ 4.0 A14 series (3) ​ — ​ — ​ — ​ 108.6 ​ 10,769,013 ​ 10.1 ​ 12.3 ​ 1,664,884 ​ 7.4 A15 series (4) ​ — ​ — ​ — ​ 47.3 ​ 3,911,913 ​ 12.1 ​ 369.0 ​ 31,995,867 ​ 11.5 Total ​ 173.7 ​ 19,586,207 ​ 8.9 ​ 212.2 ​ 25,886,921 ​ 8.2 ​ 386.7 ​ 35,019,343 ​ 11.0 Notes: (1) Mainly includes our A1246 and A1266 Bitcoin mining machines.
If we are deemed to be a PRC resident enterprise, dividends paid on our ordinary shares or ADSs, and any gain realized from the transfer of our ordinary shares or ADSs, may be treated as income derived from sources within the PRC and may as a result be subject to PRC taxation. ​ 81 Table of Contents Furthermore, if we are deemed to be a PRC resident enterprise, dividends paid to individual investors who are non-PRC residents and any gain realized on the transfer of ADSs or ordinary shares by such investors may be subject to PRC tax at a current rate of 20% (which in the case of dividends may be withheld at source).
Furthermore, if we are deemed to be a PRC resident enterprise, dividends paid to individual investors who are non-PRC residents and any gain realized on the transfer of ADSs or ordinary shares by such investors may be subject to PRC tax at a current rate of 20% (which in the case of dividends may be withheld at source).
We recorded US$13.5 million and US$6.9 million of negative foreign currency translation adjustment, net of nil tax in 2024 and 2023, respectively, primarily due to the fluctuation of exchange rates. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue.
We recorded US$0.8 million of positive foreign currency translation adjustment, net of nil tax in 2025, compared to a negative adjustment of US$13.5 million in 2024, primarily due to the fluctuation of exchange rates. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue.
Interest expense pertaining to the above loans amounted to US$521 was recorded for the year ended December 31, 2024. For our recent financing activities, please see “Information on the Company—A. History and Development of the Company” and “Item 10. Additional Information—C. Material Contracts.” As of December 31, 2024, we had cash of US$96.5 million.
Interest expense pertaining to the above loans amounted to US$0.5 million and US$2.0 million was recorded for the year ended December 31, 2024 and 2025, respectively. For our recent financing activities, please see “Information on the Company—A. History and Development of the Company” and “Item 10. Additional Information—C.
Financing Activities Net cash provided by financing activities was US$139.7 million in 2024, which was attributable to the proceeds from issuance of convertible preferred shares, net of issuance costs of US$129.8 million and proceeds from borrowings from long-term loans of US$9.9 million. 87 Table of Contents Net cash provided by financing activities was US$90.0 million in 2023, which was attributable to the proceeds from issuance of ordinary shares, net of issuance costs under At-the-Market Offering Agreements of US$65.4 million and the proceeds from issuance of Series A Convertible Preferred Shares, net of issuance costs, of US$24.6 million.
Net cash provided by financing activities was US$90.0 million in 2023, which was attributable to the proceeds from issuance of ordinary shares, net of issuance costs under At-the-Market Offering Agreements of US$65.4 million and the proceeds from issuance of Series A Convertible Preferred Shares, net of issuance costs, of US$24.6 million.
Our foreign exchange gain increased by 14.6% to US$14.1 million in 2024 from US$12.3 million in 2023, as a result of the impact of currency fluctuation on our non-US$ denominated assets and liabilities. 84 Table of Contents Other income, net.
Our foreign exchange gain increased by 14.6% to US$14.1 million in 2024 from US$12.3 million in 2023, as a result of the impact of currency fluctuation on our non-US$ denominated assets and liabilities. Other income, net. Our other income, net was US$10.8 million in 2024, compared to US$2.2 million in 2023, due to a release of payment obligation.
Particularly, a significant fluctuation in Bitcoin price in a short period of time could significantly reverse the trend of average selling price of Bitcoin mining machines in certain periods of time. For example, a significant drop in the Bitcoin price in the fourth quarter of 2022 reduced the average selling price of Bitcoin mining machines in the same periods.
Particularly, a significant fluctuation in Bitcoin price in a short period of time could significantly reverse the trend of average selling price of Bitcoin mining machines in certain periods of time.
Capital Expenditures We made capital expenditures ofUS$17.7 million, US$3.3 million and US$19.3 million in 2022, 2023 and 2024, respectively. Our capital expenditures primarily comprise expenditures for the purchase of equipment and software and other long-term assets. We will continue to make capital expenditures to meet the expected growth of our business.
Capital Expenditures We made capital expenditures of US$3.3 million, US$19.3 million and US$24.6 million in 2023, 2024 and 2025, respectively. Our capital expenditures primarily comprise expenditures for the purchase of equipment and software. We will continue to make capital expenditures to meet the expected growth of our business.
Investing Activities Net cash provided by investing activities was US$61.0 million in 2024, which was primarily attributable to proceeds from disposal of cryptocurrency of US$71.5 million and proceeds from disposal of property, equipment and software of US$8.8 million, offset by purchase of property, equipment and software of US$19.3 million.
Investing Activities Net cash provided by investing activities was US$56.7 million in 2025, which was primarily attributable to proceeds from sale of cryptocurrency of US$93.1 million, offset by purchase of property, equipment and software of US$24.6 million and purchase of cryptocurrency of US$12.4 million. 87 Table of Contents Net cash provided by investing activities was US$61.0 million in 2024, which was primarily attributable to proceeds from sale of cryptocurrency of US$71.5 million and proceeds from disposal of property, equipment and software of US$8.8 million, offset by purchase of property, equipment and software of US$19.3 million.
The following table sets forth a breakdown of our revenue by services, each expressed in the absolute amount and as a percentage of our total revenue, for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ % US$ % US$ % ​ ​ ​ ​ (in millions, except for percentage) ​ ​ ​ ​ Products revenue 618.9 ​ 95.0 ​ 176.9 ​ 83.6 ​ 223.2 ​ 82.9 Bitcoin mining machines (1) 617.5 ​ 94.8 ​ 175.9 ​ 83.1 ​ 222.3 ​ 82.6 Edge computing chip products ​ 1.4 ​ 0.2 ​ 1.0 ​ 0.5 ​ 0.9 ​ 0.3 Mining revenue 32.5 ​ 5.0 ​ 34.0 ​ 16.1 ​ 44.0 ​ 16.3 Other revenues 0.1 ​ 0.0 ​ 0.6 ​ 0.3 ​ 2.1 ​ 0.8 Total 651.5 ​ 100.0 ​ 211.5 ​ 100.0 ​ 269.3 ​ 100.0 Notes: (1) O ur bitcoin mining machines products revenue is primarily attributable to sales of Bitcoin mining machines, with the remainder consisting of Bitcoin mining related parts and accessories. 77 Table of Contents Our revenue is primary affected by the total computing power sold and their average selling price.
The following table sets forth a breakdown of our revenue by services, each expressed in the absolute amount and as a percentage of our total revenue, for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ US$ ​ ​ ​ % ​ ​ ​ ​ (in millions, except for percentage) ​ ​ ​ ​ Products revenue 176.9 ​ 83.6 ​ 223.2 ​ 82.9 ​ 413.8 ​ 78.1 Mining revenue 34.0 ​ 16.1 ​ 44.0 ​ 16.3 ​ 113.2 ​ 21.4 Other revenues 0.6 ​ 0.3 ​ 2.1 ​ 0.8 ​ 2.7 ​ 0.5 Total 211.5 ​ 100.0 ​ 269.3 ​ 100.0 ​ 529.7 ​ 100.0 Notes: (1) O ur bitcoin mining machines products revenue is primarily attributable to sales of Bitcoin mining machines, with the remainder consisting of Bitcoin mining related parts and accessories.
Income (loss) before income tax expense. We recorded a loss before income tax expenses of US$465.5 million in 2023, while we recorded an income before income tax expenses of US$88.3 million in 2022. Income tax expense (benefit). Our income tax benefits were US$51.3 million in 2023, compared to income tax expense of US$18.4 million in 2022. Net income (loss).
Loss before income tax expense . We recorded a loss before income tax expenses of US$172.3 million in 2024, while we recorded a loss before income tax expenses of US$465.5 million in 2023. Income tax expense (benefit). Our income tax expense was US$77.5 million in 2024, compared to income tax benefits of US$51.3 million in 2023.
Our change in fair value of financial instruments other than derivatives incurred a loss of US$10.9 million in 2023, compared to a gain of US$3.8 million in 2022, due to a fair value change in the preferred shares financing issued in 2023. Excess of fair value of Convertible Preferred Shares.
Our change in fair value of financial instruments other than derivatives incurred a loss of US$46.6 million in 2025, compared to a gain of US$20.6 million in 2024, mainly due to a fair value change in the preferred shares financing. Excess of fair value of convertible preferred shares.
As a result of the foregoing, we recorded a net loss of US$249.8 million in 2024, compared to a net loss of US$414.2 million in 2023. Foreign currency translation adjustment, net of nil tax.
The income tax expense in 2024 was mainly due to the valuation allowance provided for certain tax loss carry-forwards of US$78.4 million. Net loss. As a result of the foregoing, we recorded a net loss of US$249.8 million in 2024, compared to a net loss of US$414.2 million in 2023. Foreign currency translation adjustment, net of nil tax.
Our excess of fair value of Convertible Preferred Shares incurred US$59.2 million in 2023, compared to nil in 2022, due to the fair value of the preferred shares financing exceeding the proceeds. Foreign exchange gain.
Our excess of fair value of convertible preferred shares incurred US$28.2 million in 2025, compared to US$50.7 million in 2024, due to the fair value of the preferred shares financing exceeding the proceeds. Foreign exchange gains (losses), net.
If we or any of our subsidiaries established outside China are considered to be a PRC resident enterprise, it is unclear whether holders of the ADSs or ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.
If we or any of our subsidiaries established outside China are considered to be a PRC resident enterprise, it is unclear whether holders of the ADSs or ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. 81 Table of Contents Pursuant to the Value-added Tax Law of the PRC and the Implementation Regulations for the Value-Added Tax Law of the PRC, entities and individuals that sell goods, services, intangible assets, or immovables, or import goods in the PRC are taxpayers of value-added tax, and shall pay value-added tax according to law.
As a result of the adoption of ASU 2023-08, our cryptocurrency are measured initially and subsequently at fair value in accordance with ASC 820, Fair Value Measurement.
Our change in fair value of cryptocurrency and change in fair value of financial derivatives increased to US$42.4 million and US$17.6 million in 2024 from nil in 2023, respectively. As a result of the adoption of ASU 2023-08, our cryptocurrency are measured initially and subsequently at fair value in accordance with ASC 820, Fair Value Measurement.
The following table sets out the average selling cost of our Bitcoin mining machines, excluding the transfer of inventories write-down, expressed in terms of computing power: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ ​ Total ​ Selling ​ Total ​ Selling ​ Total ​ Selling ​ ​ Computing ​ Cost per ​ Computing ​ Cost per ​ Computing ​ Cost per ​ ​ Power Sold ​ Thash ​ Power Sold ​ Thash ​ Power Sold ​ Thash ​ Thash/s US$ Thash/s US$ Thash/s US$ A12 series (1) ​ 15,102,553 ​ 14 ​ 9,395,024 ​ 18 ​ 2,150,639 ​ 18 A13 series (2) ​ 6,201 ​ 12 ​ 10,191,183 ​ 15 ​ 9,055,356 ​ 14 A14 series (3) ​ — ​ — ​ — ​ — ​ 10,769,013 ​ 11 A15 series (4) ​ — ​ — ​ — ​ — ​ 3,911,913 ​ 12 Total 15,108,754 14 19,586,207 16 25,886,921 13 Notes: (1) Mainly includes our A1246 and A1266 Bitcoin mining machines.
Going forward, if we are able to sell such inventories above their cost, the cost of sales for those machines will be net of such write-down, which in turn will have the effect of increasing our gross profit for the period. ​ 78 Table of Contents The following table sets out the average selling cost of our Bitcoin mining machines, excluding the transfer of inventories write-down, expressed in terms of computing power: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ Total ​ Selling ​ Total ​ Selling ​ Total ​ Selling ​ ​ Computing ​ Cost per ​ Computing ​ Cost per ​ Computing ​ Cost per ​ ​ Power Sold ​ Thash ​ Power Sold ​ Thash ​ Power Sold ​ Thash ​ ​ ​ ​ Thash/s ​ ​ ​ US$ ​ ​ ​ Thash/s ​ ​ ​ US$ ​ ​ ​ Thash/s ​ ​ ​ US$ A12 series (1) ​ 9,395,024 ​ 18 ​ 2,150,639 ​ 18 ​ 38,759 ​ 20 A13 series (2) ​ 10,191,183 ​ 15 ​ 9,055,356 ​ 14 ​ 1,319,833 ​ 14 A14 series (3) ​ — ​ — ​ 10,769,013 ​ 11 ​ 1,664,884 ​ 10 A15 series (4) ​ — ​ — ​ 3,911,913 ​ 12 ​ 31,995,867 ​ 10 Total 19,586,207 16 25,886,921 13 35,019,343 10 Notes: (1) Mainly includes our A1246 and A1266 Bitcoin mining machines.
Therefore, our ability to comply with government policies and regulations, and to anticipate and respond to potential changes in government policies and regulations will have a significant impact on our business operations and our overall results of operations. 76 Table of Contents Development of Edge Computing Technology In addition to our Bitcoin mining machines, we have also developed ASICs for edge computing applications and have continued to make investments in the area.
Therefore, our ability to comply with government policies and regulations, and to anticipate and respond to potential changes in government policies and regulations will have a significant impact on our business operations and our overall results of operations. 76 Table of Contents Key Components of Results of Operations Revenue We derive our revenue primarily from sales of Bitcoin mining machines and mining business.
Net cash used in operating activities in 2022 was US$182.6 million.
Net cash used in operating activities in 2024 was US$199.3 million.
Gross profit (loss). As a result of the foregoing, we recorded a gross loss of US$240.8 million in 2023, compared to a gross profit of US$230.3 million in 2022. Operating expenses. Our total operating expenses decreased by 9.2% to US$170.1 million in 2023 from US$187.4 million in 2022. Research and development expenses.
Gross profit (loss). As a result of the foregoing, we recorded a gross profit of US$41.2 million in 2025, compared to a gross loss of US$84.3 million in 2024. 83 Table of Contents Operating expenses. Our total operating expenses increased by 7.4% to US$153.4 million in 2025 from US$142.8 million in 2024. Research and development expenses.
Our other income, net was US$10.8 million in 2024, compared to US$2.2 million in 2023, due to a release of payment obligation. L oss before income tax expense. We recorded a loss before income tax expenses of US$172.3 million in 2024, while we recorded a loss before income tax expenses of US$465.5 million in 2023. Income tax expense (benefit).
We recorded a loss before income tax expenses of US$207.5 million in 2025, compared to a loss before income tax expenses of US$172.3 million in 2024. Income tax expense. Our income tax expense was US$2.8 million in 2025, compared to US$77.5 million in 2024.
For example, as the Bitcoin price has fluctuated from 2023 to 2024, we continued to experience low demand and low prices in the Bitcoin mining machine market. As a result, we recorded inventories write-down, prepayment write-down and provision for inventory purchase commitments of US$190.2 million and US$100.6 million in 2023 and 2024, respectively.
For example, as the Bitcoin price fluctuated from 2023 to 2024, we experienced low demand and suppressed pricing in the Bitcoin mining machine market, leading to significant inventories write-down, prepayment write-down and provision for inventory purchase commitments.
The fair value of the cryptocurrencies is determined by using the quoted price on the cryptocurrencies platform website well recognized by the block chain users. As a result of adopting ASU 2023-08 from January 1, 2024, the Company measures cryptocurrency at fair value as of each reporting period in accordance with ASC 820, Fair Value Measurement.
As a result of adopting ASU 2023-08 from January 1, 2024, we measure cryptocurrency at fair value as of each reporting period in accordance with ASC 820, Fair Value Measurement.
For example, as the Bitcoin price has fluctuated from 2023 to 2024, we continued to experience reduced demand and prices in the Bitcoin mining machine market. As a result, we recorded inventories write-down, prepayment write-down and provisions for inventory purchase commitments of US$190.2 million and US$100.6 million in 2023 and 2024, respectively.
Although the continued Bitcoin price volatility throughout 2025 persisted in affecting market demand, the impact on our inventory gradually moderated as we optimized our inventory levels and sales strategies. As a result, we recorded inventories write-down, prepayment write-down and provisions for inventory purchase commitments of US$190.2 million, US$100.6 million and US$18.6 million in 2023, 2024 and 2025, respectively.
The decrease was mainly driven by a decrease of US$2.3 million in share-based compensation, partially offset by an increase of US$0.6 million in promotion expenses and an increase of US$0.4 million in staff costs.
Our research and development expenses increased by 2.9% to US$63.1 million in 2025 from US$61.3 million in 2024. The increase was primarily due to an increase of US$3.9 million in staff costs, partially offset by a decrease of US$2.6 million in share-based compensation.
Due to a decrease in our revenue, our research and development expenses as a percentage of our revenues increased from 12.5% in 2022 to 30.7% in 2023. Selling and marketing expenses. Our selling and marketing expenses decreased by 12.8% to US$8.2 million in 2023 from US$9.4 million in 2022.
As a result of the foregoing, as well as the significant revenue growth, our research and development expenses as a percentage of our revenues decreased from 22.8% in 2024 to 11.9% in 2025. Selling and marketing expenses. Our selling and marketing expenses increased by 138.6% to US$13.6 million in 2025 from US$5.7 million in 2024.
Due to a decrease in our revenue, our general and administrative expenses as a percentage of our revenues increased from 13.7% in 2022 to 34.6% in 2023. Impairment on property, equipment and software.
As a result of the foregoing, as well as the increase of our revenue, our general and administrative expenses as a percentage of our revenues decreased from 26.6% in 2024 to 12.9% in 2025. Impairment on property, equipment and software.
Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in “Notes to the Consolidated Financial Statements—2.
Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in “Notes to the Consolidated Financial Statements—2. Summary of Significant Accounting Policies” of our audited consolidated financial statements included elsewhere in this annual report. Useful life of long-lived assets We assess the estimated useful lives of our long-lived assets on an ongoing basis.
As a result of the foregoing, we recorded a net loss of US$414.2 million in 2023, compared to a net income of US$69.9 million in 2022. Foreign currency translation adjustment, net of nil tax.
The income tax expense in 2025 was primarily due to taxes related to certain profitable subsidiaries. 84 Table of Contents Net loss. As a result of the foregoing, we recorded a net loss of US$210.3 million in 2025, compared to a net loss of US$249.8 million in 2024. Foreign currency translation adjustment, net of nil tax.
We primarily dedicated technology and expertise in ASIC applications to Bitcoin mining machines and are a leading producer of Bitcoin mining machines in the global market. In addition, with our technology expertise and know-how in ASIC chip design, our operating subsidiaries have delivered Risc-V architecture-based edge computing chips applicable to smart digital devices.
We primarily dedicated technology and expertise in ASIC applications to industrial Bitcoin mining machines and are a leading producer of Bitcoin mining machines in the global market.
We endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business.
We endeavor to grow our deployed computing power for mining and improve the energized hash rate to enhance our mining business. For the year ended December 31, 2023, 2024 and 2025, we generated revenue of US$34.0 million, US$44.0 million and US$113.2 million from the Bitcoin mining business, respectively.
Our foreign exchange gain decreased by 65.7% to US$12.3 million in 2023 from US$35.9 million in 2022, as a result of the impact of currency fluctuation on our non-US$ denominated assets and liabilities. Other income, net. Our net other income was US$2.2 million in 2023 and US$3.3 million in 2022, both of which were primarily from government grants.
Our foreign exchange loss was US$3.5 million in 2025, compared to a gain of US$14.1 million in 2024, as a result of the impact of currency fluctuation on our non-US$ denominated assets and liabilities. Other income, net. Our other income, net was US$5.6 million in 2025, compared to US$10.8 million in 2024. Loss before income tax expense.
Change in fair value of cryptocurrency and Change in fair value of financial derivative. Our change in fair value of cryptocurrency and change in fair value of financial derivative increased to US$42.4 million and US$17.6 million in 2024 from nil in 2023, respectively.
Our change in fair value of cryptocurrency and change in fair value of financial derivatives incurred a loss of US$11.4 million and US$9.5 million in 2025, respectively, compared to a gain of US$42.4 million and US$17.6 million in 2024, mainly due to the Bitcoin price fluctuation in 2025.
Our impairment on property, equipment and software increased to US$21.1 million in 2023 from nil in 2022, due to the carrying value exceeding the fair value of the mining equipment. 85 Table of Contents Impairment on cryptocurrency.
Our impairment on property, equipment and software decreased to US$10.2 million in 2025 from US$11.3 million in 2024, mainly due to the decreased amount by which the carrying value exceeded the fair value of the mining equipment. Gain on disposal of property, equipment and software.
Due to a decrease in our revenue, our selling and marketing expenses as a percentage of our revenues thereby increased from 1.4% in 2022 to 3.9% in 2023. General and administrative expenses. Our general and administrative expenses decreased by 19.4% to US$71.2 million in 2023 from US$88.3 million in 2022.
The increase was mainly driven by an increase of US$7.8 million in staff costs. As a result of the foregoing, our selling and marketing expenses as a percentage of our revenues increased from 2.1% in 2024 to 2.6% in 2025. General and administrative expenses.
The decrease was primarily due to a decrease of US$17.6 million in share-based compensation due to the declined share incentive grants and fully vested restricted share units and an increase of US$8.3 million in disposal gain of cryptocurrency, partially offset by an increase of US$8.5 million in staff costs due to one-off expenditure for organization optimization and an increase of US$1.1 million in office expense due to our global business expansion.
The decrease was primarily due to a decrease of US$5.6 million in share-based compensation, a decrease of US$2.7 million in allowance for doubtful receivables and a decrease of US$1.4 million in professional service fees, which was partially offset by an increase of US$6.9 million in staff costs.
Such increase was the result of the fact that (i) we recorded US$190.2 million for inventories write-down, prepayment write-down and provision for inventory purchase commitments which increased the cost of revenues in 2023 as well as (ii) the depreciation of mining machines increased from US$30.9 million in 2022 to US$53.4 million in 2023 due to our growing mining machine fleet for the mining business in the full year of 2023.
Cost of revenues. Our cost of revenues increased by 38.2% to US$488.5 million in 2025 from US$353.6 million in 2024, primarily due to the increase in product cost and mining cost, which were partially offset by a decrease in inventories write-down, prepayment write-down and provision for inventory purchase commitments from US$100.6 million in 2024 to US$18.6 million in 2025.
Net cash used in investing activities was US$8.1 million in 2022, which was primarily attributable to purchase of property, equipment and software of US$17.7 million, partially offset by proceeds from disposal of cryptocurrency of US$9.6 million.
Net cash provided by financing activities was US$139.7 million in 2024, which was attributable to the proceeds from issuance of convertible preferred shares, net of issuance costs of US$129.8 million and proceeds from borrowings from long-term loans of US$9.9 million.
Our interest income decreased by 58.3% to US$1.0 million in 2023 from US$2.4 million in 2022, primarily due to a decrease of deposit principal and a reduction of interest rate. Change in fair value of financial instruments other than derivatives.
Our interest expense increased to US$2.0 million in 2025 from US$0.5 million in 2024, primarily due to an increase in secured term loans and the higher interest rates. Change in fair value of cryptocurrency and change in fair value of financial derivatives.
Removed
For the year ended December 31, 2022, 2023 and 2024, we generated revenue of US$32.5 million, US$34.0 million and US$44.0 million from the Bitcoin mining business, respectively. 73 Table of Contents Starting from January 1, 2023, we changed our reporting currency from Renminbi to U.S. dollar.
Added
In addition, to further diversify our product offering and democratize access to bitcoin mining, we launched the Avalon Home series in 2024 and formally commercialized it in 2025, a new line of compact, energy-efficient mining devices crafted for individual users and home environments.
Removed
The aligning of the reporting currency with the underlying operations will better reflect our business development of recent years and future global strategy. Assets and liabilities of entities with functional currencies other than US$ are translated into US$ using the exchange rate on the balance sheet date.
Added
The Avalon Home series represents our first step into the home-use mining machine market, blending reliable hash rate output with user-friendly interfaces, low noise operation, and streamlined connectivity.
Removed
Revenues and expenses of entities with functional currencies other than US$ are translated into US$ at average rates prevailing during the reporting period. Prior periods’ financial information has been recast as if we always used US$ as our reporting currency.
Added
Although the continued Bitcoin price volatility throughout 2025 persisted in affecting market demand, the impact on our inventory gradually moderated as we optimized our inventory levels and sales strategies. As a result, we recorded inventories write-down, prepayment write-down and provision for inventory purchase commitments of US$190.2 million, US$100.6 million and US$18.6 million in 2023, 2024 and 2025, respectively.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

29 edited+4 added−7 removed43 unchanged
Biggest changeIn computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. ​ 95 Table of Contents The total number of 6,303,953,387 ordinary shares outstanding as of the date of this annual report comprises 5,992,328,943 Class A ordinary shares and 311,624,444 Class B ordinary shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ % of total ​ ​ ​ ​ ​ ​ ​ ordinary ​ ​ ​ ​ ​ ​ ​ ​ shares on an ​ ​ ​ ​ Number of Class A ​ Number of Class B ​ as-converted ​ % of voting ​ ordinary shares ordinary shares basis power† Directors and Executive Officers:* Nangeng Zhang (1) 253,517,325 ​ 311,624,444 9.0 46.2 James Jin Cheng ** — ** ** Lu Meng ​ ** ​ — ​ ** ​ ** Wenjun Zhang — — — — Hongchao Du — — — — Zhitang Shu — — — — Yaping Zhang — — — — Directors and Executive Officers as a Group 266,810,220 ​ 311,624,444 ​ 9.2 46.3 Principal Shareholders: ​ ​ ​ ​ Flueqel Ltd.
Biggest changeIn computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 94 Table of Contents The total number of 11,549,547,317 ordinary shares outstanding as of the date of this annual report comprises 11,237,922,873 Class A ordinary shares and 311,624,444 Class B ordinary shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ordinary ​ ​ ​ ​ ​ ​ ​ ​ shares on an ​ ​ ​ ​ Number of Class A ​ Number of Class B ​ as-converted ​ % of voting ​ ​ ​ ​ ordinary shares ​ ​ ​ ordinary shares ​ ​ ​ basis ​ ​ ​ power† Directors and Executive Officers:* ​ ​ ​ ​ Nangeng Zhang (1) 405,409,125 ​ 311,624,444 6.2 31.9 James Jin Cheng ** — ** ** Wenjun Zhang ​ — ​ — ​ — ​ — Hongchao Du — — — — Zhitang Shu — — — — Yaping Zhang — — — — Directors and Executive Officers as a Group 420,634,245 311,624,444 6.3 32.0 Principal Shareholders: ​ ​ ​ ​ Flueqel Ltd.
Shu received a bachelor’s degree in law from Renmin University of China in the PRC in 2013 and a master’s degree in EMBA from Cheung Kong Graduate School of Business in the PRC in 2019. 90 Table of Contents Yaping Zhang has served as our independent director since August 2020. Ms.
Shu received a master’s degree in law from Renmin University of China in the PRC in 2013 and a master’s degree in EMBA from Cheung Kong Graduate School of Business in the PRC in 2019. 90 Table of Contents Yaping Zhang has served as our independent director since August 2020. Ms.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Nangeng Zhang and Hongchao Du. Nangeng Zhang is the chairman of our nominating and corporate governance committee. Hongchao Du satisfies the requirements for an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Nangeng Zhang is the chairman of our nominating and corporate governance committee. Hongchao Du satisfies the requirements for an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Du has more than 28 years of experience in informational technology. From March 1993 to August 1997, Mr. Du developed a series of English-Chinese translation software such as “English-Chinese Communication,” “Instant Communication,” and other real-time screen English-Chinese translation systems.
Du has more than 30 years of experience in informational technology. From March 1993 to August 1997, Mr. Du developed a series of English-Chinese translation software such as “English-Chinese Communication,” “Instant Communication,” and other real-time screen English-Chinese translation systems.
Shu served as a training manager at Ping An Insurance Company, sales manager at Taikang Life Insurance Company, manager assistant at Du Li Real Estate Development Co., Ltd., head of marking at Beijing Aerospace Purin Technology Co., Ltd., from October 1992 to December 2006. Mr.
Shu served as a training manager at Ping An Insurance Company, sales manager at Taikang Life Insurance Company, manager assistant at Du Li Real Estate Development Co., Ltd., head of marketing at Beijing Aerospace Purin Technology Co., Ltd., from October 1992 to December 2006. Mr.
Mr. Zhang has approximately 14 years of experience in electronic device design, engineering, manufacturing, quality control and research and development and is responsible for formulating and overseeing our overall development strategies and operations. Before founding our company, Mr.
Mr. Zhang has approximately 16 years of experience in electronic device design, engineering, manufacturing, quality control and research and development and is responsible for formulating and overseeing our overall development strategies and operations. Before founding our company, Mr.
It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than what may reasonably be expected from a person of his knowledge and experience.
It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than what may reasonably be expected from a person of his knowledge and experience.
Ltd. since December 2012. Mr. Zhang served as a vice president at Mesnac Co. Ltd., a public company listed on the Shenzhen Stock Exchange (SZSE: 002073) from March 1999 to November 2012. He served as a vice general manager at Dalian Rubber & Plastics Machinery Works from May 1995 to February 1999. Mr.
Ltd. since December 2012. Mr. Zhang served as a vice president at Mesnac Co. Ltd., a public company listed on the Shenzhen Stock Exchange (SZSE: 002073) from March 1999 to August 2011. He served as a vice general manager at Dalian Rubber & Plastics Machinery Works from May 1995 to February 1999. Mr.
A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached. 92 Table of Contents Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our amended and restated memorandum and articles of association.
A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached. Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our amended and restated memorandum and articles of association.
Zhang has more than 20 years of experience in corporate financial management, including nine years of experience serving as a financial manager in a public company. Since July 2021, Ms. Zhang has served as the deputy general manager of Beijing Yade Jiaye Investment Co., Ltd.
Zhang has more than 20 years of experience in corporate financial management, including nine years of experience serving as a financial manager and a director of finance in a public company. Since July 2021, Ms. Zhang has served as the deputy general manager of Beijing Yade Jiaye Investment Co., Ltd.
Zhang served as an account at Beijing Zhuzong Zhuzhaiyi Company from July 1997 to May 2004. Ms. Zhang received a bachelor’s degree in enterprise finance from Capital University of Economics in 1997. Ms. Zhang is qualified as a certified public accountant (CPA) and a senior international financial manager, and she also obtained mid-level and senior-level accountant certification.
Zhang served as an account at Beijing Zhuzong Zhuzhaiyi Company from August 1997 to May 2004. Ms. Zhang received a bachelor’s degree in enterprise finance from Capital University of Economics and Business in 1997. Ms. Zhang is qualified as a certified public accountant (CPA) and a senior international financial manager, and she also obtained mid-level and senior-level accountant certification. B.
Each committee’s members and functions are described below. Audit Committee Our audit committee consists of Yaping Zhang, Zhitang Shu and Wenjun Zhang. Yaping Zhang is the chairman of our audit committee. Yaping Zhang satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
Each committee’s members and functions are described below. 92 Table of Contents Audit Committee Our audit committee consists of Yaping Zhang, Zhitang Shu and Wenjun Zhang. Yaping Zhang is the chairman of our audit committee. Yaping Zhang satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.
Our audit committee is responsible for, among other things: ● selecting, and evaluating the qualifications, performance and independence of, the independent auditors; ● pre-approving or, as permitted, approving auditing and non-auditing services permitted to be performed by the independent auditors; ● considering the adequacy of our internal accounting controls and audit procedures; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● reviewing and approving related party transactions between us and our directors, senior management and other persons specified in Item 6B of Form 20-F; ● reviewing and discussing the quarterly financial statements and annual audited financial statements with management and the independent auditors; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● meeting separately, periodically, with management, internal auditors and the independent auditors; and ● reporting regularly to the full board of directors. 93 Table of Contents Compensation Committee Our compensation committee consists of Hongchao Du and Nangeng Zhang.
Our audit committee is responsible for, among other things: ● selecting, and evaluating the qualifications, performance and independence of, the independent auditors; ● pre-approving or, as permitted, approving auditing and non-auditing services permitted to be performed by the independent auditors; ● considering the adequacy of our internal accounting controls and audit procedures; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● reviewing and approving related party transactions between us and our directors, senior management and other persons specified in Item 6B of Form 20-F; ● reviewing and discussing the quarterly financial statements and annual audited financial statements with management and the independent auditors; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● meeting separately, periodically, with management, internal auditors and the independent auditors; and ● reporting regularly to the full board of directors.
Shu has also served as the founding partner, a member of the management committee and the initiator of the business development and facilitation committee at Merits & Tree Law Offices since March 2017. Mr. Shu served as an associate at Commerce & Finance Law Offices since February 2007 and became a partner till March 2017. Mr.
Shu has also served as the founding partner, a member of the management committee and the initiator of the business development and facilitation committee at Merits & Tree Law Offices since March 2017. Mr. Shu served as an associate and a partner at Commerce & Finance Law Offices from February 2007 to March 2017. Mr.
Compensation For the year ended December 31, 2024, we paid an aggregate of US$6.2 million in cash to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Compensation For the year ended December 31, 2025, we paid an aggregate of US$5.3 million in cash to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Hongchao Du is the chairman of our compensation committee. Hongchao Du satisfies the requirements for an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Compensation Committee Our compensation committee consists of Hongchao Du and Nangeng Zhang. Hongchao Du is the chairman of our compensation committee. Hongchao Du satisfies the requirements for an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Our compensation committee is responsible for, among other things: ● reviewing, evaluating and, if necessary, revising our overall compensation policies; ● reviewing and evaluating the performance of our directors and executive officers and determining the compensation of our directors and executive officers; ● reviewing and approving our executive officers’ employment agreements with us; ● determining performance targets for our executive officers with respect to our incentive compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● carrying out such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.
Our compensation committee is responsible for, among other things: ● reviewing, evaluating and, if necessary, revising our overall compensation policies; ● reviewing and evaluating the performance of our directors and executive officers and determining the compensation of our directors and executive officers; ● reviewing and approving our executive officers’ employment agreements with us; ● determining performance targets for our executive officers with respect to our incentive compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and ● carrying out such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. 93 Table of Contents Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Nangeng Zhang and Hongchao Du.
To our knowledge and based on our review of our register of members as of the date of this annual report, 5,874,758,835 Class A ordinary shares were held of record by one holder that reside in the United States, being The Bank of New York Mellon, the depositary of our ADS program.
To our knowledge and based on our review of our register of members as of the date of this annual report, 10,358,912,865 Class A ordinary shares were held of record by one holder that reside in the United States, being The Bank of New York Mellon, the depositary of our ADS program.
(2) — 311,624,444 4.9 43.8 Notes: * The business address for our directors and executive officers is 28 Ayer Rajah Crescent #06-08, S139959, Singapore. ** Beneficially owns less than 1% of our outstanding shares. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
(4) 596,390,182 — 5.2 3.7 Notes: * The business address for our directors and executive officers is 28 Ayer Rajah Crescent #06-08, S139959, Singapore. ** Beneficially owns less than 1% of our outstanding shares. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Our nominating and corporate governance committee is responsible for, among other things: ● selecting the board nominees for election by the shareholders or appointment by the board; ● periodically reviewing with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in corporate governance law and practices as well as our compliance with applicable laws and regulations, and making recommendations to the board on corporate governance matters. ​ 94 Table of Contents Code of Ethics and Corporate Governance We have adopted a code of ethics, which is applicable to all of our directors, executive officers and employees.
Our nominating and corporate governance committee is responsible for, among other things: ● selecting the board nominees for election by the shareholders or appointment by the board; ● periodically reviewing with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in corporate governance law and practices as well as our compliance with applicable laws and regulations, and making recommendations to the board on corporate governance matters.
Directors and Senior Management ​ ​ ​ ​ ​ Name Age Position/Title Nangeng Zhang ​ 43 ​ Chairman of the Board and Chief Executive Officer James Jin Cheng ​ 47 ​ Chief Financial Officer Wenjun Zhang ​ 60 ​ Independent Director Hongchao Du ​ 58 ​ Independent Director Zhitang Shu ​ 59 ​ Independent Director Yaping Zhang ​ 51 ​ Independent Director Lu Meng ​ 43 ​ Secretary to the Board ​ 89 Table of Contents Nangeng Zhang is a founding member of our Company and has served as our Chairman of the Board and chief executive officer since our inception.
Directors and Senior Management ​ ​ ​ ​ ​ Name ​ ​ ​ Age ​ ​ ​ Position/Title Nangeng Zhang ​ 44 ​ Chairman of the Board and Chief Executive Officer James Jin Cheng ​ 48 ​ Chief Financial Officer Wenjun Zhang ​ 61 ​ Independent Director Hongchao Du ​ 59 ​ Independent Director Zhitang Shu ​ 60 ​ Independent Director Yaping Zhang ​ 52 ​ Independent Director ​ 89 Table of Contents Nangeng Zhang is a founding member of our Company and has served as our Chairman of the Board and chief executive officer since our inception.
As of the date of this annual report, after the share division, 51,624,000 restricted ordinary shares exist under the 2018 Equity Incentive Plan, out of which 9,244,516 restricted ordinary shares have been canceled due to departing employees, 16,000,000 restricted ordinary shares and 25,759,997 restricted share units have vested.
As of the date of this annual report, after the share division, 51,624,000 restricted ordinary shares exist under the 2018 Equity Incentive Plan, out of which 9,244,516 restricted ordinary shares have been canceled due to departing employees, 16,000,000 restricted ordinary shares and 25,759,997 restricted share units have vested. 91 Table of Contents Amended 2018 Plan In April 2021, our board of directors approved an amendment to the 2018 Equity Incentive Plan, or the Amended 2018 Plan.
As of December 31, 2024, 895,563,240 restricted share units and 144,000,000 share options have been granted under the Amended 2018 Plan, including to certain directors and officers, 158,701,950 restricted share units have vested, 76,105,725 restricted share units have been cancelled due to departing employees and 84,000,000 share options have been cancelled. C.
As of December 31, 2025, 1,125,470,250 restricted share units and 144,000,000 share options have been granted under the Amended 2018 Plan, including to certain directors and officers, 158,701,950 restricted share units have vested, 138,567,780 restricted share units have been cancelled due to departing employees and 84,000,000 share options have been cancelled. C.
We have granted all 25,812 restricted ordinary shares, before the one-for-2,000 share division, authorized under the 2018 Share Award Scheme.
Share Incentive Plan 2018 Equity Incentive Plan We adopted an equity incentive plan in April 2018, or the 2018 Equity Incentive Plan, which provided for the grant of restricted ordinary shares. We have granted all 25,812 restricted ordinary shares, before the one-for-2,000 share division, authorized under the 2018 Share Award Scheme.
The guidelines are not intended to change or interpret any applicable law, rule or regulation or our amended articles of association. Qualification There is no requirement for our directors to own any shares in our company in order for them to qualify as a director. D. Employees See “Item 4. Information on the Company—B. Business Overview—Employees.” E.
The guidelines reflect certain guiding principles with respect to our board’s structure, procedures and committees. The guidelines are not intended to change or interpret any applicable law, rule or regulation or our amended articles of association. Qualification There is no requirement for our directors to own any shares in our company in order for them to qualify as a director.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holder of our Class A ordinary shares in the United States.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holder of our Class A ordinary shares in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 95 Table of Contents
Our corporate governance guidelines also provide that any adoption of a new share award scheme and any material amendments to such plans will be subject to the approval of our non-executive directors. The guidelines reflect certain guiding principles with respect to our board’s structure, procedures and committees.
In addition, our board of directors has adopted a set of corporate governance guidelines covering a variety of matters, including approval of related party transactions. Our corporate governance guidelines also provide that any adoption of a new share award scheme and any material amendments to such plans will be subject to the approval of our non-executive directors.
These agreements set forth the services to be provided and compensation to be received by our independent directors, as well as the independent directors’ obligations in terms of confidentiality, non-competition and non-solicitation. 91 Table of Contents Share Incentive Plan 2018 Equity Incentive Plan We adopted an equity incentive plan in April 2018, or the 2018 Equity Incentive Plan, which provided for the grant of restricted ordinary shares.
We have entered into director agreements with each of our independent directors. These agreements set forth the services to be provided and compensation to be received by our independent directors, as well as the independent directors’ obligations in terms of confidentiality, non-competition and non-solicitation.
We have posted a copy of our code of business conduct and ethics on our website at http://investor.canaan-creative.com. In addition, our board of directors has adopted a set of corporate governance guidelines covering a variety of matters, including approval of related party transactions.
Code of Ethics and Corporate Governance We have adopted a code of ethics, which is applicable to all of our directors, executive officers and employees. We have posted a copy of our code of business conduct and ethics on our website at http://investor.canaan-creative.com.
Removed
Lu Meng has served as the secretary to our board of directors since March 2022. Ms. Meng joined our company in September 2018 and has served as the assistant to the chief executive officer and administrative director of our company. Ms. Meng has long-term working experience in Internet, technology and media industry. Ms.
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D. Employees See “Item 4. Information on the Company—B. Business Overview—Employees.” E.
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Meng previously served as a senior manager at Kuaishou Technology (HK: 1024) from March 2018 to September 2018. Prior to that, Ms. Meng served as a senior general affairs project manager at Baidu, Inc. (Nasdaq: BIDU; HK: 9888) from August 2013 to September 2017. From October 2010 to March 2013, Ms.
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(2) — ​ 311,624,444 ​ 2.7 29.4 Cipher Black Pearl LLC (3) 210,049,718 — 1.8 1.3 Cipher Mining Technologies Inc.
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Meng served as the assistant to the vice president at IBM China Research Laboratory. Ms. Meng holds a bachelor’s degree in applied chemistry and a master’s degree in analytical chemistry from University of Science and Technology Beijing. B.
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Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. (3) Represents 210,049,718 Class A ordinary shares held directly by Cipher Black Pearl LLC, which is indirectly owned by Cipher Mining Technologies Inc. Cipher Mining Technologies Inc. is a wholly owned subsidiary of Cipher Digital Inc.
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We have entered into director agreements with each of our independent directors.
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(4) Represents 596,390,182 Class A ordinary shares held directly by Cipher Mining Technologies Inc., a wholly owned subsidiary of Cipher Digital Inc.
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Amended 2018 Plan In April 2021, our board of directors approved an amendment to the 2018 Equity Incentive Plan, or the Amended 2018 Plan.
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Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands.
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We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. ​ 96 Table of Contents